Housing Vouchers for the Poor: Lessons from a National Experiment

Foreword: "In 1970 Congress and the U.S. Department of Housing and Urban Development initiated and elaborate social experiment. The Experimental Housing Allowance Program (EHAP), conducted over an 11-year period, tested the feasibility of providing cash subsidies to low-income households to help them obtain adequate housing. The Urban Institute was involved with EHAP since its beginning. In this book, eight Institute researchers not only thoroughly analyze and describe the experiment but also probe the larger question of just what government strategies seem most effective in aiding the poor...EHAP answered these questions and provided implications for other aspects of housing programs and aid to the poor. Findings were derived by analyzing the behavior of 30,000 lower-income households who participated at 12 sites across the country. Analysis showed that from the household's viewpoint, straight cash transfers to low-income households are even more beneficial and effective than are housing allowances which are loaded with government restrictions. EHAP findings also suggested that allowances provide services equivalent to other housing programs but at a lower cost." Description by Rossi 1987 of how EHAP exemplified "wrong treatment" in social experimentation: "Wrong Treatment: This occurs when the treatment is simply a seriously flawed translation of the problem theory into a program. One of the best examples is the housing allowance experiment in which the experimenters attempted to motivate poor households to move into higher quality housing by offering them a rent subsidy, contingent on their moving into housing that met certain quality standards (Struyk and Bendick, 1981). The experimenters found that only a small portion of the poor households to whom this offer was made actually moved to better housing and thereby qualified for and received housing subsidy payments. After much econometric calculation, this unexpected outcome was found to have been apparently generate by the fact that the experimenters unfortunately did not take into account that the costs of moving were far from zero. When the anticipated dollar benefits from the subsidy were compared to the net benefits, after taking into account the costs of moving, the net benefits were in a very large proportion of the cases uncomfortably close to zero and in some instances negative. Furthermore, the housing standards applied almost totally missed the point. They were technical standards that often characterized housing as sub-standard that was quite acceptable to the households involved. In other words, these were standards that were regarded as irrelevant by the clients. It was unreasonable to assume that households wounder undertake to move when there was no push of dissatisfaction from the housing occupied and no substantial net positive benefit in dollar [pg15] terms for doing so. Incidentally, the fact that poor families with little formal education were able to make decisions that were consistent with the outcomes of highly technical econometric calculations improves one's appreciation of the innate intellectual abilities of that population."