Interesting, but since no money is changing hands I wonder if there are exceptions. I mean I can see some people preferring people sleep on the streets than see a faith-based test allowed to exist, but surely those people's irrationality doesn't prevail?
I mean, you could ask the same question for a race-based test, and come to the same basic conclusion: that it is "irrational" to prevent it.
I think you have to leave look a little deeper to reach a correct conclusion. Namely: I don't think significantly more free housing would in fact be offered without these regulations. So it would not be rational to allow this type of discrimination. The regulation in essence provides an anchor "price" for free housing, while not distorting the "market" very much. This is a good type of regulation to have.
