An encampent in Downtown Eastside, in Vancouver, British Columbia, Canada, on April 5, 2023.
Jennifer Gauthier/Reuters
Fifty homeless people in Vancouver were given a one-time, no-strings-attached stipend of Canadian $7,500 (about US $5,500).Researchers found that these people spent 99 fewer days unhoused and increased savings.Initiatives like a universal basic income program in Stockton, California, has shown similar results.
Yet another study shows that poor people didn’t squander their money on drugs and alcohol when given cash assistance.
People experiencing homelessness in Vancouver spent 99 fewer days unhoused and saved more money after they were given a one-time unconditional check, a new study found.
Researchers from the University of British Columbia and the Foundations for Social Change nonprofit, which began the project in 2018, tracked the impacts of an experimental universal basic income program in Vancouver over a year.
In the program, 50 people experiencing homelessness were given a one-time stipend of CAD $7,500 — or about $5,500 in US currency — with no strings attached, while another 65 people received no stipend.
The results of the study, which were published on August 29, 2023, in the Proceedings of the National Academy of Sciences, showed that those who received the stipend spent 99 fewer days in shelters and “55 more days in stable housing.”
The results also contradict the public’s mistrust “in the ability of homeless individuals to manage the cash transfers,” the study said.
With the stipend, people spent more on “durable goods” such as rent, food, and transit, while also generating a net savings of CAD $777 per year by reducing their time in shelters.
In addition, the stipend recipients did not spend more money on “temptation goods,” such as alcohol, drugs, and cigarettes, than the group that did not receive the stiped, the researchers found, although they note that spending was measured through “self-reports.”
A previous report on the same program claimed spending on those items decreased by 39%, but researchers told Motherboard that the figure was incorrect because it was based on incomplete data.
The researchers acknowledged some limitations in the results: the program did not include those “who are chronically homeless or experience higher severity of substance use, alcohol use, or psychiatric symptom.”
The study claimed that certain participants were filtered out to “reduce any potential risks of harm (e.g. overdose) from the cash transfer.”
“Regardless of these limitations, this study provides proof of concept for the provision of cash as a new tool to reduce homelessness,” the study said.
Similar initiatives involving cash stipends or universal basic incomes have also shown the profound impact of investing in those experiencing poverty.
When the US government spent $6 trillion at the height of the COVID-19 pandemic, ramping up social safety programs and providing stimulus checks, the poverty rate in America fell to 7.7% in 2021.
That translated to about 20 million fewer Americans in poverty than in 2018.
One northern California city, Stockton, embarked on a similar universal basic income program in 2019, providing 125 low-income residents with debit cards loaded with $500 each month. There were no spending conditions attached to the income.
Independent researchers found that the program reduced unemployment by 4% during the program’s first year, helped pay off debts, and improved the overall mental well-being of the residents.
“I had panic attacks and anxiety,” one participant said in the report. “I was at the point where I had to take a pill for it, and I haven’t even touched them in a while.”
The recipients’ spending was also tracked.
Researchers found that a majority of the basic income was spent on food, utilities, auto costs, and trips to Walmart or dollar stores.
Less than 1% of the money went toward alcohol or tobacco.