The answer will surprise you.
What would you expect to happen if you gave a homeless person thousands of dollars with no strings attached?
Would you expect them to blow it all on booze and drugs? Cigarettes? Gambling? Another form of addiction?
A pilot project conducted in Vancouver, Canada set out to answer this very question.
The researchers selected 115 participants who had been homeless for at least 6 months and had no major substance use or mental health issues. The participants ranged in age from 19 to 64.
Of the 115 participants, 50 were randomly selected to receive a cash payment of 7,500 CA$ (5,700 US$). The remaining participants became the control group. The researchers then checked up on all participants over the next year.
What were the results?
According to the CEO of Foundations for Social Change (the charitable organization that led this study), what the researchers found was “beautifully surprising.”
Indeed, the money was well managed over the 12-month study period. On average, participants retained more than $1,000, which is surprising given the high cost of living in the area. Participants spent 52% of their money on food and shelter, 15% on other items like medication and bills, and 16% on clothing and transportation.
Importantly, spending on goods like alcohol, tobacco, and drugs decreased by 39% in the group that was given the money.
Compared to the control group that received no money, the cash recipients had greater food security and spent less total days homeless. Each cash recipient saved the shelter system $8,172 compared to the non-cash recipients.
Incredibly, this means that giving these people $7,500 paid for itself and then some.
The Foundations for Social Change is planning to run an expanded second project, aiming to provide 200 people with cash payments instead of 50. And, they’re going to increase the cash payment to $8,500 to account for the increase in BC’s income assistance rate.
This is called an unconditional cash transfer, also known as direct giving. It’s a new model for charities — providing people with cash and leaving it up to them to determine how best to use it. GiveDirectly, an American non-profit headquartered in New York, has adopted this model for sending money to East Africa.
What do you think of giving homeless people money with no strings attached?
Do the outcomes of the pilot study in Canada contradict your preconceptions of the homeless?
For me, this has been a reminder that anyone’s luck can change in an instant. I am fortunate to have grown up in a middle-class family with loving parents who never struggled to give me the support I needed. They were even there for me in adulthood when I went through a divorce.
What if I didn’t have those supports? What if, through no fault of my own, I had grown up under different, less forgiving circumstances? Could I, too, have fallen into a vicious cycle of homelessness?
And what then? Would no one have trusted me to lift myself out of poverty?
When it comes to our intuitions and assumptions, sometimes we need to admit that we’re wrong. I hope you won’t forget what you’ve read here. I won’t.
Thanks for reading!