Imputed Rents and Living Standard Inequalities

Abstract

In studies of inequalities, economic theory recommends imputing to owner-occupiers the notional rent that they could earn from their housing if they rented it and imputing to low rental public housing tenants the implicit subsidy represented by the rent differential between the public housing sector and the private sector. In practice, these two approaches do not reveal the same degree of legitimacy and need. Imputing notional rents to owners significantly alters the hierarchy of standards of living: poverty would be slightly overestimated if this were disregarded. Imputing an implicit subsidy to public housing tenants is even more debatable in that low rental public housing and private rented housing do not provide the same services and are not designed for the same households. Such an exercise does highlight the handicap that low-income households have as regards housing and also the relative inability of the subsidised housing sector to resolve this problem.Imputed Rents, Living Standards, Inequalities, Tenure