The empirical literature is unanimous in finding that tenant-based housing certificates and vouchers provide housing of any quality at a much lower total cost (that is, cost to all levels of government and tenants) than each major program of project-based assistance. The best studies are very old, but recent studies produce similar results. This paper discusses the theoretical reasons to expect that project-based housing assistance will have excessive costs, presents a conceptually correct methodology for the cost-effectiveness analysis of housing programs, and provides a description and critical appraisal of the data and methods used in these earlier studies as well as a summary of their results.

Although the weight of the evidence is substantial, none of the studies uses a conceptually correct methodology and makes highly accurate estimates of all of the magnitudes required to implement this methodology. In light of the results of existing studies and the consequences of using highly inefficient programs to deliver housing subsidies, costeffectiveness studies of all of the major discretionary expenditures on project-based housing assistance such as incremental commitments under IRS’s
Low Income Housing Tax Credit (LIHTC) and HOPE VI, project-based Section 8 vouchers, and public housing operating and modernization subsidies should be HUD’s highest priority for housing policy research.