Skip navigation

Cash up front: Can no-strings payments help solve homelessness?

What happens if you give homeless people a big cash payment, no strings attached? Dr Jiaying Zhao at the University of British Columbia shares the surprising results of her world-first study… 

What kind of research do you do, JZ? 

I’m an Associate Professor in psychology and sustainability. My work fuses on behaviour change – I develop solutions to address sustainability challenges around poverty and climate change.  

What does poverty do to the human brain? 

When we’re in poverty, we can’t think as well. When there’s a shortage of resources – calories, money, social resources – our brain functions at a lower level. Essentially, you’re in fire-fighting mode. There’s no space to think about other things. 

In a recent study, you gave homeless people in Vancouver a lump sum of $7500 ($8650 AUD). Who took part? And what was the aim? 

We wanted to know whether a one-time cash transfer can help people experiencing homelessness. Fifty participants got the cash, and 65 control participants didn’t. Our interviewers followed the people for a year. 

The participants were all staying in emergency shelters. They had been homeless around six months. About one-third had a job, and about half had dependents.  

This was the first study of its kind in the world. The money was unconditional – people could spend on whatever they wanted. For equity reasons, at the end of the study, we rescreened the control participants and gave them the same cash transfer. 

And how did people react when they first heard about the money?  

The overwhelming response was, “This can’t be real. It must be a scam.”  People didn’t believe us until they saw the transfer go into their account. Then they were in shock!  

What did you discover? How did the cash payment affect people’s lives?  

I didn’t think it would reduce homelessness. But I was blown away: for the people who received the cash, homelessness was reduced by 99 days on average. Most moved into stable housing: 74 per cent went into private rentals, and 17 percent went into single-room occupancy housing (SROs).  

People spent the money on rent, food, transit, and durable goods like furniture. Some people got a used car, so they could get their children to school, or commute to work. Some moved away to reunite with their family. So it was life changing. 

Two people voluntarily gave all the money away to their family or friends. Good for them, that’s their decision. They chose to stay in the smaller shelters which were pretty decent, like a detached home, with five or six roommates. Nobody chose to keep living in the large shelters with hundreds of beds. 

The cost savings were another important finding. Every cash recipient generated a net savings of $777 Canadian over one year. So it saved the government money.  

Did you find any surprising results – did the study bust any myths? 

There was no increased spending on alcohol, drugs, or cigarettes. But there are some pervasive stereotypes around that – the idea that if you give homeless people money, that’s what they’ll spend it on. But that’s not what happened.  

For cash recipients, substance use severity declined over one year. Once they were in stable housing, they no longer had to use substances. So that was one big myth busted. 

People assume that if you’re homeless, it’s your fault: you must have abused substances, or done something wrong, or it’s due to psychiatric problems. That’s not true. When we asked people why they became homeless, they overwhelmingly said, “Because I couldn’t pay rent.” It was due to financial constraints. 

What did you expect to find?

We thought subjective wellbeing and cognitive function might improve over one year. But that didn’t happen. Even with the cash transfer, people were still poor. And life was chaotic afterwards – they had to move into new housing and establish their lives in a new environment. 

What are some broader lessons from your study findings? 

We need to provide more income for marginalised people. Canada’s homeless population is growing every year. The current approaches are not working. We need to try something different. 

I’ve also been working with the Canadian government on the new Guaranteed Livable Basic Income Bill. I’m gathering evidence about the effects of basic incomes. Our study provides an argument for that. 

What inspires you to do this work? 

There are professional reasons and personal reasons. Professionally, it feels wrong to have poverty and homelessness in rich countries like Canada and the US. 

Personally, I grew up in poverty, in China. And after I got my PhD at Princeton, I was homeless for three months. My student status expired, the Canadian consulate was on strike, so I had nowhere to go. I was stuck in limbo. 

That was really awful. I had to couch surf for three months at friends’ places. So I’ve had those lived experiences too. But maybe they were a blessing in disguise. 

Dr Jiaying Zhao is an Associate Professor at the University of British Columbia in Vancouver, Canada. Her work focuses on the psychological effects of scarcity, behaviour change, and solutions to poverty, sustainability issues, and climate challenges. 

 

Add your voice to the Melbourne Zero campaign - be part of positive change today! We’re making Melbourne a world-leading city in ending homelessness, starting with ending rough sleeping by 2030. melbournezero.org.au

Continue Reading

Read More

Add your voice today

From business leaders to your next-door neighbours, we're calling on every Melburnian to join the Melbourne Zero movement and help end homelessness in our city.