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‘The public has the wrong idea’: $7,500 in cash given to 50 homeless in basic-income study

The public has the wrong idea about what people experiencing homelessness would do after being given a large sum of money.

That according to a recent study conducted by a team at the Univerity of British Columbia’s (UBC) lead by Doctor Jiaying Zhao, an associate professor.

The study gave an unconditional $7,500 cash transfer to 50 homeless people in Vancouver and compared their spending to a control group of 65 people who received nothing, over the course of a year.

It found that recipients spent 99 fewer days homeless, increased their savings, and saved society an average of $777 each by spending less time in shelters. They did not spend more money on temptation goods – like drugs or alcohol – than the control group.

That’s in contrast to a recent US survey of more than 1,100 people that predicted that people who received $7,500 would spend 81 per cent more on temptation goods if they were homeless than if they were not.

A key factor is that the study did not include those dealing with severe levels of substance use, alcohol use or mental health symptoms. Zhao says that most homeless people do not it that common stereotypes and they can be invisible to the public eye, sleeping in cars or on friends’ couches. Those do not abuse substances or alcohol.

For that archetype, she says the cash transfer worked but public biases are still around.

“The impact of these biases is detrimental,” she says. “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.”

She says that people tend to dehumanize those experiencing homelessness, but she was surprised how large that bias was.

“Homelessness is such a big problem in North America right now,” says Zhao. “It’s extremely costly in terms of GDP as well as human lives, and the current approaches to homelessness reduction are not working. That’s why I think it’s important to explore a different approach.”

Her work mentions basic income policies as one of those approaches.

“Supporters of basic income policies argue that cash transfers help reduce poverty and give people more financial stability during tough times, but critics say they’re too expensive, and the money could be misused or discourage people from working,” reads a press release on the study’s results.

Zhao’s behavioural sustainability lab is now working on replicating the study with larger sample sizes in other North American cities, to see if it finds similar results.

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