Efficient And Equitable Housing Allocation
Since beginning his journey in the department of Industrial and Systems Engineering, Assistant Professor Nick Arnosti has showcased his passion for humanitarian research. Most recently, Professor Arnosti has been awarded the U.S. National Science Foundation (NSF) CAREER Grant. This 5-year award will allow Arnosti to research the efficiency and equitability of the housing programs in the United States. His proposal specifically focuses on four topics related to housing allocation - housing voucher issuance, housing voucher portability and exchange, applicant prioritization, and policies intended to reserve assistance for particular applicant groups.
For Arnosti, this research poses theoretically interesting problems that can be impactful to so many in need of housing. With the goal of using the resources already available to the housing authorities instead of creating new ones, his research focuses on two goals that are often invoked but rarely defined: efficiency and equity. In seeking to achieve these goals, he looks to learn from current systems in other domains such as school choice, medical residency matching, and organ allocation.
An Interest Begins
Arnosti’s interest in affordable housing allocation began when he was a professor at Columbia University. He and his co-author Peng Shi (University of Southern California), Marshall School of Business) were interested in analyzing the housing lotteries in New York City. Their paper “Design of Lotteries and Wait Lists for Affordable Housing Allocation" notes that applicants have an incentive to apply to as many buildings as possible, and to take whatever they are offered. Those who are lucky enough to win an apartment have little say in where they end up. Arnosti and Shi show that the outcomes from this lottery are equivalent to those that would result from operating a waiting list in which applicants get a single offer, and those who reject this offer are moved to the back of the list. By allocating apartments with little regard for family preferences, these systems are wasting a precious resource. Arnosti and Shi examined several alternatives designed to grant applicants more say over where they will live.
This work by Arnosti and Shi focused on housing created through New York’s “Inclusionary Zoning” laws, and on federal public housing. Arnosti’s proposal seeks to study some of the many other programs that provide affordable housing to those in need.
Housing Choice Vouchers
One of the programs in Arnosti’s proposal is the housing choice voucher program, which provides rental assistance to approximately 2 million households. The federal government provides the funding for this assistance, but vouchers are awarded and managed by thousands of local housing authorities.
Housing Voucher Issuance
Once a voucher is provided, the voucher recipient must find a landlord who is willing to rent to them. This can be challenging due to factors in the recipient’s past (such as poor credit or past evictions), and stigma by landlords against voucher recipients. Exacerbating this problem is that vouchers are typically issued for a limited term (often 3-4 months). If a participant cannot find housing within this time frame, the voucher is taken away and given to someone else.
This policy is intended to maintain high voucher utilization: a voucher being reserved for an applicant does no good to anyone while the applicant searches. However, a consequence of this policy is that applicants who have the greatest difficulty finding housing on the rental market are less likely to benefit from the voucher program.
“People should have an equal chance,” Arnosti explains, “but can only benefit if they can find housing. Those who can’t will struggle. This is a source of bias which is not the fault of the housing authority, but is exacerbated by the policy of taking away vouchers after a period of unsuccessful search.”
Arnosti proposed an alternative, which would allow people to continue searching for as long as they need. To maintain high utilization, more applicants could be authorized to search for housing at any one time. He believes that this approach could simultaneously improve voucher utilization while ensuring a more equitable distribution of vouchers.
Housing Voucher Exchange
Households that are supported by vouchers may choose to move. In this case, the voucher can travel with them. While this fact helps many households every year, it also creates headaches for housing authorities. If a household moves from Saint Paul to Minneapolis, for example, Minneapolis is in charge of inspecting the new rental property and paying the landlord, but the money to support the voucher still flows through Saint Paul. Therefore, every month Minneapolis must send a bill to Saint Paul. In the Twin Cities alone, there are 10 different housing authorities, and these authorities bill each other for thousands of households every month.
Arnosti proposes “voucher exchange” as a solution. In cases where Minneapolis is billing Saint Paul for one household, and Saint Paul is billing Minneapolis for another, why not exchange responsibility for these households, and eliminate both bills? Housing authorities occasionally make such exchanges, but they happen intermittently, and only involve two authorities at a time. Arnosti believes that the benefits would be much larger if these exchanges were conducted more systematically and involved all of the housing authorities in the region.
While exchange could offer immediate administrative relief to housing authorities, it also has potential long-term consequences. Paradoxically, Arnosti’s proposal shows that in some cases, conducting frequent voucher exchanges can actually lead to more billing down the line! In other cases, voucher exchange can shift the rate at which different waiting lists move, resulting in more people benefiting from the voucher program. Arnosti seeks to identify the circumstances under which these effects occur, in order to ensure that voucher exchange programs do not have unintended consequences.
Other Research Focuses
Shortly after joining the University of Minnesota, Arnosti joined Hennepin County’s Coordinated Entry Leadership Committee. Coordinated Entry is a program that refers people experiencing homelessness to non-profit organizations that offer housing assistance. The Leadership Committee is a group of advisors who offer feedback on the county’s referral policies.
One important question facing the county is, when a spot opens up, which of the many homeless people should receive the referral?
Arnosti is currently working with the county to conduct an analysis of its existing policies. Arnosti’s proposal will study policies designed to minimize the size of the homeless population. Another crucial consideration in this context is avoiding inadvertent racial bias, but there are not agreed upon definitions of bias or how to measure it. Arnosti hopes to collaborate with Hennepin County to tackle this issue proactively.
The fourth area of research in the proposal studies policies that seek to reserve housing for specific groups. Arnosti draws inspiration from programs in New York City, where each building has apartments set aside for applicants of different income levels, applicants from the local community, applicants with disabilities, and municipal employees. It can be challenging to implement these policies simultaneously, and seemingly minor procedural modifications can have significant consequences. Arnosti plans to research policies similar to those in New York City, to better understand their effects.
CAREER Grant Goals
Within the five years of the grant, Arnosti has multiple goals. One is to have a direct impact on the world. By collaborating with partner organizations like counties and housing authorities, Arnosti seeks to help these organizations do more with the limited resources they are given: serving more clients, offering clients greater choice, and ensuring that assistance is distributed equitably. Arnosti sees several avenues for immediate collaboration, and anticipates that others will be discovered as the work progresses.
A second goal will be to analyze novel theoretical questions inspired by these collaborations. In some cases, this will mean investigating questions which may not directly influence policy, but instead provide foundational work that future researchers could build upon. This work will be done in collaboration with ISyE graduate students.
“I care about having an impact, but am also excited by the theoretical aspects of the projects. Ultimately, I am a mathematician at heart, so I look forward to thinking through new models, doing simulations and data analysis, and solving complex math problems. It should be fun!”