Affordable Housing: Of Inefficiency, Market Distortion, and Government Failure
35 Pages Posted: 28 May 2019 Last revised: 13 Sep 2019
Date Written: May 1, 2019
In this essay, I examine the types of costs that are imposed on society as a whole due to the absence of a sufficient number of decent housing units that are affordable to the low-income population. These costs present themselves in relation to health care, education, employment, productivity, homelessness, and incarceration. Some of the costs are direct expenditures while others are the result of lost opportunities.
My hypothesis is that these costs are significant and offer, at the very least, a substantial offset to the cost of creating and subsidizing the operation of the necessary number of affordable housing units that are currently missing. I suggest a series of reasons why, in the face of this potentially inefficient outcome, the market/society does not produce the required units.
The essay is conceptual in nature, not empirical. I recognize the issues associated with the quantification of often opaque costs and with their causal relationship to the lack of affordable housing. It is clear, however, that the costs are sizable and the correlations are strong and therefore, I believe, the hypothesis requires empirical study.
Keywords: affordable housing failure, housing policy, low-income housing, affordable housing
Suggested Citation: Suggested Citation