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Abstract:
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Households receiving rental subsidies through the U.S. Department of Housing and Urban Development's (HUD) assisted housing programs receive a reduction in their monthly rent, or a utility allowance (UA), for out-of-pocket utility costs. UA amounts are estimated by housing sites and are not necessarily equal to a household's actual monthly utility expenses. They are derived using a variety of methods, including the HUD Utility Schedule Model (HUSM). The Utility Allowance Comparison study, sponsored by HUD, seeks to ascertain whether the HUSM UA method is better or worse at predicting actual out-of-pocket utility expenses than a comparison UA calculated via other methods. We use data collected from a nationally representative sample and mean square errors (MSEs) to assess the accuracy of the two UA methods in predicting the actual utility expenditure. The analysis uses jackknife replication to produce standard errors and confidence intervals of the two MSEs, and a determination of prediction performance between the methods is made. Results may inform policies and methods by which UAs are calculated to mitigate both under- and over-subsidizing for out-of-pocket utility costs.
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