Introduction

I think if you asked the typical economist for their views on housing support for low-income households, you would hear the following preference relationship. Ed Glaesar makes this point in his paper on Rethinking Federal Housing Policy

$$ \text{Cash} \gg \text{Vouchers} \gg \text{Project Based}

$$

The justification is that from EC101, cash is preferred to “in-kind” assistance because it expands the consumers choice set ($F$) — with a housing voucher, tenants only have to pay 30% of their income on rent.

$$ \underset{x \in F}{\text{maximize}} \ U(x, \alpha) $$

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Background

• The HCV program is the largest federal rental assistance program in the United States, providing rent subsidies to over 2.3 million low-income households in the form of a voucher - Source
• Less than 60 percent of households offered a voucher are able to lease a unit with it - Source
• A landlord can charge the Fair Market Rent (FMR) which is typically set at 40th - 50th percentile of the rents

Timeline

• In 1969, rental payments were changed from fixed sum to a proportion of income - Source
• In 1974, The Section 8 program was established - Source
• In 1981, priority in housing units went to households earning below 50% of AMI - Source