Full Citation
Title: Targeting In-Kind Transfers Through Market Design: A Revealed Preference Analysis of Public Housing Allocation
Citation Type: Miscellaneous
Publication Year: 2017
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Abstract: In-kind transfer programs aim to provide valuable resources to beneficiaries while targeting those who most need assistance. This problem is particularly challenging for public housing authorities (PHAs), which allocate apartments to applicants who may differ in their outside options as well as their preferred apartment types. PHAs in the U.S. differ widely in the priority systems they use and how much choice they afford potential tenants. This paper evaluates how choice and priority systems used in public housing allocation affect two competing objectives: efficiency and redistribution. I use data on the submitted choices of public housing applicants to estimate a structural model of demand for public housing in Cambridge, MA. I find substantial heterogeneity in applicants’ preferred housing developments and in their overall values of obtaining assistance, much of which cannot be predicted using observed applicant characteristics. In counterfactual simulations, I show that the range of choice and priority systems used by other PHAs would generate large changes in total welfare and tenant characteristics if implemented in Cambridge. When applicants choose where they are assigned, tenants enjoy welfare gains relative to their outside options equivalent to cash transfers of $7,000 per year. Removing choice would house applicants with worse outside options but provide low match quality, causing cost-adjusted welfare gains to fall by 30 percent. Prioritizing low-income applicants while allowing choice improves targeting without lowering match quality. As a result, some mechanisms used by PHAs are strictly dominated for a broad class of social welfare functions.
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Authors: Waldinger, Daniel
Publisher: MIT
Data Collections: IPUMS USA
Topics: Housing and Segregation, Poverty and Welfare
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