Do direct money transfers work? – BRINK – Conversations and information on world trade

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The concept of direct cash transfers was debated extensively by economists during this economic recession. A study in Canada gave homeless people in Vancouver a single cash transfer and tracked their spending habits for a year.

They found that the transfers created net savings for local authorities by reducing the need for emergency services. The study was led by Claire Williams, CEO of Foundations for social change and teacher Jiaying Zhao from the University of British Columbia.

WILLIAMS: This was a randomized controlled trial, in which we gave $ 7,500 to 50 people who had recently become homeless. Direct cash transfers are a straightforward intervention that involves paying a one-time lump sum to help people move forward with their lives.

Improvements after one month

We selected people based on their degree of functionality, so we eliminated anyone with significant substance use, alcohol, and mental health issues. That’s not to say that an intervention like this couldn’t work for this population, but we wanted to start small and safe and then expand our metrics as we move forward. We also had a control group to assess the impact of our intervention.

EDGE: Have you compared it to other direct cash transfer studies that have taken place around the world and found any major differences?

ZHAO: We first did a thorough review of existing studies on cash transfers and compared our results to theirs. There are several important differences. We saw improvements one month after the cash transfer in housing stability, food security, subjective well-being, cognitive function, savings, assets and slight improvements even in employment, and finally cost savings for society.

Since we only recruited people who met our selection criteria, we have no data indicating whether this approach would work for other populations as well, but our results suggest that it may be an effective approach to reduce roaming.

An economy for governments

EDGE: What do you mean by cost savings for society?

ZHAO: We looked at the social and health services that participants had access to for 12 months for both the cash participants and the cashless control group. What we found is that over one year, cash participants saved $ 8,100 by reducing their reliance on shelter use. So there was about a net saving of $ 600 per person per year.

This study shows that when given the opportunity, people can make wise choices and know precisely how to move their lives forward.

EDGE: Did you share this discovery with the local authorities?

WILLIAMS: We reported to the government, which was one of our first funders. Hopefully we will see more interest in terms of collaboration and eventual funding from the government. I believe that at the end of the day in Canada, it is the government’s responsibility to increase the income floor for everyone. But until then, we also firmly believe that it is the responsibility of charity and philanthropy to advance meaningful risk-taking to advance social change.

EDGE: Is there a role for companies in this space?

WILLIAMS: I absolutely think so. Neither I nor Jiaying come from a space where we have worked with homeless people. I was a consultant in environment and sustainable development; Jiaying works in behavioral sciences and psychology. And yet, this has its advantages.

We really bring lean business practices from the entrepreneurial space, from the academic space, and apply those ways of thinking, these paradigms, to an age-old problem. And I think that’s why we see the impact we have, because we think more creatively and differently about the matter.

ZHAO: I think our project is essentially about innovation. It is a highly innovative and disruptive solution to homelessness, and innovation is at the heart of businesses. So I would invite companies that want to work with us to push forward with our expansions to reduce roaming on a larger scale.

Help people plan for the future

EDGE: What was the biggest surprise for you from this study?

WILLIAMS: We’ve seen people make wise financial choices, with a 39% reduction in spending on drugs, alcohol and tobacco. This is important for challenging the prevailing stereotype and narrative about people living in poverty or homeless people, that they will ‘waste money’.

This data point shows that this is simply not true. It shows that when given the opportunity, people can make wise choices and know precisely how to move their lives forward.

In British Columbia, you receive assistance of $ 700 per month, of which $ 375 is allocated to your accommodation, so you have $ 300 and change left. If I had $ 300 and change to go through the month, I would probably look for ways to self-treat because I can’t move into accommodation, and living in a shelter is an incredibly traumatic experience. And especially if you are a woman, you are often exposed to violence, to the threat of sexual violence. People use alcohol to stay warm, they smoke cigarettes to calm their nerves, and they use substances to stay awake at night so they don’t risk violence.

So you are in survival mode when you have such a small amount of money. You can’t think of housing, you can’t think of training. Your thinking process is immediate here and now, as research shows that if you give someone a larger amount of money, it provides them with that stable basis to move forward, to start thinking about their things. goals and aspirations and start planning for the future. .

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