Perverse incentives

HUD's approach makes a very poor long-term strategy. Last year Dubuque (last month a different town; another day another lawsuit), noticing that their low income housing was attracting disproportionately out-of-towners, made residency a very high factor in getting priority for housing vouchers. HUD charged them with discriminating against blacks.

In the summer of 2009, public perceptions attributed an increase in crime to new African American residents from Chicago. Until that time, HCDD provided five preference points to anyone who had very low income. However, in late 2009 those points were eliminated and the voucher waiting list closed, except to applicants who had one of the other preference points, such as elderly applicants. This change in admission policy effectively allowed applicants from out of state only if they qualified for disabled or elderly preference points. FHEO found an internal memorandum indicating that the intent of the policy change was to close the waiting list to out of town applicants in order to address public perceptions on crime.

Note the highlighted word. Instead of "attributed" substitute the more accurate "observed." The problem is real, and not a mis-perception.

Also notice that the town is now paying extra taxes to take on the residents of other states.

Rather than encouraging Chicago to tackle its own problems, HUD is encouraging the use of "Greyhound housing": ship people somewhere else out of your hair.

The policy no doubt has all sorts of good intentions, but the effective incentives are to 1) slow down efforts to take care of the poor in your own community for fear the program will be hijacked to take care of outsiders instead and 2) encourage communities to persuade their poor people to go someplace else--anyplace else.

And I suspect that local assistance to people who are part of the community is more likely, on the average, to be effective than assistance to strangers.