In 1994, the United States Department of Housing and Urban Development launched a major randomized housing mobility experiment, called Moving to Opportunity. 4,600 low-income families living in public housing located in some of the most disadvantaged urban neighborhoods across America were offered the opportunity to move to private housing in areas which were much less distressed. Families were randomly assigned to one of three groups: a group which was offered a standard housing voucher to cover private market rent, a group that was offered a voucher that could only be used to rent in low-poverty neighborhoods, and a control group. This policy experiment has been the focus of several studies (Katz, Kling, and Liebman (2001); Leventhal and Brooks-Gunn (2003); Sanbonmatsu et al. (2005); Clampet-Lundquist and Massey (2008); Ludwig et al. (2008); Ludwig et al. (2013); Sciandra et al. (2013); Chetty, Hendren, and Katz (2016)), contributing to economists’ understanding of the impacts of housing vouchers on labor market outcomes and the importance of childhood neighborhoods in promoting intergenerational mobility in the US.
In comparison, there are relatively few studies which rigorously evaluate the impact of housing programs in developing countries. The Samurdhi housing lottery presents a particularly exciting opportunity for academics and policymakers to formally evaluate the long-run effects of a large-scale housing transfer program in a developing country. Since 2002, an estimated 34,000 beneficiaries of the Samurdhi welfare program have won the housing lottery. By comparing the outcomes of those who won (i.e. the treatment group) to the outcomes of the beneficiaries who entered the lottery but were not selected (i.e. the control group), it is possible to determine the causal effect of winning the housing lottery.
Lottery winners are awarded a cash transfer worth Rs. 150,000 which can be used to purchase land, build or renovate a house, or for any other livelihood activity. If the winner is above 60 years old, the funds may also be used for consumption. If the lottery winner already has a fully developed house, they may use the funds for self-employment activities with approval from the relevant authorities. Further evidence is needed to understand whether recipients typically use the funds for housing or treat them more like unconditional cash transfers. Given the nature of the Samurdhi housing lottery, this intervention could be viewed as similar to “graduation from poverty” programs such as large-scale cash and asset transfers, on which we have more evidence from the developing world.
In my next blog post I will distill some of the evidence on housing assistance to shed light on the effects we might expect to see as we explore the data on Samurdhi lottery winners.