Cash can be Effective for Helping the Homeless
Keeping people on the streets costs between 45-180K (accounting for inflation) because they, “randomly ricochet through very expensive services” such as hospitals, addiction treatment services, police arrests, jail time, and court time. Alternatively, giving them basic income enables them to meet their immediate needs and empowers them to chart paths to housing stability.
The Denver Basic Income Project has been providing over 500 homeless participants with basic income since the beginning of 2023. Here are the Preliminary results using the first 6 months of data:
- No one (out of 12 total) receiving $1,000/mo was still sleeping outside after 6 months
- Full-time employment increased
- Fewer visits to the emergency room
- Fewer nights spent in jail
- Reduced feelings of distress and anxiety
- Feel safer and more welcome where they sleep
- Greater sense of hope
New Leaf Project: A basic income experiment run by Foundations for Social Change helping homeless individuals in Canada, the New Leaf Project gave over 100 recently homeless individuals $7,500 of unconditional cash.
- The experiment resulted in a 39% reduction in spending on drugs, alcohol, and cigarettes.
- The cost savings to the shelter system paid off the cost of the cash transfer after just 12 months. We should also note that corporal and medical costs are far higher in the US than in Canada, so transfers in the US would pay for themselves far faster.
Experimental Data Shows Impressive Housing Outcomes
| Homeless Cash Assistance Pilots | Year | Cash / Person | Participants | Housing Success | Notes |
|---|---|---|---|---|---|
| London Rough Sleepers | 2009 | £3,000 | 13 | 69% | Personalized Budget; Helped Worst Case Population: 4-45 Years Homeless |
| New Leaf Project | 2018 | $6,000 | 115 | 75% | Used Single Bulk Transfers, RTC Study, Drug/alcohol spending went down 39% |
| Miracle Money | 2021 | $3,000 | 9 | 66% | Housing was not a stated goal, It was achieved nonetheless |
| Denver Basic Income Project | 2023-2024 | $12,000 | 520 | 80% | Most comprehensive RTC study to date, Broad Elegibility, 6 Months Results |
| Trust Youth Initiative | In-Progress | $30,000 | ~35 | ? | Flexible $1,250/month for 2 years |
| Our Maximum Impact Pilot | 2024 | $1,200 | 6 | 66% | Randomized Homeless Population |
Findings From the New Leaf Project
Fact
Cash transfer recipients prioritized and increased spending on recurring staples like housing/rent, food, transportation, and utility bills.
Cash transfer recipients prioritized and increased spending on recurring staples like housing/rent, food, transportation, and utility bills.
Data
On average, cash recipients spent 52% of their budget on food and rent, 15% on “other” items such as medications and bills, and 16% on clothes and transportation.
Why it matters
Cash transfers provided choice and enabled people to buy more goods, helping them meet their basic needs. Counter to some stereotypes, participants spent their money on essential items.
The Worst-Case Case Study:
Simon From London’s Experiment
Simon was sleeping rough (homeless) for 18 years. He moved into accommodation ten months ago after engaging with the personalized budget pilot. He has been on a methadone script for four months, engaging with drug treatment after 20 years of heroin use.
The script is great. I don’t know what to do with myself. I have breakfast, go to the clinic to get my script, then watch telly. I think: what can I do today? – instead of going out begging for money for gear. I’m concentrating on getting it together. I’m trying to go for rehab and detox. I just want to get myself steady first.
For some reason, for the first time in my life, everything just clicked, it feels like now I can do something. Now I’m thinking of going back home. I’ve got two kids. Hopefully by Christmas I’ll get it together. I want to get myself sorted first.
I’m happy as Larry. I never thought about going back out. [The quality of my life has improved] a lot. I’m starting to look after myself, wash and shave. I’ve got a better life, I’m starting to do something with my life.
Simon
“The most efficient way to spend money on the homeless might be to give it to them”
– The Economist
Basic income can end the homelessness crisis.
The federal government spends over $51 Billion a year to combat homelessness and there are 653,104 homeless Americans as of 2023. That’s $78,073 per homeless person. The result? Homelessness increased by over 12% from 2021 to 2022.
Our research partners have demonstrated that providing unconditional basic income as small as $200 per month would enable most homeless people to regain stability within 6 months. This figure is an order of magnitude lower than conventional housing programs and two orders of magnitude lower than shouldering the medical, law enforcement, and property devaluation costs associated with homelessness.
Homelessness in Arizona is not only expensive, it is extremely deadly. 1,286 people suffering from homelessness died in Maricopa County alone in 2022, and given 2022’s Point-in-Time Count of 9,026 homeless people, Maricopa County had an annual mortality rate well above 10%.
14.2%
Deaths / Population = Death rate
Arizona’s Homeless Death Rate
1,286/9,026 = 14.2%
Our Vision for Ending Homelessness
With $20 Million we could end the homelessness crisis in Pima County, building a model that could be easily scaled up to work in Maricopa County. With under $150 Million, the amount that Arizona’s government put into a housing trust fund dedicated to reducing homelessness, we could temporarily end the homelessness crisis across Arizona.
Ultimately, implementing Universal Basic Income is the best path to permanently end homelessness and build a brighter future for all.