Homeless people given a large amount of money don't spend frivolously despite public perceptions to the contrary, a new B.C. study has found.
The study, published in the Proceedings of the National Academy of Sciences Tuesday, gave a one-time unconditional cash transfer of $7,500 to 50 people experiencing homelessness in Metro Vancouver. The University of British Columbia researchers then compared their spending and outcomes over the following year with a control group of 65 homeless people who did not receive any cash.
In a parallel U.S. survey, the researchers found more than 1,100 people predicted recipients of such a cash transfer would spend 81 per cent more on temptations — such as alcohol, drugs and tobacco — if they were homeless than if they were housed.
Contrary to those predictions, the results of the B.C. study showed cash transfers actually helped reduce homelessness. Recipients spent an average of 99 fewer days homeless, increased their savings, and saved society an average of $777 each by spending less time in shelters.
Jiaying Zhao, a researcher in UBC’s Department of Psychology who oversaw the study, said despite the group's findings, people’s biases persist.
“The impact of these biases is detrimental,” said Zhao. “When people received the cash transfer, they actually spent it on things that you or I would spend it on — housing, clothing, food, transit — and not on drugs and alcohol.”
Public bias in need of correction
One way to counter negative public bias toward unhoused people is to explain how they actually spend money, according to the researchers. Another option would be to emphasize the utility of cash transfers and the net savings they bring to society.
“We know that people tend to dehumanize those experiencing homelessness. What’s surprising to me was how large this bias was,” Zhao said.
“Homelessness is such a big problem in North America right now. It’s extremely costly in terms of GDP as well as human lives, and the current approaches to homelessness reduction are not working. That’s why I think it’s important to explore a different approach.”
Rowan Burdge, provincial director of the B.C. Poverty Reduction Coalition, said research has repeatedly shown people experiencing homelessness and poverty make excellent decisions for themselves and their families when allowed to do so.
“Many people are unhoused simply because they cannot afford housing — giving people cash transfers creates the conditions to access this fundamental human right,” said Burdge, who was not involved in the study.
The $7,500 given to the participants in the study was equal to the annual income assistance in B.C. in 2016, and accounted for almost 60 per cent of the annual incomes of those involved.
Burdge said the UBC study upholds why raising the rates on income and disability assistance programs and providing people with basic economic security are effective and safe policy tools for reducing poverty and homelessness.
“This is why the B.C. Poverty Reduction Coalition advocates for the income and disability assistance rates to go up to the poverty line, at the very least. Stigmatizing poverty does not solve anything, but giving people resources can,” she said.
Large population left out in the cold
Across the world, there are an estimated 150 million people who experience homelessness — a group whose life expectancy is up to 12 per cent less than the general public. Many of those people do not include individuals with severe levels of substance use, alcohol use or mental health symptoms,
Zhao said most homeless people do not fit these common stereotypes.
“Rather, they are largely invisible,” Zhao said. “They sleep in cars or on friends’ couches, and do not abuse substances or alcohol.”
Zhao said his team will now turn its attention to replicating the study with larger samples in other cities in Canada and the U.S.