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Housing Choice as a Function of Risks Confronting Low-income Households

Author

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  • Anand Sahasranaman
  • Vishnu Prasad
  • Aditi Balachander

Abstract

The design of housing solutions for low-income populations has been one of the most pressing policy concerns in developing countries like India. In this work, we explore the effect of risks confronting low-income households—unemployment, health and mortality—on their choice of housing arrangements. We use simulations to study the evolution of long-term wealth of a stylised low-income household faced with these risks and find that, on average, rental housing significantly reduces the risk of undesirable wealth fluctuations over time. From a policy perspective, this means greater focus and incentives for the development of low-income rental markets using strategies such as provision of rental vouchers, rent-to-own models or long-term leases, in addition to the traditional ownership-based housing strategies. The development of housing solutions encompassing a range of rental and ownership models will be critical to ensuring the availability of safe and affordable housing for all urban residents. JEL Codes: C63, O18

Suggested Citation

  • Anand Sahasranaman & Vishnu Prasad & Aditi Balachander, 2020. "Housing Choice as a Function of Risks Confronting Low-income Households," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 19(1), pages 100-118, April.
    • Handle: RePEc:sae:emffin:v:19:y:2020:i:1:p:100-118
    DOI: 10.1177/0972652719877475
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    References listed on IDEAS

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    More about this item

    Keywords

    Emerging markets; financial inclusion; government policy and regulation; housing; simulation;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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