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HOUSING AS SOCIAL INVESTMENT:WHAT DO WE KNOW?

Sandra J. Newman

Johns Hopkins University

Institute for Policy Studies

Fifth Annual Berkeley Conference on Housing and Social Policy

Haas School of Business, UC Berkeley

March 25, 2004

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DEFINITION

"SOCIAL INVESTMENT" or "SOCIAL BENEFITS" defined as a positive effect on person’s well-being (e.g., health; education;

income; earnings; welfare dependency).

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HOUSING [ASSISTANCE] AS SOCIAL INVESTMENT:

WHAT DO WE KNOW?

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OVERVIEW

CONTEXT: EVOLUTION OF HOUSING POLICY DEBATE

HYPOTHESES: HOW COULD HOUSING AFFECT WELL-BEING?

WHAT WE KNOW: FOCUS ON PUBLIC HOUSING

NEXT STEPS: THE GOOD AND THE BAD

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FORCES BROADENING THE DEBATE

WELFARE REFORM (1996 Bill and its precursors)• >50% of housing assistance recipients receive welfare• Shift in societal expectations of public benefit programs

SOCIETAL EXPOSURE AND SENSITIZATION• The homeless; journalistic accounts (Auletta; Lemann)

W.J. Wilson's THE TRULY DISADVANTAGED

NEW FINDINGS ON PHYSIOLOGICAL EFFECTS OF SOCIAL CONTEXT(“CONTEXTUALIZING SCIENCE”)

• Effects of social support on stress hormones (e.g., Berkman)• Link between social cohesion, income inequality and health (Kawachi)

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A REDISCOVERY OF OLD IDEAS

• James Ford, Slums and Housing (1936):

“There has been lacking in the housing programme the vision...in which each home will be a positive element in the self-development of its occupants and of the community....This may be taken as the criterion by which housing programs is to be gauged..."

• Elizabeth Wood, The Beautiful Beginnings, The Failure to Learn: 50 Years of Public Housing in America (1982):

Public housing managers were expected to be the means by which residents "advanced" socially and economically (paraphrase of original).

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NEED FOR EVIDENCE-BASED ARGUMENTS

• Jonathan Miller, Housing & Development Reporter (2002):

"...to make their case, housing advocates need to show how lack of stable, affordable housing can have destructive effects."

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AFFORDABILITY FRAMEWORK

HOUSING & HOME• nutrition; medical care ("income effect")• quality ("substitution effect")• residential mobility• parental stress• parent work hours

NEIGHBORHOODS & SCHOOLS

• "neighborhood effects"(e.g., (dis)advantaged peers and

adults; crime)

AFFORDABILITY MAY AFFECT:

PARENTING / NURTURING

OPERATING THRU PATHWAY:

CHILD WELL-BEING• physical, mental health• cognitive development• efficacy and motivation, etc.

RESULTING IN OUTCOMES:

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EFFECTS OF HOUSING ASSISTANCE

DISINCENTIVE:

• 30% tax on income

• Concentration of disadvantaged residents in developments

• Neighborhood problems, particularly public housing

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INCENTIVE:

• Affordable, physically adequate, and stable housing necessary for well-being, including economic self-sufficiency

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THE NEGATIVE ASSESSMENT OF 1980

• John Weicher, Housing: Federal Housing Policies and Programs (1980):

"More than 40 years' experience with public housing and other subsidized programs, and a large body of independent research findings have provided little evidence that better housing does, indeed, yield benefits to society over and above the improvement in housing itself."

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EFFECTS OF PUBLIC HOUSING

CHILDREN: Some beneficial effects

ADULTS: Neutral (neither INcentive nor DISincentive)

CAVEAT: Evidence is non-experimental

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FEATURES OF THE ANALYSIS

OUTCOME AGE OBSERVED___________________________________________________________

Welfare receipt 20-27Earnings 25-27___________________________________________________________

SAMPLE: (1) Children who lived in public housing at some point between ages 10-16(2) Children 10-16 who were income eligible for public housing but

never lived there

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KEY DATA REQUIREMENTS

(1) Follows individuals from childhood through early adulthood

(2) Relies on administrative records to identify public housing receipt

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THE CHANGING PROFILE OF PUBLIC HOUSING

___________________________________________________________1970 1980 1990

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% black 61.9 80.8 80.5% married 50.4 24.4 30.3% receiving welfare 46.5 67.1 72.3Annual earnings $10,087 $4,471 $5,921____________________________________________________________

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EXAMPLES OF VARIABLES WE

CONTROLLED FOR AgeRaceSexFamily structure while growing upChange in family structureEducational attainment of head of householdMarital status of headEarnings and employment of headNumber of childrenWhether head disabledEarnings of other household membersMovedCensus divisionPopulation of locale (logged)Number of years in public housing, 10-16

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KEY RESULTS: CHILDREN

(1) During the 1968-1982 period, public housing ENHANCED children's long-term outcomes.

(2) The poor young adult outcomes of children who grew up in public housing are entirely attributable to their more disadvantaged family background characteristics, not public housing itself.

(3) Some examples:Each additional year of public housing residence between 10-16 years old in 1968-1982:

• Increased the chances of working when 25-27 years old by 7 percentage points

• Raised annual earnings about about $1,860 when 25-27 years old• Reduced welfare use between ages 20-27 by about .70 of a year

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SHORT-TERM EFFECTS ON CHILDREN

• Children in public housing are 11 percentage points less likely to be held back in school (Currie and Yellowitz 2000)

• WORTHY OF NOTE:• Contemporaneous• Additional outcome• May mean that short-term effects may translate into long-term

gains• BUT uses self-reports to identify public housing residents

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EFFECTS OF PUBLIC HOUSING ON ADULTS

• Mark Shroder, Journal of Housing Economics (2002):

“(Based on a review of 18 studies) I find the following: Housing assistance is not persuasively associated with any effect on employment.”

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EFFECTS OF PUBLIC HOUSING ON ADULTS

OUTCOMES

(1) Welfare receipt(2) Labor force participation(3) Work hours (weekly average)(4) Earnings (annual)

SAMPLE

(1) Heads of households with at least one child <18 years old who moved into public housing during the period 1970-1995

(2) A comparison group with similar characteristics that never moved into public housing

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VARIABLESOUTCOMES (Measured after the move)

Labor Force Participation (1,0)

Average weekly work hours

Annual earnings

Any AFDC

$ AFDC/person

CONTROLLING FOR:Outcomes (Measured before the move)AgeRaceSexEducational attainmentMarital statusHead of householdNumber of childrenWhether child <5DisabledEarnings of other household membersMovedWhether received housing assistanceCensus divisionPopulation of locale (logged)

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KEY RESULTS: ADULTS

(1) Without controls for greater disadvantage among public housing residents, adults:

• work less• earn less• more likely to receive welfare

(2) After controls for greater disadvantage, negative effects disappear.

(3) Little effect of time period (“policy regime”) on outcomes.

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STAY TUNED...MORE TO COMEEXAMPLES OF STUDIES IN PROCESS

ASSISTED HOUSING(Outcomes include work; earnings; welfare)

• Welfare to Work Voucher Experiment (Abt Associates)• Harkness & Newman (private assisted)• Harkness & Newman (long-term effects for children 0-10)• Jacob & Ludwig (vouchers)

AFFORDABLE HOUSING(Outcomes include child well-being: health; behavior; school performance)

• Belsky et al.• Child Trends, Inc.• Harkness & Newman

LOW-POVERTY NEIGHBORHOODS(Outcomes include all of the above)

• Moving to Opportunity Experiment (multiple researchers)