This presents estimates of the effects of government-subsidized rental housing programs based on the model developed in 3, the variables as estimated by the procedures described in 4, and data contained in the 1977Annual Housing Survey. In Section 5.1 the magnitude of benefits to participating families is investigated, and estimated changes in consumption patterns due to the subsidy programs are compared with consumption changes under a program of unrestricted cash grants. In Section 5.2 the distribution of benefits of the subsidy program is estimated. Section 5.3 compares these results to results of previous studies.

Changes in consumption patterns and magnitude of benefits to participating households

The model developed in 3 uses a Hicksian measure of consumer surplus to estimate the benefits of the programs to participating families. This involves selecting a utility function and comparing the utility surface attained under participation in the programs with the utility surfaces attained under certain alternatives to participation. Specifically, an intertemporal, Stone–Geary utility function is chosen and consumption patterns are compared under the following policy alternatives: (1) the housing programs are terminated in the beginning of 1978; (2) the housing programs are terminated in the beginning of 1977; (3) the housing programs are terminated in the beginning of 1977 and replaced with a program of unrestricted cash grants which operates in 1977 only.

In this model, then, the measure of benefit from a housing program is the cash grant that enables a participating family to be as well off without participation in 1977 and future years as with participation in 1977, but in no future years.