Conclusions from a study on homeless people released last week by University of British Columbia researchers say the public has the wrong idea about the spending habits of homeless people who are given a large amount of unconditional cash.
The study, published in Proceedings of the National Academy of Sciences, notes that the cash transfer worked well, yet public biases persist.
Participants in the U.S. survey of over 1,100 people predicted that recipients of an unconditional $7,500 cash transfer would spend 81% more money on “temptation goods” such as alcohol, drugs and tobacco if they were homeless than if they were not.
UBS researchers actually gave $7,500 each to 50 people who were homeless in Vancouver, Washington, then compared their spending and outcomes over the following year with a control group of 65 homeless people who did not receive any cash.
Cash recipients spent 99 fewer days homeless, increased their savings, and saved society an average of $777 each by spending less time in shelters, researchers said. They did not spend more money on temptation goods than the control group did.
UBC associate professor of psychology Jiaying Zhao said the impact of such biases is detrimental.
“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,” Zhao said.
While the study did not include people with severe levels of substance use, alcohol use or mental health symptoms, most homeless people do not fit these stereotypes anyway, Zhao said. Rather, they are largely invisible, sleeping in cars or on friends’ couches, and do not abuse substances or alcohol.
Researchers were also trying to determine how public perception of giving cash to homeless people could be changed. They concluded that the most effective way to counter stereotypes would be to explain how homeless people actually spend money or emphasize the utility of cash transfers and net savings they bring to society.
Lawmakers in Canada are considering legislation to create a national framework for a guaranteed basic income to cover essential living costs for people in Canada over the age of 17, including temporary workers, permanent residents, and refugee claimants.
Supporters of basic income policies argue that these cash transfers help reduce poverty and give people greater financial stability in tough times, but critics argue that this is too expensive and the money could be mismanaged or discourage people from working.
Zhao’s Behavorial Sustainability Lab now plans to focus on replicating this study with a much larger sample of people in other cities in Canada and the U.S.
