Measuring subjective housing affordability using a data-driven discrete information approach: A case study of Selangor, Malaysia

Jason Wei Jian Ng, Tomas Zelinsky, Catherine S. Forbes and Cash Hao Looi

Applied Economics Letters, 2024, vol. 31, issue 19, 1964-1968

Abstract: A widely adopted measure of housing affordability is that households should spend no more than 30% of their household income on housing. However, this normative threshold is an arbitrary Great Depression-era guideline and may not be relevant today. This paper proposes a subjective indicator of housing affordability by introducing a method commonly used in the medical sciences. It utilizes discrete information to estimate a subjective affordability ratio that discriminates between subjective house-poor and non-house-poor households. We apply the proposed method to household-level data collected in Selangor, Malaysia, and show that the optimal cut-off point is 23.5%. This estimated value suggests a higher prevalence of house-poor households than is implied by the regularly assumed 30% threshold. In addition, we perform a sensitivity analysis and find the bias in the estimated cut-off point is close to zero.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2023.2208833 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:31:y:2024:i:19:p:1964-1968

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2023.2208833

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().