Reforming Housing Assistance Summer 2015 By Edgar O. Olsen Reforming Housing Assistance Getting better outcomes with less public spending is always desirable, and our current fiscal situation adds urgency to this task. Low-income housing assistance is fertile ground for such reforms. Most current recipients are served by programs whose cost is enormously excessive for the housing provided. Phasing out these programs in favor of the system’s most cost-effective program would ultimately free up resources to provide housing assistance to millions of additional people while reducing taxpayer cost. It would also reduce other deficiencies of the current system. The current system provides large—sometimes enormous—subsidies to some households while offering none to others that are equally poor, and it provides subsidies to many people who are not poor while offering none to many of the poorest. Finally, the current system is strongly biased against homeownership for low-income households. A modest modification of the system’s most cost-effective program would eliminate this bias. Edgar O. Olsen Ed Olsen is a professor emeritus of economics at the University of Virginia, where he has served as chairman of the economics department and was heavily involved in the creation and development of the Frank Batten School of Leadership and Public Policy. Olsen's teaching and research has focused on public policy issues, especially concerning the welfare system. Within this broad area, his research specialty is low-income housing policy. Read full bio Related Content Edgar O. Olsen Does HUD Overpay for Voucher Units, and Will SAFMRs Reduce the Overpayment? Research One argument for Small Area Fair Market Rents (SAFMRs) is that they would reduce overpayment for voucher units in low-rent neighborhoods. This article provides a more comprehensive theoretical analysis that leads to the conclusion that the worst voucher units and those in the worst neighborhoods will usually rent for more than the mean market rent of identical units, and the best units in the best neighborhoods will rent for less than this amount. Racial Rent Differences in U.S. Housing Markets Research This paper exploits an unusually rich data set to estimate racial differences in the rents paid for identical housing in the same neighborhood in U.S. housing markets and how they vary with neighborhood racial composition. It overcomes the shortcomings of the data used in previous studies. Results suggest that households led by blacks pay more for identical housing in identical neighborhoods than their white counterparts and that this rent gap increases with the fraction of the neighborhood white.