Six months later, most of the beneficiaries of the project were better off
It doesn’t necessarily buy happiness, but both personal experience and scientific research show that when people have more money, they are more likely to lead happy lives. That’s the premise of a social experiment in Denver, where over the past few months, several hundred of the city’s most vulnerable people have been receiving cash with no strings attached.
The results so far are as follows: People who slept rough at the beginning of the experiment, then – with more money in their pockets – feel safer, have better mental health and enjoy access to more stable and friendly living conditions.
Mark Donovan, founder and executive director of the Denver-based Basic Income Project, told Insider he was “very encouraged” by the results.
“Many participants reported using the money to pay off debt, fix their car, secure a home, and enroll in a course. These are all avenues that can ultimately lift participants out of poverty and allow them to to be less dependent on welfare programs,” he says.
Donovan founded the Denver Basic Income Project in 2021. He’s an entrepreneur who made his money from Wooden Ships, a clothing company specializing in women’s sweaters, and an investment in Tesla, which has soared during the pandemic. In 2022, he used some of that money, plus a $2 million contribution from the city, and began distributing money to other people.
Commentary on homelessness often focuses on mental health and addiction, which are seen as major factors in the sharp increase in the number of people sleeping rough. But as the Pew Charitable Trust noted in a recent analysis, research “consistently finds that homelessness in a given area is determined by the cost of housing” (ie, rent, not time).
Six months later, most of those who received project money were better off—significantly better off, according to researchers at the University of Denver’s Center for the Study of Housing and Homelessness.
How the Universal Basic Income plan works in Denver
As of October last year, more than 800 people were enrolled in the basic income plan, but not everyone receives the same stipend. There are three groups – one gets $1,000 a month for a year; the other receives $6,500 upfront and $500 monthly thereafter; and a third gets only $50 a month.
While cautioning that this is only an interim report of a year-long study, the researchers nevertheless found stark and encouraging changes in the material well-being of the participants. Those who received $500 or more per month were the most successful. At the beginning, less than 10% of them lived in their own house or apartment, while after six months more than a third had their own home.
Guaranteed Income has also dramatically reduced visible homelessness. When the initiative started, about 6 percent of people in the $1,000-a-month group were sleeping outside, and six months later that number had dropped to zero. The group that received a large lump sum also saw a drop from 10% sleeping outside to 3%. Even those who received as little as $50 moved into a home, with the rate dropping from 8% to 4%.
In the $1,000-a-month group, 34% of participants now live in their own house or apartment, compared to just 8% half a year earlier. For all groups, the number of people sleeping in shelters more than halved, and all reported an increased sense of safety in their current place of residence. Overall mental health also improved, although the $50 group reported slightly more stress and anxiety than before — and slightly less hope.
Other cities are also implementing the experiment
The fact that material benefits were seen among all groups suggests that at least some of the improvements may be due to something other than money, such as increased access to other services during the study period (the researchers make no assumptions). Additionally, the study relied on participants self-reporting their situation in exchange for payments of up to USD 30.
But the results match the experience of other cities.
In San Francisco, a study of 14 people receiving $500 a month found that two-thirds of those who were homeless at the beginning found permanent housing six months later. Smaller cities, such as Santa Fe, have also experimented with cash payments, as have rural areas, including upstate New York. Philadelphia is even expanding the concept to other vulnerable groups, including pregnant people.
Outside the United States, other countries are also finding that the method of direct cash assistance is proving to be a more effective means of dealing with some social problems than policing or the patronage of more traditional aid programs where aid is tied to conditions.
Vancouver, Canada recently awarded about $5,600 to a group of more than a hundred people suffering from poverty.
“Housing is improved, homelessness is reduced, spending and savings are increased over time, and it’s a net saving for the government and taxpayers,” Jiaying Zhao, an associate professor of psychology at the University of British Columbia, told The Guardian.
Source: Business Insider
Illustrative Photo by Aidan Roof: https://www.pexels.com/photo/man-in-black-crew-neck-shirt-wearing-gray-hat-4071362/
