Today, a majority of the world’s population lives in cities, and the global urban population is on track to double by 2050.
In much of the developing world, the first residence for a migrant in the city is in the slum. Life here is often fraught with significant health risks. The illegal nature of housing makes slum dwellers susceptible to extortion by slumlords on the one hand and government officers on the other. The fact that slums are often located on prime real estate compounds the problem: Governments lose significant revenues they could otherwise redistribute to the poor.
Reflecting these realities, the agenda of “Make cities inclusive, safe, resilient and sustainable”, which was enshrined in the UN’s Sustainable Development Goal 11, was complemented in the October 2016 Habitat III summit in Quito, Ecuador by a “New Urban Agenda” of giving slum dwellers upgraded housing with basic services by 2030. How to accomplish such ambitious goals? A common approach is to build higher quality, affordable housing for the poor on the city’s periphery. This is a central pillar of the Indian government’s housing initiative, the Pradhan Mantri Awas Yojana (PMAY), which aims to achieve “Housing for all by 2022”.
But a report in May last year put the vacancy in urban housing built under the PMAY at 23 per cent. Why are slum dwellers and new urban migrants rejecting this housing? One possibility is the lack of affordable housing finance. In his New Year Eve address to the nation, the prime minister announced two new interest-subsidy schemes under the PMAY; some anticipate further breaks in the upcoming budget. But reality is more complex. In my research with Sharon Barnhardt of Flame University and Erica Field of Duke University, we tracked female beedi workers drawn from Ahmedabad’s slums who had entered a lottery to receive improved housing at far below market cost, 12 km from the city centre. In 2007, 14 years after the lottery winners received their houses, we conducted detailed surveys with lottery participants.
Winning the lottery represented a financial windfall and a chance for home ownership in cleaner, safer environs. The monthly mortgage payments, which were guaranteed for 20 years, were roughly half the monthly rent that the lottery participants paid for their slum dwellings. Yet, 34 per cent of the winners chose not to move to the colony. A further 32 per cent returned to the slums within 10 years.
Poor people were turning down an apparent golden opportunity, and it wasn’t because of high interest rates. What’s more, this group represented a best-case scenario, compared to typical PMAY participants: Beedi work is done at home, so one of the family’s earners didn’t face a long commute. In another housing complex in Ahmedabad — where houses were also assigned by lottery — we found only 46 per cent of the winners were living in the units two and a half years after winning the lottery.
Research pointed to the importance of social networks in the housing decisions of the participants. Relative to lottery losers, the winners lived farther from their adult children and saw them less often. They reported feeling isolated, and were six to nine percentage points less likely to know someone they could rely on for borrowing needs. Lottery losers, but not winners, reported receiving money through their social networks during hard times.
Slum dwellers give each other material and psychological support along with informal insurance in ways that, for now, the state cannot provide. Low take-up of PMAY housing suggests that the programme, in its current form, risks some of the same failures as the one we studied. Studies of “Moving to Opportunity” — a programme in the US in the 1990s that gave lottery winners vouchers to move from high- to low-poverty neighbourhoods — provide another useful benchmark. These studies found no financial or employment benefits for participants or their adult children. In our study, we found that lottery winners were not better off on a variety of socio-economic measures, including income, labour force participation, household health outcomes.
It may be that such benefits only materialise among those relocated at an early age. A new study on “Moving to Opportunities” uses tax data to show that while those who moved in adolescence showed negative effects, those who moved as children were more likely to attend university and less likely to end up a single parent.
This suggests a need to be more aware of what individuals stand to gain or lose through relocation, and how they will behave, given those tradeoffs. Policies can be designed and tested to allow people to preserve their social networks even as they are relocated. One approach is to move entire communities to new developments. Another is to focus less on relocation and more on giving slum dwellers rights,
investing in the development of slums.
However, such approaches will require greater upfront investment by the government, not in interest-rate subsidies, but in collecting data on the preferences of poor migrants and targetting a smart programme at those who need and want it. The broad strokes the government is making — subsidies directed imprecisely towards the poor and even middle-income recipients — may well lead to more unoccupied units in undesirable locales.
In some cases, local authorities have demolished slums and provided residents with rental subsidies until PMAY housing can be built.
Governments should be aware these are not just rickety structures falling under bulldozers, but also strong and deeply beneficial social networks.