Policy Diffusion in a Redistributive Policy: Affordable Housing and State Housing Trust Funds

• Author: Xiaoyang Xu,Rebecca J. Walter,Carla Flink
• Published date: 01 September 2021
• Date: 01 September 2021
• DOI: http://doi.org/10.1177/0160323X211049420
• Subject Matter: Original Research General Interest Articles

Policy Diffusion in a

Redistributive Policy:

Affordable Housing and

State Housing Trust Funds

Carla Flink

1

, Rebecca J. Walter

2

,

and Xiaoyang Xu

3

Abstract

Diffusion models explore the reasons policies transfer across governments. In this study, we focus

on U.S. state level efforts in affordable housing. Drawing predominately from policy diffusion liter-

ature, our research examines the determinants of the creation of state Housing Trust Funds (HTFs).

We utilize event history analysis with logit regressions and survival modeling to examine how prob-

lem severity, neighbor adoption, economic standing, elected leadership, housing investment, and

demographics predict state HTF adoption. Results indicate that both problem severity and elected

leadership predict the adoption of HTFs. This work improves our understanding of state policy dif-

fusion and efforts in housing affordability.

Keywords

housing policy, diffusion, policy adoption

Introduction

The determinants of when governments adopt

policy have been an enduring area of study for

public policy scholars. As one theory of the

policy process, diffusion models explore the

conditions under which policies transfer across

governments. Throughout decades of work,

scholars have applied the diffusion mechanism

in numerous policy and national contexts.

Recent contributions have included policy

areas such as energy policy (Nicholson-Crotty

and Carley 2018), tobacco policy (Pacheco

2017), medical marijuana laws (Johns 2015;

Hannah and Mallinson 2018), and same-sex

marriage (Fay 2018). Theories of policy diffu-

sion also have been applied to different national

contexts, including China, Germany, Latin

American countries, and the United States

(Meseguer 2004; Shipan and Volden 2014;

1

Department of Public Administration and Policy,

American University, School of Public Affairs, Washington,

DC, USA

2

Runstad Department of Real Estate, University of

Washington, College of Built Environments, Seattle,

Washington, USA

3

Department of Public Administration and Policy,

American University, School of Public Affairs, Washington,

DC, USA

Corresponding Author:

Carla Flink, American University, School of Public Affairs,

Department of Public Administration and Policy, 4400

Massachusetts Avenue, NW, Washington, DC 20016-8070

USA.

Email: f‌link@american.edu

Original Research General Interest Articles

State and Local Government Review

2021, Vol. 53(3) 187-209

© The Author(s) 2021

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0160323X211049420

journals.sagepub.com/home/slg

Abel 2019; Heggelund et al. 2019). We con-

tinue in this line of policy diffusion research

in the context of U.S. states with application

to housing affordability.

An enduring theme of policy diffusion

research is that states can innovate and learn

from one another to solve problems. The

housing policy arena has experienced a deepening

problem –housing affordability. The standard

def‌inition used to def‌ine affordable housing is

households that pay no more than 30% of their

income toward housing costs (Stone 2006). The

literature on housing affordability has grown

over the last several decades as the severity of

the problem has intensif‌ied, while the federal gov-

ernment has passed on more responsibility for

state and local governments to meet housing

needs. Housing is a basic necessity that not only

provides physical safety but is a primary require-

ment for an individual’s overall well-being (Bratt,

Stone, and Hartman 2006). Extant research has

shown the impact of housing and neighborhoods

on economic, social, physical, and mental health

outcomes (e.g., Burgard, Seefeldt, and Zelner

2012; Steiner, Makarios, and Travis 2015;

Chetty, Hendren, and Katz 2016). The private

housing market is unable to provide housing for

the lowest-income households and factors such

as housing discrimination and income inequality

contribute to the lack of access to decent afford-

able housing (Bratt, Stone, and Hartman 2006).

Government intervention is required to address

these issues that are at the root of the affordable

housing crisis.

Housing affordability representsa policy area

with a unique combination of characteristics for

state innovation.For one, housing policy innova-

tion has a set of obstacles as a redistributive

policy area benef‌iting people of lower political

power. Theories on the “race to the bottom”

and social const ruction of targe t populations

outline the barriers to successful policy creation

and implementation. Additionally, this policy

area has experiencedworsening problems, punc-

tuated with a major negative event—the 2007–

2008 f‌inancial crisis and housing collapse—

that disproportionately affected the poor and

racial and ethnic minorities. Coupled with

increasing severity, federal burden shedding

(Weaver 2020) ha s pushed states t o f‌ill the gap

of declining support; a trend seen in many

other redistributive policy areas (Franko and

Witko 2017).

In this study, we utilize the policy diffusion

framework to examine the factors that lead to

the creation of state housing trust funds

(HTFs). State governments, through enabling

legislation, create HTFs to generate money ded-

icated to affordable housing initiatives without

having to go through an appropriation process.

We use panel data on 50 states from 1980 to

2016, collected from state Housing Trust Fund

and Housing Finance Agency websites, Census

data, and American Community Survey (ACS).

This study builds on the foundational work of

Scally (2012) in the housing literature by updat-

ing the last 12 years of HTF adoption—which

covers the end of the housing bubble, the col-

lapse of the housing market and subsequent

recession, and the last decade of recovery and

economic growth. We analyze HTF adoption

through event history analysis (EHA) utilizing

logit and survival analyses to identify factors

that inf‌luence the likelihood of policy adoption.

Results indicate that both problem severity and

elected leaders hip predict the a doption of HTFs.

This study can inform not only housing

policy researchers, but the broader political

science and policy process scholars on how

housing policy dynamics give insights to theo-

ries of policy adoption. For the housing f‌ield,

this study contributes to the knowledge on

when states are primed to adopt benef‌icial

policy solutions that expand the affordable

housing stock. The housing policy arena is not

emphasized to the same extent in theories of

policy adoption compared to the extensive and

growing research in the f‌ields of education,

welfare, criminal justice, environmental, and

health policy to name a few. This work

advances the policy process literature on diffu-

sion by expanding to a new policy area –

housing affordability. Theoretically, this study

adds to the diffusion literature by examining

not only another redistributive policy area but

one that has gone through a national crisis and

faced a devolution of responsibility from

federal to state governments

1

. This study

188 State and Local Government Review 53(3)