Association for Public Policy Analysis & Management

In this paper we examine how the design of housing subsidies: whether a household is offered a unit in public housing or a housing vouchers, affects the characteristics of those who lease-up with assistance, as well as the effectiveness of this assistance in reducing subsequent housing instability. Two central considerations in evaluating in-kind transfers are subsidy effectiveness and targeting efficiency. Effectiveness concerns the effect of the subsidy on the consumption of the subsidized good, along with any spillover effects on other outcomes, or behavioral distortions. While targeting efficiency captures whether the individuals who receive assistance are those that value it the most. Using a unique housing assistance lottery linked to administrative data on housing instability and homelessness from three sources (HMIS data, school records, and consumer data), we examine how the design of housing subsidies impact their targeting efficiency and their effectiveness in reducing housing instability. The structure of the lottery produced random offers of housing vouchers, public housing, or both types of assistance to a large sample of low-income households, allowing us to isolate the causal effect of receiving a public housing offer relative to a voucher offer (or vice versa) on the characteristics of those who lease-up. We then estimate the relative effectiveness of each type using instruments construct from the randomly assigned initial lottery positions.