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New Research Shows the Major Benefits of Giving Money to People Experiencing Homelessness

People arrive at a temporary homeless shelter with painted social-distancing boxes in a parking lot at Cashman Center on March 30, 2020 in Las Vegas, Nevada.
People arrive at a temporary homeless shelter with painted social-distancing boxes in a parking lot at Cashman Center on March 30, 2020 in Las Vegas, Nevada.
Photo: Ethan Miller (Getty Images)

New research from Canada is the latest to show that simply giving money to people in need helps them tremendously. The year-long study in British Columbia found that people who were given a $7,500 cash payment (roughly $5,700 USD) spent fewer nights at a shelter, experienced fewer days without enough food, and secured stable housing quicker than those who weren’t given anything more than a workshop. They also saved money and spent less on things like alcohol, cigarettes, or other drugs.

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The results come from a report released this week by the New Leaf Project, founded by the charitable organization Foundations for Social Change and run with the help of the University of British Columbia. The project is billed as the “world’s first direct cash transfer program to empower people to move beyond homelessness in Canada.”

Beginning in spring 2018, the project recruited 115 individuals who had recently experienced homelessness (an average six months spent homeless). Of these, 50 people received the cash payment as well as training from a workshop on goal setting and personal planning; half were also offered additional life skills coaching. The no-cash group was split into two, with one group receiving the workshop and coaching and the other none. All participants, however, were given access to a savings account if they didn’t have one already. They were also all given questionnaires to fill out one, three, six and 12 months later, and completed an open-ended interview six and 12 months in.

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In the first month alone, according to the report, people given the cash were able to cut their days living unhoused from 77 percent to 49 percent, compared to their recent baseline; while those without the payment actually increased their days of homelessness in the first month. On average, it took about three months for cash recipients to find stable housing, compared to the average 5 months it took everyone else.

Moreover, the cash group cut down their level of food insecurity—defined as having trouble eating three meals a day–from 70% to 33% in the first month, and were able to avoid food insecurity more than the control group throughout the year. On average, the group also saved $1,000 of the original payment by the end of the 12 month period, and there was an 39% decrease in the reported amount of money spent on alcohol, cigarettes, and other drugs in the cash group as well.

“That sort of decrease is incredible, and it defies our stereotypes,” Jiaying Zhao, an associate professor of psychology at the University of British Columbia and lead researcher of the project, said over the phone. “Obviously, there’s a common intuition that if you could give homeless people cash, they’re going to squander it on drugs. But that was not the case here.”

Many of the participants also expressed a sense of relief and greater control over their lives and the lives of their children (one-third of volunteers had children).

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“It helped me solve a lot of issues, for instance (being) homeless that was one of the major things,” one anonymous recipient said, according to the report. “Now I have a place, I can focus on getting to school, getting that career, focus on my son, right? Those are the most important things.”

The findings seem to debunk many misconceptions about the utility of cash aid to those living with homelessness, such as money largely being spent on luxury items or drugs of abuse. And according to the project’s calculations, they’re likely saving everyone money. By their estimates, the cash group saved the local shelter system about $8,100 per person, amounting to more than $405,000 throughout the year (that’s Canadian dollars in both cases).

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The study does have its caveats. For one, the data shown here is preliminary and based on a small sample size of volunteers, though Zhao said the results should be in a peer reviewed journal sometime next year. The project was also selective, since only volunteers who recently became unhoused and were deemed to be at low risk for drug abuse or mental illness were eligible. However, Zhao noted these volunteers are more representative of the typical person living with homelessness than many would assume.

“People might think that if you’re homeless, that means you have severe substance use issues, you have severe mental health issues. But that’s not true. Only 20% to 30% of homeless people have severe substance use or mental health issues,” Zhao said, referencing estimates that have been documented in the literature. “So I think this approach could be extended to a lot of other people living with homelessness, not just a tiny subset.”

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Zhao didn’t discount the idea that similar programs could also help those who are living with these issues or are chronically homeless; the data just isn’t available yet. Indeed, though other studies have shown that direct cash aid can help those living in poverty beyond typical welfare or existing assistance programs, those studies have largely been conducted in developing countries. Zhao said as far as she knew, this is the first such evidence to show that direct cash aid can reduce homelessness among people living in places like Canada or the U.S.

“I think this is showing the impact of a highly effective and also cost effective approach to reduce homelessness in developed countries,” she said.

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Other research has shown that similarly novel interventions such as free or heavily subsidized housing can help those living with chronic homelessness, while cutting down on medical and other public service costs, like shelters.

Solving the homelessness crisis in places like the U.S.—with an estimated 500,000 Americans sleeping on the streets on any given day—may not be as simple as handing people some cash. But compared to the current state of things, it surely seems to be one huge practical way to help the most vulnerable among us.

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The people behind the New Leaf Project next plan to expand their work to cover an additional 200 people living with homelessness in the area of British Columbia known as the Lower Mainland, and they also hope to expand their model to other cities in North America.

Science writer at Gizmodo and pug aficionado elsewhere

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DISCUSSION

Anyone who says money can’t buy happiness is incredibly wrong in most situations. Nearly 100% of my problems could be solved by throwing money at it.