Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment

44 Pages Posted: 5 Mar 2012 Last revised: 12 Aug 2015

See all articles by Sebastian Galiani

Sebastian Galiani

University of Maryland - Department of Economics

Alvin Murphy

Arizona State University (ASU) - Economics Department

Juan Pantano

Washington University in St. Louis - Department of Economics

Date Written: August 5, 2015

Abstract

We use data from a housing assistance experiment to estimate a model of neighborhood choice. The experimental variation, which effectively randomizes the rents that households face, helps us to identify a key structural parameter of the model. Access to two randomly-selected treatment groups, in addition to a control group, allows for the out-of-sample validation of the model using a group of households who were not used in estimation and who faced a separate set of incentives. We use our estimated model to simulate the effects of changing the subsidy-use constraints implemented in the actual experiment and find that restricting subsidies to even lower poverty neighborhoods substantially reduces take-up. As a result, average exposure to poverty actually increases under these more restrictive subsidies. We also simulate the effect of adding additional subsidy restrictions based on neighborhood racial composition and find that this policy does not change the average household exposure to either neighborhood racial composition or poverty.

Keywords: Neighborhood Choice Models, Experimental Data, MTO

JEL Classification: R23, I38

Suggested Citation

Galiani, Sebastian and Murphy, Alvin and Pantano, Juan, Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment (August 5, 2015). Available at SSRN: https://ssrn.com/abstract=2015474 or http://dx.doi.org/10.2139/ssrn.2015474

Sebastian Galiani (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Alvin Murphy

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

Juan Pantano

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

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