Researchers Gave $5,700 to Homeless People. Misunderstanding Ensued.

This article was originally published on RealClearPolicy.com on December 2, 2020.

“Researchers gave thousands of dollars to homeless people. The results defied stereotypes.” “Cash transfers help homeless to find stable housing and jobs.” “Trailblazing study gave homeless $7,500 [CAD] – and it worked.” These recent headlines and articles about a new Canadian study are a cringeworthy — and destructive — distortion of reality.

At first glance, this unbridled optimism seems to be a reasonable synopsis of the study. Canadian researchers did give $5,700 USD to 50 homeless people and most of the recipients used the cash responsibly. Nearly every news outlet that reported on the New Leaf Project covered the study as proof that we should give more money directly to homeless people; they said we should give cash through charity, government programs, and drop it into Styrofoam cups. Unfortunately, this is a tragic misreading of the facts.

The root problem is that the study participants do not resemble the average homeless person on a street corner. Project New Leaf’s website is very forthright: “Project participants were carefully screened for program eligibility to ensure the highest likelihood of success.” This means they selected participants who were adults, newly homeless, citizens or legal residents, and who had low risk of mental health challenges and substance abuse.

The magnitude of those screening criteria is lost on those unfamiliar with homelessness. It is comparable to a survey finding that “a majority of registered Democrats voted for Donald Trump in 2020” — but the survey only allowed responses from Democrats who voted for Trump in 2016. So how representative were these study participants of the homeless population?

On a single night in 2019, The Department of Housing and Urban Development finds that there were around 568,000 homeless people in the US. Of these, roughly 100k were chronically homeless, and would have been excluded from the study. Add to that exclusion a segment of the population classified as “episodically” homeless. Those approximately 57,000 people are homeless occasionally, but not quite chronically.

Of the remaining “transitional” homeless, a factsheet from the US Substance Abuse and Mental Health Services Administration (SAMHSA) informs us that around 30% of them abuse addictive substances (80% of the chronically homeless do). SAMHSA also estimates that around 5% of the transitionally homeless have mental health issues (these issues have affected 60% of the chronically homeless).

The actual screening criteria may have been more specific than that, since the New Leaf Project reports that they screened out any who were at risk for those disorders. Depending on how they defined “risk of mental health challenges and substance abuse,” the New Leaf Project screened out between 55% and 90% of all homeless people from participating in their study.

The disconnect between findings and perception gets worse. A typical person associates homelessness with panhandling. However, panhandlers are only a fraction of the homeless and are predominately the chronically homeless with addictions that this study did not examine. For example, a 2019 survey of Orlando’s panhandlers found that 92% of them were substance abusers. Most freely admitted to using their “earnings” on drugs and alcohol. An earlier study in Toronto found nearly identical results; 87% reported drug and alcohol use and the median self-reported spending on drugs, alcohol, and tobacco was greater than their spending on food.

The New Leaf Project showed potential for giving cash to a small, stable, and high-capacity tier of the homeless. There is nothing wrong with the fact that they only tested a solution on a subset of the homeless population — situations and solutions vary from person to person. Cash transfers may work for someone in a temporary crisis and may harm someone with a chronic addiction, destructive habits, or a mental disorder. Effective charity should offer different solutions for different situations.

However, that means that the findings of the New Leaf Project offer a policy option for a tiny fraction of the homeless. Thus, the study has essentially no application to the people you see on the street corner with a cardboard sign. Nine out of ten of those people will continue in their addictions, until passersby stop enabling them and start connecting them with the real help they need.