Cash Transfers Reduce Homelessness, Says Vancouver Study

A new study out of Metro Vancouver is making global waves.

It says traditional approaches to addressing homelessness – such as providing emergency services, healthcare, and housing – help prevent more serious forms of homelessness, but fail to address “a core cause.”

And that core cause, according to the authors, is a lack of cold, hard cash.

Published in the Proceedings of the National Academy of Sciences, the study was spearheaded by researchers at the University of British Columbia (UBC) who gave a one-time, unconditional $7,500 cash transfer to 50 homeless individuals in Metro Vancouver and followed them for a year.

The study also followed 65 homeless people who did not receive any cash.

The results show that cash recipients spent fewer days homeless, increased savings, and put more money toward essentials compared to the control group.

It also reported that there was no increase in “temptation spending,” such as alcohol, drugs, and cigarettes, among the cash recipients.

By reducing time spent in shelters, the handout led to a decrease in public spending of $777, per the report.

“Together, this research offers a new approach to address homelessness and provides insights into homelessness reduction policies,” reads the paper.

Expectedly, the paper – whose authors call for increased public support for a cash transfer policy – sparked a whirlwind of controversy and debate, particularly due to the study not including participants with severe substance use, alcohol use, or mental health symptoms.

“Non-addicts not buying booze is hardly a discovery,” wrote one critic in a social media post.

“This study tells me that if you hand a select, curated group of homeless people money, they will probably use it to better their lives,” said another.

Reiterating that the cash transfer did indeed “work,” Dr. Jiaying Zhao, associate professor of psychology at UBC and principal investigator of the study says public 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.”

As mentioned, the study did not include participants with severe levels of substance use or mental health symptoms. Nonetheless, Zhao points out that most homeless people “do not fit these common stereotypes.”

“Rather, they are largely invisible. They sleep in cars or on friend’s couches, and do not abuse substances or alcohol,” the associate professor said.

Canadian lawmakers are considering a bill that would guarantee basic income for people in Canada older than 17. It includes temporary workers, permanent residents, and refugee claimants.

Zhao says she’ll now turn her attention to replicating the study with a larger sample of people, further expanding it to other cities in Canada and the US.