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Another Look at the Economics of Demand‐Side Versus Supply‐Side Strategies in Low‐Income Housing

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  • Jarjisu Sa‐Aadu

Abstract

This paper presents evidence of the relative efficiency of a particular variant of demand‐side housing strategy vis‐a‐vis the supply‐side Section 8 New Construction program. The model is cast explicitly in terms of theory of consumer behavior, allowing the estimation of price subsidy rates under the demand‐side strategy, that would yield the same welfare improvement as the Section 8 program. The results indicate that neither the latter strategy nor the former clearly dominates in terms of traditional goals of low‐income housing policy. The increases in housing consumption induced by the demand‐side strategy, while less than those from the supply‐side strategy, are significant, and are accompanied by substantial reductions in housing affordability problems (rent burdens). It is shown that anywhere from .63 to 2.16 additional households could have been served for each household served under the Section 8 program, with the demand‐side strategy, at no additional cost to the taxpayer.

Suggested Citation

  • Jarjisu Sa‐Aadu, 1984. "Another Look at the Economics of Demand‐Side Versus Supply‐Side Strategies in Low‐Income Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(4), pages 427-460, December.
    • Handle: RePEc:bla:reesec:v:12:y:1984:i:4:p:427-460
    DOI: 10.1111/1540-6229.00332
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    References listed on IDEAS

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    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. John F. Kain & John M. Quigley, 1975. "Introduction to "Housing Markets and Racial Discrimination: A Microeconomic Analysis"," NBER Chapters, in: Housing Markets and Racial Discrimination: A Microeconomic Analysis, pages 1-8, National Bureau of Economic Research, Inc.
    3. John F. Kain & John M. Quigley, 1975. "Housing Markets and Racial Discrimination: A Microeconomic Analysis," NBER Books, National Bureau of Economic Research, Inc, number kain75-1.
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