Fighting Poverty By Giving Homeless People Money

One of the big things we need to change as a society is to start treating poor people with more respect. Poor people, by definition, don’t have much money. And lack of money leads to a lot of problems. Oftentimes, these problems are best attacked at the source. Here’s an interesting Economist article about trying this approach on London’s homeless. The Joseph Rowntree Foundation found people who’d been on the streets for between four and 45 years and “Instead of the usual offers of hostel places, they were simply asked what they needed to change their lives.”

It’s not a miracle cure, exactly, but it seems to work pretty well:

One asked for a new pair of trainers and a television; another for a caravan on a travellers’ site in Suffolk, which was duly bought for him. Of the 13 people who engaged with the scheme, 11 have moved off the streets. The outlay averaged £794 ($1,277) per person (on top of the project’s staff costs). None wanted their money spent on drink, drugs or bets. Several said they co-operated because they were offered control over their lives rather than being “bullied” into hostels. Howard Sinclair of Broadway explains: “We just said, ‘It’s your life and up to you to do what you want with it, but we are here to help if you want.’”

This was only a small-scale pilot project — though its results have been echoed by others elsewhere in Britain — but it underlines the importance of risk-taking in the provision of public services. In this case, although finance directors (and many voters) might balk at buying the homeless caravans, the savings should outweigh the costs. Some estimates suggest the state spends £26,000 annually on each homeless person in health, police and prison bills.


Malcolm Gladwell (whose work has become unfashionable for reasons I don’t really understand) wrote a brilliant article on a similar theme, also with regard to homelessness, five years ago where he rightly observed that our sense of folk morality tends to get in the way of addressing this sort of issue optimally. After all lots of people might like $1,277 worth of stuff. I, for example, got a notice in the mail today from the Internal Revenue Service suggesting that I owe approximately that much in back taxes due to some improper filing in the past. So why should that money go to homeless people when I could use it too? Current spending on the homeless is already much higher than that, but it overwhelmingly consists of the in-kind provision of services — shelter beds, addiction treatment, incarceration, frostbite relief — that most of us don’t actually want. From a rationalist perspective we can see that helping people in cheaper but more dignity-respecting ways will ultimately end up with all of us having more money in our pockets. But to get there you need to move past the impulse toward scolding moralizing.