Current Housing Allowance Methodology: Anomalies and Alternatives

This analysis begins with a review of the current expenditure-based system. The system uses member survey information on housing expenditures to set the allowance rates. First, we will demonstrate how the current system should work in theory. Second, we will explore some of the problems in the current system either from its theoretical underpinnings or its method of execution. Third, we argue for a price-based alternative to the expenditure-based system. A price-based alternative uses rental prices for units of comparable size and quality to set the housing allowances for the different housing areas.