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Southwestern Professor Receives Funding to Conduct Study on Discrimination in Affordable Housing

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    Dirk Early

Project will be the second one Economics Professor Dirk Early has done for for the Department of Housing and Urban Development

A Southwestern University economics professor has received $20,000 to help the U.S. Department of Housing and Urban Development (HUD) determine whether minorities face additional barriers when trying to rent affordable housing in neighborhoods that are perceived as more desirable.

Dirk Early, professor of economics and associate dean of the Brown College of Arts and Sciences, submitted a proposal to conduct the research in response to a request HUD sent out for research that would benefit HUD policymaking.

“This is an area I have wanted to study for a while,” Early said. “I’ve always been curious about how housing markets work and the interplay with discrimination.”

Early said the subject of discrimination against minorities trying to rent in certain areas has been studied before, but researchers have never been able to reach a consensus on whether or not there is a problem. However, he notes that previous studies have only focused on a small number of markets. Early has received data from HUD that will enable a nationwide study of housing discrimination.

The research will focus on HUD’s Housing Choice Voucher program, which is one of the major programs the government runs to provide housing for low-income families. Families who are eligible for the program find a unit of rental housing, pay 30 percent of their income for rent, and the government gives them vouchers to cover the rest of their rent. Early said the vouchers are much more popular than the other common option – public housing projects – because they enable families to live wherever they want and can even be taken out of state.

“One of HUD’s goals is to get voucher recipients out of high-poverty neighborhoods,” Early said.

However, Early said that minorities may face obstacles in trying to rent properties. For example, he said, landlords may perceive that minorities may not take as good care of the properties and may charge them a higher rate than what is charged to white tenants.

This discrimination may be even more pronounced in desirable neighborhoods. “In tight markets, landlords may believe that a number of potential tenants will be vying for the unit,” Early said. “Therefore, refusing to rent to one potential tenant will have a small, or possibly no, affect on the expected time the unit is vacant.”

Early has developed a hedonic regression that will enable him to quantify the difference in rents between minority and majority households and to determine whether these differences are influenced by the racial and ethnic composition of the neighborhood, the level of poverty in the neighborhood and the tightness of the housing market. He also will be able to determine whether the role race and ethnicity play in determining rents varies in different regions of the country.

Early said the results of the study should help policymakers identify what, if any, additional burdens minorities face as they attempt to use the Housing Choice Voucher program to obtain housing in neighborhoods of their choosing. If his study does identify problems, policymakers will need to find a way to address them.

Early said he hopes to complete the research for HUD by the end of next summer. This is the second grant Early has received to conduct research for HUD. In 2006, he received a HUD grant to produce a housing price index across geographic areas of the United States. This index will be used to adjust poverty rates for variations in the cost of living across areas.

Early said research projects such as these are of interest to his economics students because they show the practical implications of economic theory and empirical models. Last semester he taught a capstone class in which students examined discrimination in a variety of areas such as education, jobs and housing.

Early has taught economics at Southwestern since 1994. He has been studying low-income housing programs, housing markets and homelessness for more than a decade, and his work has appeared in publications such as the Journal of Urban Economics, the Journal of Housing Research, the Journal of Housing Economics, Regional Science and Urban Economics, and the Journal of Policy Analysis and Management.