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Canadian Researchers Gave Homeless People $7,500 And It Actually Saved Money

Ryan Ford 9 Oct 2020

Homelessness is a stubborn problem and considering the economic fallout from the global pandemic, it's one that's expected to get worse before it gets better. While there's no one obvious or easy solution to getting people off the streets and into homes, many things have been tried.

One research team in Canada decided to try just giving a group of homeless people a chunk of cash and it went even better than they could have hoped.

Vancouver, British Columbia is a shining jewel of a city in many ways.

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It's a gorgeous city set between the expanse of the Pacific Ocean and the Rocky Mountains with all the modern amenities you'd expect from a world-class city.

However, it also has a significant housing problem and a considerable homeless population to go along with it. As of 2020, the city identified 2,095 homeless residents, 1,548 of whom live in some kind of temporary shelter with no fixed address, and 547 who live on the street.

To try to help lift some out of homelessness, researchers with the University of British Columbia and the Vancouver-based non-profit Foundations for Social Change decided to see how just giving them cash would work.

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For their study, the researchers selected a random group of 115 homeless people between the ages of 19 and 64.

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All had been homeless for at least six months and none reported any serious struggles with addiction, substance use, or mental health issues. Out of those 115, the researchers gave 50 of them $7,500 to do with as they pleased, and the rest were given nothing to act as a control group. The researchers then followed up on all of the participants over the course of a year.

Claire Williams, CEO of Foundations for Social Change, told the CBC that she "had no expectations and really high hopes," for the study but a year after it started, she found that it had turned out "beautifully surprising."

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The study turned the stereotype of homeless people mismanaging their money on its head.

Foundations for Social Change

Those who received the money got themselves into stable housing much faster than those who didn't. For them, this occurred after three months on average, compared to five months for those in the control group.

On average, the participants who received cash spent 52% on food and rent, 15% on things like medication and utilities, and 16% on clothing and transportation. Spending on things like alcohol and cigarettes went down 39%, and 70% of the cash participants reported being food secure after just one month.

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What's more, the cash recipients were able to keep some money in savings.

Foundations for Social Change

"We saw people retain over $1,000 for 12 months, which is remarkable in the Lower Mainland," Williams said. "It challenges stereotypes we have here in the West about how to help people living on the margins."

Indeed, it wasn't just with regards to homeless people that the study shed light on how money might be better managed.

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When all was said and done, giving homeless people free money actually saved the system money.

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The bottom line was that $7,500 proved to be a worthwhile investment as the program more than paid for itself. Just giving that group of 50 homeless people cash saved the shelter system about $8,100 per person over the course of a year, a total of about $405,000.

While the sample size was small for the study, the researchers hope they've at least shown that the concept is worth exploring further.

"The common belief is that the status quo is cheap...in fact, it is incredibly expensive," Williams said.

Check out the full results of the study right here.

h/t: CBC

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