You’d probably guess that a major factor contributing to homelessness is a lack of money. Yet, very few programs provide unconditional and lump sum cash to unhoused individuals as a solution. There are a number of barriers that have impeded the broad implementation of this type of assistance, which include the lack of policymaker support and public mistrust in homeless people’s ability to manage money. Our guest this week found that direct cash transfers actually result in net societal savings over time. Jiaying Zhao is an associate professor, Canada research chair and a Sauder distinguished scholar at the University of British Columbia. She co-authored “Unconditional cash transfers reduce homelessness,” which was published recently in the Proceedings of the National Academy of Sciences journal. Zhao, who has personally experienced housing insecurity in the past, joins WITHpod to discuss the cognitive taxes of poverty, rethinking the homogenous narrative about who homeless people are, the most surprising findings from the study, intended policy changes and more.
Note: This is a rough transcript — please excuse any typos.
Chris Hayes: Hey WITHpod listeners, before we get into today’s episode, a reminder that we are taking WITHpod on the road again. Tickets are going fast so buy yours today at msnbc.com/WITHpodtour. I hope to see you in our live audience this fall.
Jiaying Zhao: From what I’ve heard, the perception is changing but very slowly, but we do see a lot of pushbacks from, you know, people of the, you know, of a different party especially the conservative party in Canada. We do get a lot of pushbacks on deservingness, on how they spend the money, and whether it’s a worthy investment and how do we pay for this program. And we’re, obviously we’re working and cooperating with them to nail out these details, but as you said, Chris, at the beginning, this is a rational approach. This saves money at the end. And I just think it’s a no brainer. If we are rational about this, then I hope that policy makers and the public will eventually get on board with a policy change.
Chris Hayes: Hello and welcome to Why Is This Happening with me, your host, Chris Hayes. You know, a few years ago, Pope Francis was talking about giving money to the poor, giving the money to charity, giving money to folks that are unhoused that you may encounter on the street. Sometimes we call panhandlers and he, an interviewer asked, but if I’ve given money to a homeless man, he goes out and spends that on the glass of wine. And Pope Francis said, you know, that’s okay. How about you ask if a glass of wine is the only happiness, he has in life that’s okay. Ask yourself, what do you do in the sly? What happiness do you seek in secret?
And I’ve thought of that for a long time because I love that reply, right? There’s a little bit of, well, what do you do with the money that you have? Why do you think you’re the best judge of how this person should spend the money if you give it to them, right? I mean, if you’re giving them the money, then you’re giving them the money. And then they’re gonna do with that what they will. And it also speaks to an instinct that a lot of people have, particularly when we encounter folks who seem to be in mental distress or particularly, I think people who are giving off sort of telltale signs of addiction.
And a lot of people because of people in our lives kind of know what those signs can look like, and they seem familiar that, okay, if I give money to someone I am maybe aiding and abetting addiction, right? It could come from a perfectly good and sort of empathetic, even high-minded place, right? Like I don’t want to produce a situation in which I give someone money and that facilitates them getting fentanyl, right? That might be very dangerous for them.
So, there’s a whole complex that goes into this and how people think about this, but that’s just sort of a microcosm of a broader question, right? Which is what happens when you give people money who don’t have it? And that’s a huge policy question because when we think about something like poverty, right? In a narrow sense, right, there are sort of two ways to look at poverty. Poverty is a condition produced by a set of personal, familial, psychological, social, and cultural pathologies for complexes that make it hard for a person to, you know, be successful in the, you know, market economy we have. That’s one way of looking at poverty.
Another way is poverty is just almost tautologically someone doesn’t have enough money. And if you look at it as tautologically like what is poverty, poverty is a condition of not having enough money. What is the solution to poverty? Give them money. They will there therefore have the money. Now that seems almost like, it almost seems glib, but there has been a real school of robust, both theoretical and empirical work done over the last several decades basically showing it like, actually reducing poverty might not be as complex as we make it.
It may not be that first one, what are the root causes of poverty and why are these people in distress and how do we get them out of addiction and how do we make sure that they can hold down a job because, you know, as opposed to they don’t have enough money, if we give them money, then maybe they will have enough and they will no longer be poor. And so, there’s a back and forth, I think, among different schools about this, about poverty eradication. In the U.S., we just saw a huge policy experiment in which we had a direct cash transfer to families with children called the Child Tax Credit, fully refundable.
It reduced child poverty by the largest amount in a single year in American history to all-time lows. It expired after a year. Child poverty jumped by the highest amount in history. That’s a broad trend, right? But you can say, well, we don’t really know what was going on underneath the surface. We don’t know what those families are spending that money on. We don’t know if it actually improved wellbeing. We don’t know if like all that is just an account, you’re just reporting something that’s like an accounting identity, right?
If you distribute money from the family to a household budget, it has to be the fact that that household budget is higher and they’re then, as a mathematical you know, derivation, they’re no longer as poor as they were, but do we really know what the impact. And it sort of amidst this conversation that I saw on Twitter, a study that was out of Canada by a group of authors who ran a big randomized control trial on direct cash transfers to people that are unhoused. And we’ll get into what randomized control trial is. I think, suspect most people know what it is, but how the survey divine (ph).
And they found fascinating, fascinating results that are, I think, surprising and counterintuitive to a lot of people that do have profound policy implications. And I think also kind of moral and philosophical implications and I thought it would be a great subject for a conversation. So today I’m very lucky to have Jiaying Zhao who likes to be known as JZ who’s associate professor in Canada Research Chair and a Sauder distinguished scholar at the University of British Columbia. And Jiaying is one of the authors of the paper. Jiaying, it’s great to have you in the show.
Jiaying Zhao: Thanks for having me, Chris.
Chris Hayes: First of all, I just wanna shout out your other co-authors on Unconditional Cash Transfers. Ryan Dwyer, Anita Palepu, Claire Williams and Daniel Daly-Grafstein, right. Are those the other folks that did it with you?
Jiaying Zhao: Yeah, they did.
Chris Hayes: Great. So, I wanna make sure they get their credit out front. So first let me just start, what is your area of research? Like what do you study as a scholar? What department are you in?
Jiaying Zhao: I’m a psychologist. I work on behavior change.
Chris Hayes: Oh wow.
Jiaying Zhao: And I work on poverty eradication and environmental sustainability. So, these are my domain of research. More specifically, I’ve been working on, you know, the cognitive taxes of poverty.
Chris Hayes: Hmm.
Jiaying Zhao: That was actually my PhD work. And more recently in the last 10 years or so, I’ve been designing interventions like the cash transfer to reduce poverty. And in the study, you mentioned, this is the most marginalized people in Vancouver. These are the unhoused, they have very little income and we thought let’s give, you know, cash transfer a shot.
Chris Hayes: So, talk about the one of the things you just said, the cognitive taxes of poverty. That’s an interesting phrase. I’ve encountered it before. What do you mean by that?
Jiaying Zhao: So basically, when you experience poverty and this could be money, scarcity, time scarcity, relationship scarcity, food scarcity. My work has shown that you actually function at a much lower level cognitively or in terms of the brain bandwidth than if you’re not under poverty. So, this is what we call, you know, cognitive taxes, because you’re actually worse at problem solving, reasoning, executive control, which is the ability to inhibit impulses, et cetera. So, this is kind of an important context for this cash transfer (ph) intervention.
Chris Hayes: Is there a literature on this? I mean, obviously this is your area of research, but I’ve heard of this cognitive tax. I mean, how do we find that result, right? Give me some examples of ways that we establish that in the literature, that if you’re under conditions of scarcity, money scarcity and the other time scarcity, other things that you actually suffer a sort of cognitive hit.
Jiaying Zhao: Yeah. So, the way we did this was sample a broad range of people in the U.S. and other countries where we, you know, ask them to do a bunch of cognitive tests or puzzles when they’re poor versus when they’re not poor.
Chris Hayes: Mm-hmm.
Jiaying Zhao: So, the same individual look at how they perform essentially on a bunch of IQ tests when they are experiencing poverty versus not. So that’s one way to look at that. Another way to look at that is sample again, the lower income and higher income individuals and present financial challenges to them and see how well they cope with these challenges. So, these are the different ways to establish the cognitive taxes.
Chris Hayes: The cognitive tax concept is interesting because it does something interesting to our theory of causation of this stuff, right? I mean, I think the sort of standard, let’s say 19th century Protestant American vision, right, of poverty is that you are poor because you lack executive function, that your problem is you don’t have self-discipline, you’re not a hard worker. You don’t have these things and that’s making you poor.
And what some of your work and the other people’s work is describing is a causal mechanism that goes the other way that from that poverty you can actually be causally affecting how you function, you know, the degree of self-discipline you have or executive function and things like that.
Jiaying Zhao: Well, exactly. I mean, I think we tend to blame the poor for their flaws. You know, as Margaret Thatcher said, this is a character flaw that you ended up in poverty. Whereas what we’re saying is that no, it’s a context. It’s the lack of money or resources that makes people behave this way. So, what this means is that if you lift them out of poverty, let’s say, give them the cash, then they will function better. So, it’s a factor of the context as opposed to the individual.
Chris Hayes: How much is that? I mean, there’s an ideological point there, right, which I’m obviously disposed towards. So, there’s a little confirmation bias here. So, I’m like, well, that jives in my priors, but how has this kind of gimme a little bit of this, where has this concept sort of come from this cognitive tax and how has it developed over the research space?
Jiaying Zhao: Yeah. So, I mean, I’m a cognitive scientist, which is a branch in psychology.
Chris Hayes: Yep.
Jiaying Zhao: And I think this is the work, you know, with a lot of my colleagues like Eldar Shafir and Sendhil Mullainathan. I think we have kind of first-hand evidence of poverty or scarcity and how that influences our behavior and cognitive function. I mean, I think everyone has had deadlines once in a while. And my personal observation is I function very differently if I have a deadline versus if I don’t have a deadline and same goes with money when you have money versus not.
So, I think part of the motivation comes from just personal experiences. I think that resonates with a lot of people in the world. And then the second motivation is just how the literature and the culture and popular views have characterized people in poverty. And we certainly think it’s unfair. It’s not an accurate depiction of people in poverty. And we also hope that our work will change policy going forward in terms of how policies can be best designed to help the low-income individuals.
Chris Hayes: What I introspect on this, right, because it is just so seems so obvious. I mean, I had a conversation with a guy named Ned Resnikoff who studies housing policy in California and what to do about large populations of folks that are unhoused there and how to make their lives better and make sure they’re in stable shelter. You know, he made this point that stuck with me about like the sort of nexus between substance use and not having a house, which he also sort of made this point that like the cause doesn’t always go the way you think it does, which is to say like, if you’re sleeping out in the street, it’s really stressful and very hard to fall asleep.
So, people do turn to substances as part of that. And then I thought about like, yeah, even when you’re camping, like, or you’re in some situation, like maybe you have an extra drink because like that’s gonna knock you out. And that sort of change in that causal story has stuck with me. In terms of this causal story, I guess my question is how much is stress the kind of like mediating factor here, which is to say like, when you say scarcity, that when I introspect on this, I think the scarcity causes stress, and to me it’s very obvious the stress causes reduced cognitive ability.
So, like when I’m stressed out, I’m worse at doing everything. And being under financial stress or time stress or some scarcity situation produces that kind of fight or flight mode. And generally, in fight or flight mode, I’m not doing my best thinking.
Jiaying Zhao: I mean, stress is an important factor under scarcity, but we did account for stress. So, I mean, there are different forms of stress. There’s a physiological stress.
Chris Hayes: Yes.
Jiaying Zhao: That activates our sympathetic systems. There’s psychological stress, which is what we are talking about. So, we did measure, you know, stress in terms of heart rate, blood pressure and cortisol. And even if you account for the physiological markers of stress, the cognitive detriment of poverty still stands. So, it’s not entirely due to our fight and flight response.
Chris Hayes: That’s really interesting, right? Because I mean, my hypothesis would be that it’s the stress.
Jiaying Zhao: Yeah.
Chris Hayes: Right. Like, I mean, that’s a pretty surprising finding to me at least.
Jiaying Zhao: Yeah. So, I think it’s not just physiological stress. I think what’s going on is a psychological stress. And that is in our mind, we think of it as a mental preoccupation. It’s almost like, you know, when, when you are sick, you can’t stop thinking about the symptoms and what you should do about it or when you have a deadline or you have a bill to pay and you can’t really afford it, that mental preoccupation is what we are trying to get at.
It’s almost like now you have a tunnel vision that this is everything you can think about. This is what you ruminate about. And the consequence of that is severe because you can easily forget or neglect other things that you need to attend to. So, then I think that’s the kind of mental stress we’re looking at.
Chris Hayes: So, tell me about how this experiment, this randomized control trial came about.
Jiaying Zhao: Sure. So, I moved to Vancouver in 2013 after getting my PhD. There are two motivations behind this trial. The first motivation is that I’ve witnessed firsthand, the booming homeless population in Vancouver, which is really distressing and just heartbreaking. And the current approaches on, in my opinion, failing because every year we’re getting a surge of people entering homelessness. So, I think this is when Claire Williams, the co-founder of Foundations for Social Change, my key partner in this project, came to me and asked, can we, we try a different solution.
And in this case, can we try cash transfers? Because there’s, you know, you probably know of GiftDirectly that has run a ton of cash transfer studies in developing countries, so mostly in lower income countries. And they found that people getting the cash transfer has shown a variety of benefits in better health, better mental wellbeing, even higher education attainment, employment. You know just the benefits are really tremendous.
But no cash transfer studies have been done in the developed countries. So, in Canada or U.S. partly because it’s expensive and governments tend not to fund those trials because they’re afraid of the pushback from the public. So, what we have to do is literally fundraise through philanthropy to actually pay for this trial.
Chris Hayes: Right, because the intervention here is gonna cost a lot of money because what the intervention is, is money.
Jiaying Zhao: Well, that’s effectively what we’re doing.
Chris Hayes: Yeah. I mean, that’s right. I mean, that’s what I’m saying. You know, you’re not like in another randomized controlled trial, like, you know, maybe some people are wearing blue and some are red or whatever. Whatever the variable is, in this case, it’s like you’re giving them money. That’s got to come from somewhere. You don’t just have it sitting around. Presumably your university can’t produce enough money to actually make a tangible difference.
And the point that you’ve made that there have been these randomized control trials in developing nations where the per dollar cost is just lower, right? That would make a difference. In the place you’re talking, Vancouver, is one of the most expensive cities in the world, if I’m not mistaken.
Jiaying Zhao: That’s right.
Chris Hayes: And so, you need to go find the money to make this happen.
Jiaying Zhao: Yeah. And it’s not just $10 or $50, right? It’s a pretty big chunk of money. It’s, you know, $7,500 per person. So, it took us two years to actually fundraise and get enough in the bank to do this trial.
Chris Hayes: How did you come to that number?
Jiaying Zhao: So, $7,500 was the annual income assistance in British Columbia back in 2016 when we designed the study.
Chris Hayes: Hmm.
Jiaying Zhao: And the reason we benchmarked against the income assistance was to have policy implications for governments to take this on going forward where, you know, the implication is for somebody who just enters homelessness then maybe governments can provide this lump sum one time unconditionally to these individuals so they can get back to stability.
Chris Hayes: So, you managed to raise the money, then there’s the question of how you, you know, recruit and sort people into, into the study. How many people did you get and how did you go about finding them? And then, you know, who was on which side of what line randomized?
Jiaying Zhao: Yeah. So, we have a team of interviewers and we deploy them into 22 shelters across the Metro Vancouver area. So, they’ve literally had to go into shelters to conduct the screening survey. So not every individual in homelessness can get into the study. We have a series of screening criteria that involve basically homeless for less than two years, no severe levels of substance use alcohol use and mental health challenges, Canadian citizen, permanent residents, and age of, between 19 and 65.
So that’s about a third of the shelter population. So, it’s not capturing the majority of people in the shelters. And we did this because, you know, we wanna mitigate harm or risks with the cash transfer. And to maximize the benefits of this cash transfer as a very first starting point.
Chris Hayes: Yeah. I mean, the screening is significant there and I want to just linger on it for a second because I think when you go back to the Pope Francis story and the point I’m making, you’re trying to make sure that you don’t have people in here who are in the throes of very, very intense substance use disorder, basically.
Jiaying Zhao: Yes. As a first try because nobody has done this before.
Chris Hayes: Right. I see. Yes.
Jiaying Zhao: You know, our utmost responsibilities do no harm.
Chris Hayes: Right.
Jiaying Zhao: And try to maximize benefits.
Chris Hayes: Right.
Jiaying Zhao: So that’s why we chose these screening criteria.
Chris Hayes: And the interviewers in these shelters were able to identify a pool of people that met these criteria.
Jiaying Zhao: They did, yeah.
Chris Hayes: And how many people is that?
Jiaying Zhao: So, we screened over 700 people. Of the 700, 200 passed all the criteria we have in place. So, we try to reach back out to them to do the baseline. So, this is essentially onboarding. We’re enrolling into the study officially. But because these individuals live in shelters, they move around a lot —
Chris Hayes: Yeah, that’s right.
Jiaying Zhao: They don’t have a stable address. They don’t have phones or e-mails. It’s really hard to get back in touch with them.
Chris Hayes: That seems extreme. All of this seems, I mean, as I was reading about the study, I was saying to myself, this is a very, very labor-intensive undertaking.
Jiaying Zhao: Yeah. Actually, our interviewers spent sometimes weeks to find one person. They had to drive around town to ask people, have you seen this person? So, it’s not like the typical study that, you know, you get people to come in and do the study and pay them. It’s a lot more complicated than that. So, in this process of reaching out back to them, we lost half of the sample. So, in the end we were able to reach 115 people who passed the screening survey and those are our final sample size.
Chris Hayes: And then you divided that into a control group and an intervention group?
Jiaying Zhao: Yeah. Then we randomly assigned 50 into the cash group and 65 into the control group. One thing I need to say about the randomization is it’s not randomizing based on the participant, but based on the shelter. So basically, this shelter is randomized to a cash group and that shelter is the control group. The reason we did that was to again, mitigate risks and assault and theft and targeting.
Chris Hayes: Right. Of course. I mean, if you went into a shelter and said like eeny, meeny, miny, moe, you have $7,500. You do not. Now you guys are just gonna sit next to each other.
Jiaying Zhao: Yeah.
Chris Hayes: That could be a really —
Jiaying Zhao: That would be a disaster in my opinion. So that’s why we randomized based on the shelter, which is called the clustered randomized control trial, not the individual based trial. So that’s another feature of our study.
Chris Hayes: First of all, how are they informed of this? I mean, I guess on the onboarding, right? Like, you know, it’s a little bit like cancer drug trials, right, or other, you know, this was true back during the ACT UP days, right, for folks that had HIV. You know, you’re desperate for this thing. The nature of science is such that you need randomized control trials. You need a control group, a placebo group, right. And then the group that’s gonna get the medication and you don’t want to be in the placebo group.
In this case, like it makes a huge difference, at $7,500 or not, if you’re a person who’s unhoused and desperately poor. So how do you communicate that on the front end in a fair and transparent way?
Jiaying Zhao: Yeah. So, we reach back out to the 115 people. We conduct the baseline survey with them. This is a survey to capture how they’re doing their housing status, how much income they have, et cetera, et cetera. And at the end of the baseline survey, if you’re in the cash group, then we disclose the cash transfer to you. We will literally say, we’re giving you $7,500 in a week or so, but we need to open a bank account for you so we can e-transfer you the money. At that moment, most of our participants are in kind of disbelief. In fact, some have said, you know, you guys are scam. This is not true. I’ve never heard anything like this.
Chris Hayes: Understandably. Yeah, right.
Jiaying Zhao: They’re like, nah, this can’t be right. This can’t be right. So, we had to, you know, like really establish trust and say, no, no, this is actually happening. We give them the consent forms. We give them my information to really tell them this is gonna happen. This is real. And you know, every single one said, yes. I mean, they also have a chance to say, no, I don’t wanna take the cash. Zero rejected the cash transfer. So that that’s great.
Chris Hayes: That’s a good finding. That seems like a robust finding.
Jiaying Zhao: Yeah.
Chris Hayes: If you offer people money.
Jiaying Zhao: They were in shock and it took them a while to actually believe what we are saying.
Chris Hayes: Right.
Jiaying Zhao: And when they actually saw the cash transfer in their bank account, that’s when they’re like, oh my God, this is real. Yeah. This is happening. But those in the control group, basically after they finished the baseline survey, they were thanked and you know, we pay them. So, each survey has an honorarium $50.
Chris Hayes: Right.
Jiaying Zhao: So, we thank them and say, we’re gonna reach back out to you in a few months. Thank you. That’s it.
Chris Hayes: Gotcha. So, you don’t have to do the thing where they’re going in, not knowing which side of the line. You just do it all in one on that, right? Yeah.
Jiaying Zhao: Absolutely. And important thing is to all the surveys that were done with this cover story in mind. So, we did not disclose the cash transfer to the control participants at first.
Chris Hayes: Right.
Jiaying Zhao: Because I think it would provoke strong negative emotions if I know I’m in the control group. But now this raises an ethical question, right?
Chris Hayes: Yes. All of this. I mean —
Jiaying Zhao: Unlike the drug trial.
Chris Hayes: Yeah.
Jiaying Zhao: Basically, you’re randomly assigned, but you know, you can make a placebo or the treatment.
Chris Hayes: Right.
Jiaying Zhao: But in this case there’s no placebo, right? You know, whether you’re getting cash or not.
Chris Hayes: Right.
Jiaying Zhao: So, what we have to do there is at the end of the, the experiment, we reached out to the control participants again and we said, let’s rescreen you. And for those who screened in, they received the same cash transfer. So, this ensures that everybody has the same opportunity to get the cash transfer in the study. So, they did not receive the cash first, but at the end of the study, at the end of one year, we will thank them and debrief them.
Chris Hayes: Mm-hmm.
Jiaying Zhao: And we actually rescreened them. And for those who screened in, we gave them the same cash transfer.
Chris Hayes: You did. Okay. In the end they were —
Jiaying Zhao: Yeah.
Chris Hayes: Right. And you could do that because you’re no longer studying the intervention. The studies ended. This is a way of sort of trying to ethically balance this in such a way. So that basically everyone was in the same boat of the possibility of getting it as long as they passed the screening.
Jiaying Zhao: Yeah. I mean, this is for equity concerns.
Chris Hayes: Right.
Jiaying Zhao: So, everyone who participated in our study had the same chance of —
Chris Hayes: Right.
Jiaying Zhao: — getting the cash transfer.
Chris Hayes: So then, while you’re doing the study, how are you monitoring folks? And again, you’ve got the same issues, right, with getting in touch with people, being able to check in with them, find them, all that stuff. Like how long did it go and how did you do all that?
Jiaying Zhao: So, this trial lasted one year. So, we followed every participant in the cash and control groups for one year at 1, 3, 6, 9, 12 months. And it was again, as I said, difficult to reach them. So, we provided a lot of supports to everyone in the study. So, we gave them a free phone. We actually have a telecom partner, Telus, in the project. So, they had a free phone. Everybody was provided with a free checking account. Even in the control group, they were provided with the same resources.
But you know, the point of giving the phone is so we can call them and follow up with them over time. But some people will lose their phone so we could no longer reach them. Some people getting the cash transfer, moved away, they moved to a different province.
Chris Hayes: Mm-hmm.
Jiaying Zhao: Most of them actually reunited with their family. That’s great. Great for them, but bad for us because we could no longer reach them.
Chris Hayes: Right.
Jiaying Zhao: So, the attrition over one year was about 30 percent.
Chris Hayes: More of our conversation after this quick break.
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Chris Hayes: So now let’s get to the result. I mean, we’ve done the methodology section of the paper. What did you find?
Jiaying Zhao: So, we found that this cash transfer reduced homelessness by 99 days per person per year. So, what this means is that if they get the cash transfer, they’re able to move into housing almost three months earlier, then the participants who did not get the cash transfer, and that has direct cost savings for government, for taxpayers. What this cost saving translates to is $8,277 per person per year, which is greater than the cash transfer itself.
Chris Hayes: So just at the sort of shelter cost level, the cash transfer produced the ability to move out of shelter housing or other publicly funded resources for folks such that the savings on the government ledger would be greater than the $7,500 that’s given.
Jiaying Zhao: That’s what we found. Yeah.
Chris Hayes: Wow.
Jiaying Zhao: We also looked at their use of other services like hospital stays, encounters with police, whether they are in jail or not. So, when we added all of these costs together, they’re similar to the shelter costs. So, it does look like this cash transfer is cost effective because people can move into housing and stability and rely less on social and health services.
Chris Hayes: What were the other effects? I mean, what were the other things you were looking for in terms of, you know, I don’t know if it’s arrests or substance use or, you know, ability to get a job, things like that?
Jiaying Zhao: Yeah. So, the cash recipients kept more in savings over one year, which is great. They spend more on rent, food, transit, furniture, used cars, those durable goods. I mean, that’s as expected. There was no increased spending on temptation goods. So those are alcohol, drugs —
Chris Hayes: This is really interesting.
Jiaying Zhao: — and cigarettes. So, this is contrary to what most people believe that they actually did not squander the money away on alcohol and drugs. Now substance use were actually, it marginally decreased. It’s wasn’t statistically significant, but their substance use severity decreased over one year. I think, as you said, this is kind of speaking to the cause and effect of homelessness. When people become homeless, they tend to use more drugs and alcohol to self-medicate. And the longer they are in homelessness, the more severe those issues will come up.
But instead, if you put them back into housing before they become further entrenched, their substance use actually declined. So that’s a very promising finding. Now, speaking to jobs, we actually didn’t see a significant impact on jobs. We looked at, you know, whether they had a job, their working hours, their pay, but there was a trending numerical increase in working hours and hourly pay. And this effect is stronger than in those who had jobs to start with.
So just to preface, a third of our participants actually are working. They have jobs. So, for those who are already working, they were able to increase their pay and increase their working hours after getting the cash transfer.
Chris Hayes: I’m curious if you can share just some of the qualitative aspect of it, like what did people do? Like you’re in a shelter and you’ve been without a home for under two years. You’re not in acute and severe grips of addiction, but obviously you’re in desperate need of money and your life is incredibly unstable. You get $7,500 in a bank account that you set up, like, what did you observe? What did people do? Like what was the first thing they did? What was it like? Was there a kind of programmatic? What happened?
Jiaying Zhao: So, the first thing that most people did was get into housing.
Chris Hayes: Right.
Jiaying Zhao: That’s a lot of the behaviors we saw at one month. And that was a chaotic period for them. I mean, they had to basically leave the community they know. They had to leave friends —
Chris Hayes: Right.
Jiaying Zhao: — and support systems they had in place in their shelter. At the time that we ran the study, Vancouver was developing this modular housing initiative. So basically, they turned, you know, shipping containers and empty apartments into affordable units for people. So, this is where people ended up mostly is these modular housing apartment units. So, moving basically occurred right after getting the cash transfer. So that’s almost within one month.
But also, why we couldn’t reach a lot of the cash recipients at one month because they were busy. Their life is now turned upside down.
Chris Hayes: Right.
Jiaying Zhao: But in a good way.
Chris Hayes: Right.
Jiaying Zhao: And you know, they had to get furniture. Some people bought a used car, so they can actually go to work. We had a lot of single mothers in this study, so they put their children back to daycare or school —
Chris Hayes: Hmm.
Jiaying Zhao: — so they can work more. So that’s kind of the turbulent month after the cash transfer. Then things will start to stabilize typically after three months because now they are in a new community. They can start to make new friends and kind of reestablish their lives. So, I think that’s kind of the trajectory. By six months this is when most people have spent all the cash transfer. I mean, as you said, Vancouver is an expensive city, $7,500 is actually not that much. It can cover rent till probably six months.
And this is also when we saw the control group catching up. So, between six and nine months is when the control group are. Now, they are eventually moving to stable housing. And that’s the reality of being in-housed in Vancouver. The average wait was about six months to get into housing.
Chris Hayes: They were moving to stable housing through government programs that were sort of moving them through generally? Okay.
Jiaying Zhao: Yes, that’s right. Yep.
Chris Hayes: Okay.
Jiaying Zhao: So, then you see, you know, the cash recipients stabilize after six months and control participants are catching up. So, the cost savings comes from between one and six months.
Chris Hayes: Hmm. What do you think the implications here are in terms of, well, there’s psychological implications, right? So, one of the things that’s striking here is what you describe is what people do is. I’m not sure what the right word is. Rational or the kind of thing that you might think like a firm would do. You know, like you need space. It’s like capital investment, right? I mean, obviously used cars on investment, it’s depreciating good, but it is investment in the sense of it’s your sort of taking on productive capacity for yourself, right.
You’re stabilizing your situation; you’re getting your kid to daycare so that you can work. Like, this is a very kind of like rational and programmatic set of investments that it seems like people are making, as opposed to, again, the sort of worst-case vision people has of like a sort of binge of consumption.
Jiaying Zhao: It is the rational choice. I mean, I think it’s kind of a no brainer. And I personally think this is ridiculous that we have to show that cash transfer works.
Chris Hayes: Right.
Jiaying Zhao: It’s kind of like, you know, of course they would. If this were to happen to you, you would’ve done the same thing, but we have very different ideas of what people would do and we have all the biases and stereotypes of people in homelessness. And that’s, I think, the number one barrier to policy change and, you know, I think that’s the incorrect misconceptions that we have.
Chris Hayes: We’ll be right back after we take this quick break.
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Chris Hayes: I think, you know, that I basically agree with you, but just to sort of push on that a little bit, I mean, we do come back around a little bit to the screening, right? Because I think what ends up happening is people’s mental heuristic for how they represent people, you know, without homes tends to be people who are the most extremely and obviously in distress, right? So, if you’re dealing with someone who seems to be, you know, profoundly unwell and is sort of talking to themself in a loud or threatening or aggressive manner, and this is a person who seems. Like your conception of like that person needs something more than, you know, just a cash transfer because that person has a significant illness.
You know, I’ve known a lot of people in my life with very significant mental illness so. And they run the gamut, right, in terms of where they’ve ended up in terms of money and things like that. But I do wonder like one of the things I think that happens in the discourse here is people conflate homelessness with addiction and severe mental distress. That’s just not the case when the numbers don’t bear that out. And there are different subgroups within that population for whom different interventions might be most efficacious, I guess, is what I’m saying.
Jiaying Zhao: That’s right. I mean, the homeless population is not homogeneous by any means, but the homeless population that exists in people’s mind is highly homogeneous.
Chris Hayes: Exactly.
Jiaying Zhao: Because that’s all the public sees.
Chris Hayes: Right.
Jiaying Zhao: That’s their only exposure to people in homelessness. They don’t see people in shelters. They don’t see the hidden homeless —
Chris Hayes: Right.
Jiaying Zhao: — that are couch surfing and sleeping in their cars.
Chris Hayes: Right.
Jiaying Zhao: So that’s why the distortion comes in because our sensory input is somebody using substance on the street, we’re begging money on the street. That’s a fraction of the population, right? And I think that’s the era where the misperception that we need to really correct.
Chris Hayes: Yeah. It’s also why it’s very hard to tell people that like, if you build more homes and made housing cheaper and gave people money, you would reduce homelessness because people see folks in distress and are like, well, that’s not gonna solve that. I’ve had this conversation with so many people. What you are thinking of is not the representative population of the people.
You know, in a city like New York or Vancouver that are very expensive, like you know, and I say this to people all the time, like, do you think there are people without severe substance and mental health issues in Mississippi and West Virginia? Like clearly there are. Do they have the same levels of homelessness? No. What do you think the difference is? Well, it’s just cheaper to be in a home there. So, like clearly that’s not the driving factor.
Jiaying Zhao: No, not at all. In fact, studies have shown that the number one cause of homelessness is inability to pay rent and that’s because of a skyrocketing housing prices —
Chris Hayes: Right.
Jiaying Zhao: — job loss, et cetera. Mental illness and substance use are not the primary drivers of homelessness.
Chris Hayes: And I gotta say, you’re doing it in the city of Vancouver, which I said was one of the most expensive cities in the world. I mean, my understanding is Vancouver’s real estate market is totally insane. I mean, it’s even more insane I think, than New York in some ways. It’s more like Hong Kong or something. I mean, it’s like really, really super expensive. It’s a beautiful city. It became incredibly desirable. It became particularly desirable with lots of people from all over the world who wanted to live there and, and for obvious reasons. And so, you guys are sort of at the tip of the spear of this affordability crisis, which is part of, I think the context for you doing this experiment.
Jiaying Zhao: Yeah. I mean, that’s why we did not expect the impact on homelessness to start with because the vacancy was around 1 percent. Rent is now, I think at the time was over $1,500 per month. So, we certainly didn’t expect that people will move into housing this quickly.
Chris Hayes: Hmm.
Jiaying Zhao: And that’s why when you read the paper, like the preregistered results are only about subjective well-being and cognitive function, which actually did not turn out to be true. But you know, our best-case scenario turned out to be true, which is the reduced homelessness. We placed our bet before we started the study, we had to make predictions of what the outcome would be.
Chris Hayes: Yep.
Jiaying Zhao: That’s the whole jargon of pre-registration.
Chris Hayes: Right.
Jiaying Zhao: We thought that the cash transfer will improve subjective well-being.
Chris Hayes: So, you ask people like how you’re doing on a scale of one to 10.
Jiaying Zhao: Oh yeah. Like how happy are you feeling? Positive affect, life satisfaction, et cetera, et cetera. And we also measure cognitive function. We think that the cash transfer will alleviate the cognitive taxes of poverty, as my previous research has shown. But over one year well-being or cognitive function actually didn’t improve. There was no detriment either. It just there’s no effect. And I can get into why that was the case.
We did see however positive affect increasing at one month. So, there was a temporary improvement in how good people are feeling. At three months we did also see an improved cognitive function, but those effects were transient. They didn’t last. There are many reasons for that. I think one reason we did not see those effects was people are still under poverty. Their average income was $12,000 per person per year. This cash transfer is over, you know, half of their income, but they’re still below the poverty line —
Chris Hayes: Right.
Jiaying Zhao: — in Canada. And certainly, it’s not enough to meet the living costs in Vancouver.
Chris Hayes: Right.
Jiaying Zhao: So, I think that this is partly why we didn’t see those, you know, well-being and cognitive benefits, but it’s okay because we still saw housing benefits, you know, savings and spending increased, social cost went down.
Chris Hayes: Yeah. The policy implications are really interesting. When I had the thought when you were talking about this, the first thing people do is move and that in itself can be kind of disruptive, even maybe a little traumatic. I mean, we’re moving soon and I’m dealing with it. It’s just like the most stressful thing in the world. Like just moving generally. Like, as I think as, you know, people can relate to that, obviously not in the way that the folks that you’re talking about, but obviously at one level it’s like, well, you’re going from not having stable shelter to having stable shelter, but you’re still moving.
You’re still disrupting your life. You’re still extracting yourself from one situation and going into new one. The first few weeks of like a new place, you know, all that stuff is, well, lot’s a lot of stress. So, like I can see a universe where at some level it’s like better for you, you’re in a better situation, but your subjective experience of it, I guess not necessarily. That’s a lot of change, right, and it’s a lot of disruption. And it’s not shocking to me that that might have some effect.
Jiaying Zhao: Oh, you’re absolutely right. I mean, the first three months I think after getting the cash transfer was super chaotic, but life changing. So that’s what we’ve heard from our participants. This saved their lives and their families lives. It was hard. Almost everyone said, this takes hard work.
Chris Hayes: Yeah.
Jiaying Zhao: It’s not that you’re giving cash and everything is great. No, it took a tremendous amount of work, to move, to stabilize and that’s, you know, stressful.
Chris Hayes: Yeah. When you talk about what the respondents told you, I mean, there’s some exit interview, presumably or there’s some sort of qualitative aspect of that. And I’m curious what you did here. Like, I’m glad I was part of this or I’m not, like screw you, you messed up my life. I mean, I don’t know. I’m curious what you heard.
Jiaying Zhao: We did do a qualitative interview with them every six months after the cash transfer. And the responses from the cash recipients were overwhelmingly positive. It was lifesaving. Some of them said they gave me the mental peace to make decisions, to think for myself. Some parents got to reunite with their children. That’s the other sad part of being unhoused is most likely you’re gonna lose your children to foster care.
Chris Hayes: Right.
Jiaying Zhao: So, after getting the cash, they actually can get their children back.
Chris Hayes: Oh my God. Yeah.
Jiaying Zhao: So, it was overwhelmingly positive experiences that we heard. Whereas, you know, the only two, I wouldn’t say negative, but stories we heard was there are two participants in our study that gave the money away, gave the entire amount away to their family and friends.
Chris Hayes: Hmm.
Jiaying Zhao: So, it’s very generous of them. I don’t know whether it’s good or bad, but it’s their choice and this is something we would call, you know, prosocial donation or spending.
Chris Hayes: Yeah. That’s as prosocial as it gets. I mean, that’s the opposite of, right? I mean, it’s complete opposite, right, of what I was talking about before, about like, you know, this model of someone who lacks executive function and is sort of seeking gratification over all of this. And that’s why they’re in this place to begin with. And if you give them money, they’ll just binge it. I mean, this would be like the exact opposite of that.
Jiaying Zhao: That’s exactly right. So, because this money’s unconditional, so we have no say. Nobody has any say of how to spend it other than themselves.
Chris Hayes: Which is the point. Right. So, are you getting pick up on this from folks? I saw it on Twitter. I don’t know, like, what is reaction been? Do you have policy makers who are interested? Do you think there’s something here? And can you imagine doing this at a larger scale?
Jiaying Zhao: Yeah. Great. The responses have been very positive and I’m actively working with policy makers in Canada to change policy at this moment. So, there’s a bill that’s actively being discussed in the Canadian Senate. This is all open news. There’s nothing, no secret here. It’s bill S233. It’s basically setting up a national framework of basic income in Canada.
So, our study provides a critical piece of evidence in favor of a basic income program. And I’m, you know, I’m working with policymakers on weekly basis to move that bill forward. So, I think that’s the, kind of the policy implication is. I don’t wanna redo this study in a different city. I mean I’m sure more evidence is better, but it’s just we need to do it at a larger national level to help more people. A small study is okay, but I just don’t think it’s sufficient.
Chris Hayes: And it’s also a lot of work.
Jiaying Zhao: Yeah.
Chris Hayes: I mean, it is just so labor intensive and difficult to do it, right? That like if you have promising results, if those promising results are in line, it’s worth doing at a sort of policy level as an intervention to see if you can draw some conclusions.
Jiaying Zhao: That’s what we are hoping to do. And hopefully, I think in a few months, we will see if this bill has a chance of passing. But having said that, we are actively expanding this project to include more people and help more people with a larger amount of money at this point. So, we’re actually running an expansion to scale it up. I just can’t say too much about it because this project is still ongoing.
Chris Hayes: So, there’s been a lot of research and writing about unconditional cash transfers. There’s the GiveDirectly model, which has been a very successful charity. There’s a book by Annie Lowrey called “Give People Money.” There’s been an experiment with Mayor Michael Tubbs in Stockton, California. That was not a randomized control trial, but it was trying this at a fairly large scale. There seems to be fairly promising research.
Do you think that people are changing? I mean the child tax credit is the sort of biggest example as recently. It was tens of billions of dollars. Do you think people’s perceptions are changing on this question, right, about the sort of worthiness about self-regulation and all these things?
Jiaying Zhao: I think they are. We’re actually going to run a nationwide survey to quantify the change in public perception.
Chris Hayes: Hmm.
Jiaying Zhao: There was a nationwide survey done in 2020, people’s perception of basic income. And we’re gonna redo it this time to see if there’s any change. From what I’ve heard, the perception is changing, but very slowly, but we do see a lot of pushback from, you know, people of, you know, of a different party especially the Conservative Party in Canada. We do get a lot of pushback on deservingness on how they spend the money and whether it’s a worthy investment and how do we pay for this program?
And obviously we’re working and cooperating with them to nail out these details. But as you said, Chris, at the beginning, this is a rational approach. This saves money at the end. And I just think it’s no brainer if we are rational about this, then I hope that policy makers and the public will eventually get on board with a policy change.
Chris Hayes: Jiaying Zhao is associate professor at Canada Research Chair and a Sauder distinguished scholar at the University of British Columbia where she does her research. A paper that she co-authored on these unconditional cash transfers to reduce homelessness was co-authored along with Ryan Dwyer, Anita Palepu, Claire Williams, and Daniel Daly-Grafstein. Jiaying, that was really fascinating and thank you so much for making time for us.
Jiaying Zhao: Thanks for having me, Chris.
Chris Hayes: Once again. Great thanks to Jiaying Zhao. That was a fascinating, fascinating conversation and study. We’d love to hear what you think. Get in touch with us on the various social media sites that are out there, including X, formerly known as Twitter. You can use the hashtag WITHpod. You can follow us on TikTok by searching for, WITHpod. You can follow me on threads @chrislhayes. Also, I’m chrislhayes if you search for me on BlueSky.
“Why Is This Happening” is presented by MSNBC and NBC News produced by Doni Holloway and Brendan O’Melia. This episode was engineered by Cedric Wilson and features music by Eddie Cooper. Aisha Turner is the executive producer of MSNBC Audio. You can see more of our work, including links to things we mentioned here by going to nbcnews.com/whyisthishappening.
“Why Is This Happening?” is presented by MSNBC and NBC News, produced by Doni Holloway and Brendan O’Melia, engineered by Bob Mallory and featuring music by Eddie Cooper. Aisha Turner is the executive producer of MSNBC Audio. You can see more of our work, including links to things we mentioned here by going to NBCNews.com/whyisthishappening?