Housing policy in the local political economy: Understanding the support for affordable housing programs in cities

Public choice scholars argue city policy makers seek to provide the best cost/benefit ratio for public goods and services to attract residents and maintain fiscal health. This economic self-interest by cities results in competition among localities for residents and fiscal benefits. Redistributive policies such as low- and moderate-income housing programs produce a higher cost to benefit ratio for the median household. Therefore, public choice theory predicts that city decision makers will eschew these types of policies. Despite this prediction, locally-initiated affordable housing programs are implemented in many cities. Political theory and the policy making literature suggest alternative explanations for these policy choices. It is argued that political variables such as intergovernmental relationships, interest groups, and the preferences of elected officials influence local policy and program development. The debate between public choice theorists and the political perspective continues in the literature. This research addresses the debate by examining the influences of both inter-city competition and political factors on local affordable housing expenditures. The research uses data from the 1990 U.S. Census and mail survey data collected from city officials in a representative sample of U.S. cities with a population of 25,000 or more. The dissertation reports both descriptive statistics from the survey and the results of a multivariate analysis of local affordable housing expenditures. The results from the analyses indicate that inter-city competition reduces the likelihood that cities will spend even a token amount of local dollars on housing programs. However, political factors such as federal funding, state mandates, interest groups, and the preferences of city officials positively influence cities to spend local funds on affordable housing programs. Therefore, economic self-interest by cities, politics, and political arrangements all matter in the local housing policy making process.