Rental and mortgage assistance impact
Hello,
I am trying to calculate the impact of our housing programs. We have different programs assisting the renter and owner (the rent (or portion of the rent) or the mortgage paid on behalf of the household).
I am assuming since they don't have to keep the money for rent (or mortgage) households will spend this money on other goods and services.
How can I model this? Do I use "household income event?" But the households are not receiving this money as additional income. So, there should not be any portion for saving and/or taxes, right? And while they are spending their "rent/mortgage saving" on other goods and services, do I have to exclude housing sector? If so, how can I make sure they don't spend their money on housing?
Similarly we also have utility (electricity and gas) assistance. Do I model that one also similarly?
Thank you
Hulya
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Official comment
Hello Hulya!
This is a tricky thing to model - in IMPLAN your best option is going to be to utilize a Household Income Event. This is in essence saying that the HH will be receiving additional income by way of an increase in expendable HH Income, I do not think this in and of itself is an issue. If that HH Income group are net savers in the Region, then it would be reasonable to assume that some of this additional income will be saved. The tax portion is a bit more complicated, as you are correct that this impact will not mean that they are taxed additionally. However, we are constrained by the functionality of the most appropriate Event Type, as HH Income Events will automatically reduce your Event Value to account for personal taxes.
You could of course increase you Event Value by the rate in which taxes will be removed, but finding this rate is no simple task. You would need to reference the detailed IxC Social Accounting Matrix, and divide the HH Income column totals by the amount being allocated to personal taxes for state/local & federal government rows, and then up-scale you Event Value to account for these percentages being removed automatically. This would need to be done for each HH Income Group that you plan to include in the Project.
Regarding the exclusion of the associated sectors for housing, you can simply add an Industry Contribution Analysis Event (with a value of $1) for each of these Industries, thus constraining the ability of Induced Output to be generated in these sectors. This same process could be followed for the E&G utility assistance. Understandably, this is not the most ideal scenario for your particular analysis, as we do not currently have the ability to edit what Households will spend this additional Income on, or how they will be taxed on it. Let me know if you have any follow-up questions!
Best,
Michael Nealy
Comment actions -
Thank you for your detailed answer. This is very helpful.
I am new to the cloud version of IMPLAN. We were using the desktop version, in which "households" by various income levels were included under the institutional spending pattern option. Once you import the Household (with appropriate income level), you were getting all the sectors they could spend the additional money. It was even possible to remove a sector (such as housing - "real estate establishments" and "imputed rent for owner occupied dwellings") and then redistribute to make it 100.
Is it true to say that if I don't do anything else to account for the tax and/or the spending for housing (or for utilities), just using the household income event will underestimate the impact?
Thank you
Hulya Arik
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Hulya,
It is difficult to say for sure, but would tend to agree that this approach is likely to be understating the impact, at least from the lens that there would be a removal of taxes from the Event Value that we know is not occurring in your scenario. On the other side here, we are also allowing some of this income to be spent on housing, which will create local impacts. However, we know that the households will not be spending these dollars on housing, so to allow the dollars to create these local values would in a way be overstating the economic impact, as the dollars could be either saved or spent on imported goods and services (thus not generating local impact).
Best,
Michael Nealy
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