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The Cost-Effectiveness of Alternative Methods of Delivering Housing Subsidies


  • Edgar O. Olsen



The empirical literature is unanimous in finding that tenant-based housing certificates and vouchers provide housing of any quality at a much lower total cost (that is, cost to all levels of government and tenants) than the types of project-based assistance studied, namely Public Housing, Section 236, and Section 8 New Construction and Substantial Rehab. However, these studies are so old and inaccessible that they are unknown to most people involved in current discussions of housing policy. This paper discusses the theoretical reasons to expect that these types of project-based housing programs will have excessive costs, presents a conceptually correct methodology for the cost-effectiveness analysis of housing programs, and provides a description and critical appraisal of the data and methods used in these earlier studies as well as a summary of their results. It concludes that cost-effectiveness analyses of current forms of projectbased housing assistance should be the highest priority for research on housing policy.

Suggested Citation

  • Edgar O. Olsen, 2000. "The Cost-Effectiveness of Alternative Methods of Delivering Housing Subsidies," Virginia Economics Online Papers 351, University of Virginia, Department of Economics.
  • Handle: RePEc:vir:virpap:351

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    References listed on IDEAS

    1. Olsen, Edgar O. & Barton, David M., 1983. "The benefits and costs of public housing in New York City," Journal of Public Economics, Elsevier, vol. 20(3), pages 299-332, April.
    2. Daniel H. Weinberg, 1982. "Housing Benefits From the Section 8 Housing Program," Evaluation Review, , vol. 6(1), pages 5-24, February.
    3. Mayo, Stephen K., 1986. "Sources of inefficiency in subsidized housing programs: A comparison of U.S. and German experience," Journal of Urban Economics, Elsevier, vol. 20(2), pages 229-249, September.
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    Cited by:

    1. Luis Marcano & Inder J. Ruprah, 2008. "An Impact Evaluation of Chile's Progressive Housing Program," IDB Publications (Working Papers) 2896, Inter-American Development Bank.
    2. Denise DiPasquale & Dennis Fricke & Daniel Garcia-Diez, 2003. "Comparing the costs of federal housing assistance programs," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 147-166.
    3. Inder J. Ruprah & Luis Marcano, 2007. "A Meta-Impact Evaluation of Social Housing Programs: The Chilean Case," IDB Publications (Working Papers) 2834, Inter-American Development Bank.
    4. repec:pri:indrel:dsp01qz20ss50t is not listed on IDEAS
    5. Edgar O. Olsen, 2003. "Housing Programs for Low-Income Households," NBER Chapters,in: Means-Tested Transfer Programs in the United States, pages 365-442 National Bureau of Economic Research, Inc.
    6. Crews Cutts, Amy & Olsen, Edgar O., 2002. "Are Section 8 housing subsidies too high?," Journal of Housing Economics, Elsevier, vol. 11(3), pages 214-243, September.
    7. Ludwig, Jens & Duncan, Greg J. & Pinkston, Joshua C., 2005. "Housing mobility programs and economic self-sufficiency: Evidence from a randomized experiment," Journal of Public Economics, Elsevier, vol. 89(1), pages 131-156, January.
    8. repec:pri:cheawb:j_kling_2005 is not listed on IDEAS
    9. Lang, Bree J., 2015. "Input distortions in the Low-Income Housing Tax Credit: Evidence from building size," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 119-128.
    10. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz & Lisa Sanbonmatsu, 2004. "Moving to Opportuntiy and Tranquility: Neighborhood Effects on Adult Economic Self-sufficiency and Health from a Randomized Housing Voucher Experiment," Working Papers 247, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
    11. Anthony Yanxiang Gu & Joseph W. Trefzger, 2003. "Mortgage Payment as a Portion of Income: A Better Solution," International Real Estate Review, Asian Real Estate Society, vol. 6(1), pages 121-135.
    12. Matthew Klesta & Frank Manzo & Francisca Richter & Mark S. Sniderman, 2013. "Low-income-rental-housing programs in the Fourth District," Working Paper 1311, Federal Reserve Bank of Cleveland.
    13. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
    14. Eriksen, Michael D., 2009. "The market price of Low-Income Housing Tax Credits," Journal of Urban Economics, Elsevier, vol. 66(2), pages 141-149, September.
    15. Todd Sinai & Joel Waldfogel, "undated". "Do Low Income Housing Subsidies Increase Housing Consumption?," Zell/Lurie Center Working Papers 394, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    16. Early Dirk W. & Olsen Edgar O., 2002. "Subsidized Housing, Emergency Shelters, and Homelessness: An Empirical Investigation Using Data from the 1990 Census," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-36, August.
    17. Sinai, Todd & Waldfogel, Joel, 2005. "Do low-income housing subsidies increase the occupied housing stock?," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2137-2164, December.

    More about this item


    Housing assistance; housing programs; housing subsidies; cost-effectiveness;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location


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