The Importance of Demonstration Projects to the Mission of PD&R

Brian J. McCabe

Demonstration projects like Operation Breakthrough and the Experimental Housing Allowance Program have served as an important tool for understanding and evaluating HUD's housing programs.

Fifty years ago, HUD created the Office of Policy Development and Research (PD&R) in the midst of two very different demonstration projects: Operation Breakthrough and the Experimental Housing Allowance Program (EHAP). 

Operation Breakthrough was a demonstration intended to spur housing production. The three-phase demonstration, which centered on factory-built homes, endeavored to devise brand-new systems of housing production, financing, and management, according to HUD’s then-Secretary George Romney. EHAP, on the other hand, was designed to provide low-income families with high-quality affordable housing through a housing allowance they could use on the private market. EHAP tested the feasibility of these housing allowances across several metropolitan areas. The three-part study included supply experiments to test how markets would respond to a voucher program, demand experiments to test how tenants would respond to vouchers, and administrative experiments to test the capacity of local public housing agencies (PHAs) to administer tenant-based rental assistance. Together, these inaugural projects paved the way for 50 years of large-scale demonstration projects led by PD&R.

Demonstration projects such as Operation Breakthrough and EHAP are central to HUD’s mission. These projects enable HUD to gather data, often in real time, that provide the evidentiary basis for major shifts in housing policy. Significantly, these demonstrations take different forms. In some cases, they are randomized controlled trials in which randomly selected households are compared with similar households in a treatment group; in others, they are observational studies to examine policy implementation, program uptake, or financial implications. Paired alongside other research, these demonstration projects provide evidence of the effectiveness of programs, evaluate program costs, and help shape HUD policy.

Over the past 50 years, demonstration projects focused on the pressing policy issues of their time. In the 1990s, a period when the tenant-based model of rental assistance was firmly established, two policy questions concerned the concentration of poverty in low-income neighborhoods: how does living in high-poverty neighborhoods affect families’ health, earnings, and educational attainment, among other factors, and could federal policy deconcentrate poverty by encouraging mobility to high-opportunity, low-poverty communities?

To answer these questions, HUD launched the Moving to Opportunity (MTO) program in five cities. MTO provided rental assistance through a housing voucher to families living in public housing. The treatment group received a voucher to move to a low-poverty area, and a second group received a voucher with no restrictions on the neighborhood they could choose. The control group remained in public housing. Although MTO initially produced mixed results concerning the impact of high-opportunity, low-poverty neighborhoods, an update analysis nearly two decades later by Raj Chetty and colleagues suggested long-term improvements in outcomes for children who moved to high-opportunity neighborhoods when they were young — a finding that underscores HUD’s continued commitment to enabling mobility for HUD-assisted families.

Building on these findings about the benefits of access to low-poverty, high-opportunity neighborhoods, HUD recently launched the Community Choice Demonstration in eight PHAs nationwide. Although neighborhood mobility is a core component of rental assistance programs, PHAs often find facilitating movement to these low-poverty neighborhoods difficult. Through randomized controlled trials in which families are randomly assigned to receive mobility-related services, the Community Choice Demonstration is testing the impact of mobility counseling on families with children.

Demonstration projects have allowed HUD to gather data on other salient policy issues related to rental assistance. Launched in 1996, the Moving to Work (MTW) demonstration is testing the effects of increased flexibility on the ability of PHAs to effectively administer HUD programs. The program initially granted 39 PHAs greater administrative latitude in their program design and implementation. MTW is evaluating whether granting PHAs broader discretionary authority to implement programs and allocate federal funds leads to increased efficiencies, cost savings, or increased self-sufficiency for assisted tenants. Among the studies made possible by this increased flexibility were HUD’s Jobs-Plus research in the 1990s and the Rent Reform Demonstration in the 2010s.

More recently, HUD added four additional cohorts as MTW agencies, each designed to test a different set of innovations, including stepped and tiered rent policies, landlord incentives, and increased administrative flexibility for small PHAs. Today, 126 MTW agencies nationwide are providing data to HUD on the benefits and burdens of PHA flexibility.

One of the core issues in the voucher program that is most important to policymakers is the promotion of economic self-sufficiency. Several HUD demonstrations sought to evaluate whether HUD policies could change employment and earnings outcomes for households. HUD funded the Jobs Plus program to encourage work readiness, promote literacy, and improve job placement. The Family Self-Sufficiency program evaluated the impact of the Housing Choice Voucher program on labor market participation among assisted families. The program used a randomized controlled design to assign voucher participants to case managers, who helped them develop self-sufficiency plans. Participating households also pursued asset development strategies to increase their financial savings. Ultimately, the results of the FSS program were mixed. Treated households saw no steady increase in their earnings or labor market participation, but they did participate at higher rates in related services, including financial literacy services.

Major demonstration projects also sought to test the impacts of rental assistance on pathways out of homelessness. In the Family Options Study, HUD randomly assigned families experiencing homelessness to different assistance models. Launched in 2008, the study was intended to examine how different approaches to housing families experiencing homelessness affected their short- and long-term outcomes. The Family Options Study enrolled nearly 3,000 families across four different groups: a group that received rental assistance in the form of a housing voucher, a group that received transitional housing and supportive services for up to 2 years, a group that received rapid rehousing, and a control group that received no assistance other than the typical services offered in a jurisdiction.

Although many of these demonstration projects focused on rental assistance through PHAs, others have tested different policies and programs, including the role of housing counseling in homebuying programs, the prevalence of discrimination in housing markets, and the effects of supportive services on residents of properties serving the elderly.

HUD launched the Integrated Wellness in Supportive Housing (IWISH) demonstration, a randomized controlled trial, to test the impact of integrated service delivery on the health and well-being of elderly HUD-assisted tenants.  The IWISH demonstration adds wellness staff to HUD-assisted housing developments serving the elderly to coordinate service delivery strategies for residents with the goal of evaluating their health and well-being, although preliminary results of the study have been mixed.

With the First-Time Homebuyer Education and Counseling Demonstration, HUD examined whether offering housing counseling to first-time homebuyers would improve their outcomes and reduce the likelihood of foreclosure. In this demonstration project, HUD used a randomized controlled trial to identify the impacts of housing counseling on the experiences of first-time homebuyers. Nearly 6,000 first-time homebuyers, consisting of low- and moderate-income households in 28 metropolitan areas, were recruited for the demonstration.

Finally, HUD’s Housing Discrimination Studies have supplied important evidence about discrimination in the housing marketplace. Nationwide studies focused on racial discrimination have been expanded to include studies of discrimination against same-sex couples, voucher holders, disabled households, and families with children. These studies continue to indicate underlying patterns of discrimination in housing markets — a continued concern of the agency.

Over PD&R’s first 50 years, demonstration projects have served as an important tool for understanding and evaluating our programs. Evidence of the benefits of tenant-based rental assistance, the returns to administrative flexibility, and the importance of neighborhood choice continue to shape core aspects of HUD’s program. As we continue to grapple with the challenges of housing affordability, production, and quality, we must continue to think boldly about the promise of large-scale demonstrations.