"Applicant choice in the design of social housing allocations : Evidence from France"

Although social housing is prevalent in many developed countries, there is no consensus over how to design allocation rules. Measuring the impact of a change in rules requires predicting how applicants will respond. In a context where rents are fixed, application data scarce, and allocation rules lack transparency, disentangling an applicant’s preferences from their probability to receive an offer is challenging. This paper develops a dynamic framework which makes use of a novel, comprehensive dataset of French social housing applications to separately identify preferences of applicants to social housing from their expectations over future offers and the allocation rules. This allows to compare the welfare impact of changes in the allocation rules. Results indicate that the current system favors households with French nationality, and disadvantages precarious households like single mothers compared to the rest of the population. Counterfactual analysis suggests better targeting low-income households would significantly improve welfare. Mechanisms based on applicant waiting time like first-come-first-serve are shown to be welfare-reducing.