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Households' willingness to pay for public housing

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  • Van Ommeren, Jos N.
  • Van der Vlist, Arno J.

Abstract

In the presence of price controls, nonmarket housing allocation mechanisms such as queueing prevent households from revealing their marginal willingness to pay for housing through market prices. We derive the households’ marginal willingness to pay using the intuitive idea that the length of the queue for a specific house reflects the households’ willingness to pay for housing characteristics. We apply our methodology to public housing in the Amsterdam Metropolitan area and show that, on average, the households’ marginal willingness to pay for a unit of public housing is close to its marginal costs. This suggests that the welfare loss of public housing through distortions in housing supply is rather limited and is mainly through distortions in housing demand. We provide indirect evidence of the latter by showing that queueing induces inefficient matching of households and housing.

Suggested Citation

  • Van Ommeren, Jos N. & Van der Vlist, Arno J., 2016. "Households' willingness to pay for public housing," Journal of Urban Economics, Elsevier, vol. 92(C), pages 91-105.
  • Handle: RePEc:eee:juecon:v:92:y:2016:i:c:p:91-105
    DOI: 10.1016/j.jue.2015.11.007
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    References listed on IDEAS

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    Cited by:

    1. Essi Eerola & Tuukka Saarimaa, 2017. "Delivering Affordable Housing and Neighborhood Quality: A Comparison of Place- and Tenant-Based Programs," CESifo Working Paper Series 6674, CESifo Group Munich.
    2. Hans R.A. Koster & Jos van Ommeren, 2017. "Place-based policies and the housing market," Tinbergen Institute Discussion Papers 17-008/VIII, Tinbergen Institute, revised 10 Aug 2018.
    3. Hans R.A. Koster & Jan Rouwendal, 2017. "Historic Amenities and Housing Externalities: Evidence from the Netherlands," Economic Journal, Royal Economic Society, vol. 127(605), pages 396-420, October.
    4. Mark A. C. Kattenberg & Wolter H. J. Hassink, 2017. "Who Moves Out of Social Housing? The Effect of Rent Control on Housing Tenure Choice," De Economist, Springer, vol. 165(1), pages 43-66, March.

    More about this item

    Keywords

    Nonmarket allocation; Public housing; Marginal willingness to pay; Queueing;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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