How do we effectively test new policies before they are implemented? Abt Global’s Judy Geyer describes a new model that can help policymakers understand the impacts of potential housing policy changes before implementation. In “Housing Demand and Neighborhood Choice with Housing Vouchers,” published in the Journal of Urban Economics, Geyer explains how she constructed, tested and validated an economic model that predicts how people make housing decisions with housing vouchers.

Geyer compared data from 4,431 low-income households in Pittsburgh that received housing vouchers in 2006 with 2000 Census block information of similarly matched low-income households. With the model, she assessed what happened when families received:

• A increased voucher subsidy;
• A subsidy that varied based on neighborhood housing costs;
• A rebate, instead of subsidy, that was proportional to the market rent of specific units;
• A subsidy that required moving to a census tract where poverty was less than 30 percent; and
• A 20 percent reduced subsidy.

Under each policy change scenario, Geyer examined whether households would choose to move to a better neighborhood, defined as neighborhoods with less crime, public schools with strong test scores, and greater walkability, or decide to upgrade to improved housing, such as larger, higher quality apartments in lower-priced neighborhoods.

Findings
An increase in voucher subsidies had a larger impact on housing consumption. It did not appear to affect households’ decision to move to safer neighborhoods.

Under a policy change where households received vouchers that varied based on neighborhood housing costs, Geyer observed greater impacts on neighborhood mobility and smaller impacts on housing consumption. This policy change was also cost-effective.

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