Patrick Power PRO
Economics PhD @ Boston University
Bezy et al. (2024)
The economics of Housing & Homelessness
Big Picture Questions
(1) How should we think of this relative to vouchers?
(2) What is the scale effect?
(3) Under what market conditions might landlords raise the monthly rent?
- What Income Percentiles does this target?
- Even with the Max Rent of EUR 1300
(4) Do landlords move more quickly to file to remove the tenant?
Consider
Background
- The average duration of an eviction case is upwards of one year
- Industry sources estimate court costs to lie between EUR 3,000 and EUR 5,000 (more than five months of the average rent in the country)
- Eviction is also entirely illegal for five months out of twelve (the so-called ”winter truce”)
- 0.14% of renters are evicted each year
Evictions
- No credit score system
Screening Standards
Guarantors
Private Rental Insurance Market
Landlord
Visale
- No deductible
- Covers up to 36 months of Rent
- Max Rent: EUR 1300
How binding is the Max Rent?
- Max Rent/Income ratio of 50%
Policy Rollout
Note: These figures correspond to tenants covered by the policy
Likelihood of Default
How can these both be included?
Predictability
Empirical Strategy
20
30
40
30
0
1
Eligible
Age
\mathbb{E}[Y_{i,2016} \vert X_{i,2016}, a_{i,2016} =30] - \mathbb{E}[Y_{i,2016} \vert X_{i,2016}, a_{i,2016}=31]
Idea # 1: Difference-in-Means
- Compare outcomes between individuals who are on opposite sides of the age threshold
Idea # 2: Difference-in-Difference
\mathbb{E}[Y_{i,2016} \vert X_{i,2016} , a_{i,2016} =30] - \mathbb{E}[Y_{i,2016} \vert X_{i,2016} , a_{i,2016} =31]
- \mathbb{E}[Y_{i,2015} \vert X_{i,2015} , a_{i,2015} =30] - \mathbb{E}[Y_{i,2015} \vert X_{i,2015} , a_{i,2015} =31]
- Approximate the potential selection bias using pre-policy implementation data
Regression Equation # 1
Y_{it} = \alpha _{a(i)} + \delta_t + \beta1_{a(i) \leq 30} \times 1_{t \geq 2016} + X_{it} + \varepsilon_{it}
Y_{it} = \beta_1 \underbrace{\Big(D_i - \mathbb{E}[D_i \vert a(i), X_{it}, \delta_t]\Big)}_{=0}
Interpretation
\textrm{Let} \ D_i = 1_{a(i) \leq 30} \times 1_{t \geq 16}
Regression Equation # 2
Y_{it} = \alpha _{a(i)} + \delta_t + \sum _{2016-T}^{2016+T}\beta_k 1_{a(i) \leq 30} \times 1_{t \geq 2016} + X_{it} + \varepsilon_{it}
Interpretation
Clarifying Questions
(1) How binding is the max rent?
(2) Can the guarantee cover a short period of nonpayment and allow the tenant to remain housed?
(3) Why is this in the Appendix?!
Presentation of Bezy et al.
By Patrick Power
