In Denver, a social experiment was conducted to examine the impact of providing individuals with cash assistance, without any conditions or obligations attached. The experiment aimed to understand whether having more money would lead to a more pleasant life, despite not directly buying happiness. The participants in the experiment were some of the most vulnerable people in the city who were initially experiencing homelessness.
The results of the experiment so far have been encouraging. With the additional money, participants reported feeling safer, experiencing improved mental health, and gaining access to more stable living arrangements. Mark Donovan, the founder and executive director of the Denver Basic Income Project, expressed his optimism about the findings. Many participants used the money to pay off debts, repair their vehicles, secure housing, and pursue educational opportunities. These outcomes have the potential to lift participants out of poverty and reduce their reliance on social support programs.
The Denver Basic Income Project was established in 2021 by Mark Donovan, an entrepreneur who became successful through his clothing company, Wooden Ships, and his investment in Tesla. To initiate the distribution of money, Donovan used a portion of his own funds along with a $2 million contribution from the city.
While conversations about homelessness often focus on mental health and addiction as the primary causes, recent research by the Pew Charitable Trust indicates that housing costs are a significant driver of homelessness, rather than weather conditions. According to researchers from the University of Denver's Center for Housing and Homelessness Research, six months into the study, most of the participants who received money from the project were significantly better off.
The basic income plan in Denver had different stipend amounts for the participants. One group received $1,000 per month for a year, another group received $6,500 upfront and $500 per month thereafter, and the final group received only $50 per month.
Interim findings from the year-long study show promising changes in participants' material circumstances. Those who received $500 or more per month experienced the most significant improvements. At the beginning of the experiment, less than 10% of the participants had their own homes or apartments. However, at the six-month mark, over a third of them were living independently. The initiative also led to a significant reduction in visible homelessness. The number of people sleeping outside decreased to zero for the $1,000/month group, and similar declines were observed for other groups as well.
Interestingly, many participants moved into their own homes and apartments. In the $1,000/month group, 34% of participants now have their own housing, compared to just 8% at the start of the experiment. The number of participants staying in shelters was also more than halved, and there was an overall improvement in mental health. However, the group that received only $50 reported slightly higher levels of stress and anxiety, along with a slight decrease in hope.
Denver is not the only city exploring the concept of Universal Basic Income (UBI). San Francisco conducted a study involving 14 people who received $500 per month and found that two-thirds of the initially homeless participants secured permanent housing after six months. Other cities, such as Santa Fe and rural areas in upstate New York, have also experimented with cash payments. Philadelphia is even extending the concept to other vulnerable groups, including pregnant individuals.
Internationally, countries like Canada are finding that providing direct cash assistance is proving to be more effective than traditional assistance programs that come with conditions or restrictions. In Vancouver, a group of over a hundred people experiencing poverty received approximately $5,600, resulting in improvements in housing, reduced homelessness, increased spending, and savings over time. It was also a net savings for the government and taxpayers.
Overall, the findings from these experiments suggest that providing individuals with direct cash assistance can have positive effects on their well-being, including improved housing, reduced homelessness, and increased stability. It also highlights the potential benefits of exploring Universal Basic Income as a means of addressing social issues and reducing dependence on traditional assistance programs.