Heather Harlan


Education: Bachelor of Science in anthropology and economics (December 2002)

McNair Project: Does Public Housing Assistance Affect Savings Behavior? (2002)

Mentor: Tracy M. Turner, Ph.D.

In this paper, I investigate the savings behavior of low-income households to examine the potential future effects on saving as a result of receiving rental subsidies and project-based public housing assistance. My hypothesis is that poor households receiving housing assistance will have increased wealth when compared to those households similarly situated who are not receiving housing assistance. I test this hypothesis using 1993 and 1994 longitudinal wealth data and supplements from the University of Michigan's Panel Study of Income Dynamics (PSID).

The empirical method used for my research is a Heckman two-stage regression. The first stage identifies the likelihood that those low-income households within the sample will have positive wealth, and the second stage examines how the level of positive wealth among that subsample is affected, if at all, by the variables that I am controlling for-mainly, a rent subsidy, income, demographic factors and employment status.

Results from the first stage regression indicate that low-income households receiving rental subsidies and/or public housing assistance have a decreased likelihood of having positive wealth, whether in the form of savings or assets. The results of the second stage regression were statistically insignificant. While it has not been determined whether housing assistance impacts the level of positive wealth holding over the lifetime, further research should be done to address the significance of this, perhaps using a larger sample, and additional control variables.