Many poor people will not fix up their homes even if the government gives them money to do it, a Rand Corp. researcher told the Senate Budget Committee recently. Instead, they prefer to use the federal funds to move to larger quarters, researcher Ira Lowry said.

Lowry, who has made a study of the Department of Housing and Urban Development's experimental housing allowance program, testified last week at a hearing on low-income housing. The committee was seeking among other things, to determine whether subsidies earmarked for specific purposes are more cost effective than unrestricted welfare grants.

The housing allowance program is designed to help low-income people liveuncrowded, decent, safe and sanitary housing. The recipients can either move to units that meet housing code standards or improve their present homes.

Lowry, who has monitored these programs in Green Bay, Wis., and South Bend, Ind., stated, "Low-income families seem to appreciate space, but are either less aware of or less concerned about dangerous wiring, poorly vented space heaters, unsafe stairs, inadequate light or ventilation, leaky plumbing, etc.

"We think that few of the housing improvements so far achieved by the program would have resulted from unrestricted income supplements of the same amounts as the housing allowance payments," he added.

At the same hearing, Jerry J. Fitts, HUD assistant secretary for policy development and research, called earmarked housing assistance "an important complement to a direct cash income security program" (welfare), but said the department was not yet ready to make any recommendations to the Congress or the President. Mr. Carter has ordered an evaluation of all forms of cash sibsidies to implement welfare reform.

The Rand Corp. study of two pilot programs in South Bend and Green Bay concluded that housing assistance helped reduce low-income families' housing costs so that only the poorest now spend more than a fourth of their unsubsidized income for housing. Prior to that, more than half of them were paying more than 30 per cent of their income - and some as high as 50 per cent - for shelter, a level HUD considers excessive.

At the same time, the study concluded that the program has had little effect thus far on improving the conditions of dwellings and neighborhoods. Neither has it had any dramatic effect on the amount of mortgage prices, or residential segregation.

In Green Bay and South Bend, where owners as well as renters were included in the project, most of the participants stayed in their original residences and arranged for the necessary repairs to make their dwellings conform to housing codes. In three years, the 10,000 participating households repaired 4,000 buildings, while 1500 other enrollees chose to move to more acceptable housing.

In most cases the repairs turned out to be simple and inexpensive, often done by the owner or tenant and landlord together. Extensive rehabilitation of gutted shells is rarely carried out by anyone on government subsidy, Lowry said.

But in other HUD experiments involving only renters, 45 per cent chose to move, 43 per cent stayed without doing any fixing up, and only 12 per cent rehabilitated their homes, he said.

The experimental program was designed to help HUD and Congress decide whether direct cash assistance to low-income households is feasible and desirable nationwide. Based on inspections and extrapolated from the two pilot projects, Lowry estimated that between one half and two thirds of the nation's poor live in overcrowded or substandard housing, more than indicated in the census which has less stringent criteria for determining what housing is substandard.

HUD's 1975 annual housing survey estimated that 3.6 million households live in overcrowded conditions and 4 million live in homes with serious defects. Lowry believes the latter figure is low.

Yet, the level of participation in housing assiatance projects, once projected at 75 per cent or more, has been less that 50 per cent. Fewer than half of those in Green Bay making $3,800 a year in (adjusted gross.) income, the $3,050 in South Bend joined. And of those, 20 per cent never managed to qualify for payments; that is, they never fixed up their houses or moved to acceptanle quarters.

Taking the experiment in 12 communities as a whole, HUD drew these conclusions among others:

About one third of all households living in the substandard units at the time of enrollment in the allowance program have failed to acquire adequate housing and have thus been denied assistance.

For those households able to improve their original units to qualify for allowance payments, the amount of upgrading has so far been minimal.