evant local housing market. These rents are used to administer Section 8 Housing Assistance Payments. Using the FMR method, the dollar amount of the housing subsidy a CPS family receives can thus be calculated as equaling the difference between the fair market rent where the family resides and 30 percent of that family’s total income (since families receiving the subsidy are required to spend 30 percent of their income on rent). The overall effect of alternative methods on estimated poverty rates is small—no more than 0.3 percentage points.
Ronald Sepanik (Department of Housing and Urban Development), in his commentary on these two approaches, expressed reservations about using HUD FMRs for the purpose of estimating housing subsidies. Among other technical concerns, he noted that FMRs were not consistently set at the 40th percentile of rent. Rebecca Blank (University of Michigan) expressed concerns about the quality of data used in both of the methods. Kathleen Short (Census Bureau) expressed concerns about the quality of the subsidy estimates using the FMR approach, though the CPS-AHS statistical match method was more challenging to complete in a timely manner every year. Rebecca Blank stated that her sense from the paper presentation and discussion was that the statistical match method seemed to be the technically superior method, and many participants seemed to agree with her assessment.