IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/18996.html
   My bibliography  Save this paper

The inefficiency of tied subsidies: Evidence from UK public housing

Author

Listed:
  • Koster, Hans
  • Pinchbeck, Edward

Abstract

Subsidising housing rents, as opposed to providing untied cash subsidies, distorts consumption choices and may be inefficient. Our study focuses on the UK Right-to-Buy, a policy which has allowed nearly 3 million tenants to purchase subsidised public-housing units at discounted rates since 1980. By utilising tenants' acceptance of purchase grants to bound the benefit obtained from public-housing units, we estimate the policy has generated at least 41 billion pounds in efficiency savings. This equates to approximately 8 to 10% of the value of the public-housing stock and is likely similar in magnitude to the external benefits that arise from increased home-ownership under the policy. Our findings underscore the significance of evaluating the benefits of public housing, and the potential for substantial efficiency losses from tied subsidies.

Suggested Citation

  • Koster, Hans & Pinchbeck, Edward, 2024. "The inefficiency of tied subsidies: Evidence from UK public housing," CEPR Discussion Papers 18996, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18996
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP18996
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    public housing;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:18996. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.