Does Subsidized Housing Investment Improve the Neighborhood?
Marvin M. Smith, Ph.D., Community Development Research Advisor Housing investment plays a vital role in urban development efforts. Often this takes the form of subsidized housing. But much of the economics literature implies that the use of subsidies to develop housing is not an effective approach to compensate for shortcomings in the housing market or to create housing for low-income households. Yet this position is based on the majority of cost-benefit analyses of housing programs, which have focused solely on the benefits conveyed to the occupants of the subsidized housing. If, however, external benefits accrue to the neighborhood and are deemed economically important, then it could be argued that place-based housing investment by governments may well be a critical component of efficient housing markets. A study by Ellen Schwartz, Ingrid Gould Ellen, Ioan Voicu, and Michael Schill sheds some light on this issue by investigating the external effects associated with place-based subsid
