'Can Pay? Won't Pay?' or Economic Principles of 'Affordability'

The term 'afford ability' has been gaining currency in housing policy debates, but neither government nor academic researchers have given much consideration to defining it. This paper considers what meanings have been given to the term affordability in practice and suggests a range of analytically more useful definitions. It argues from economic first principles that it is more logical to use some form of residual income definition than one based on a prescribed ratio of housing costs to income. Most researchers have been using a ratio definition. The paper then uses data from a household survey in the Glasgow Travel-to-Work Area in 1988/89 to examine the incidence of 'unaffordability' of housing costs according to a variety of definitions.