The Effect of Rental Assistance on Household Spending Behavior

Policymakers are often interested in understanding how the receipt of a subsidy affects economic behavior. In the case of housing assistance, they may want to understand how cost savings (if they exist) from the receipt of a rental subsidy affects their spending on other goods. This paper analyzes Consumer Expenditure (CE) Survey data to investigate the relationship between rental assistance and household expenditures. In summary, I find that that for the median renter household, receipt of a subsidy is associated with a significant decrease in spending on rent and utilities. These cost savings are met with increases in expenditure on food, apparel, entertainment, and housewares. Households with relatively higher incomes experience an increase in transportation expenditures and a decrease in healthcare expenditures. Conversely, households with relatively lower incomes experience a decrease in their expenditures on transportation and an increase in their expenditures on healthcare. Taken within the context of existing research, our findings suggest that there may be a relationship between expenditure changes and various economic outcomes.