$750 a month was given to homeless people in California. What they spent it on is more evidence that universal basic income works.
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- What happens when homeless people are given $750 per month for a year?
- A study found they were less likely to remain unsheltered and closer to having their basic needs met.
- The initial results of the first six months of the study show the effectiveness of a basic income plan.
A group of just over 100 homeless people in California's Los Angeles County and San Francisco Bay Area were given $750 per month for a year — no questions asked.
The newly released results of the first six months of the study into the impact of a basic income and social support intervention reveal what the recipients spent the influx of cash.
Their findings are the latest piece of evidence showing the benefits of a basic income plan.
Those who received the $750 monthly stipend were less likely to remain unsheltered and closer to having enough money to meet all of their basic needs as compared to a control group who accessed usual homeless services, the study found.
According to the study, conducted by the San Francisco-based nonprofit Miracle Messages and the USC Suzanne Dworak-Peck School of Social Work, most of the spending from the $750 stipend, at 36.6%, was focused on food in the first six months.
Nearly 20% was spent on housing, 12.7% on transportation, 11.5% on clothing, 6.2% on healthcare, and 13.6% on other expenses that were not classified, the study found.
More importantly, the initial findings "dispels this myth that people will use money for illicit purposes," Ben Henwood, who led the study, told the Los Angeles Times.
Only about 2% of the $750 per month was spent on alcohol, cigarettes, or drugs, Henwood said in an interview with the Times; the majority of that money was spent on cigarettes.
Henwood, the director for the Center for Homelessness, Housing and Health Equity Research at the USC Suzanne Dworak-Peck School of Social Work, said in a statement: "People have different needs, and we're empowering them to focus on what is going to help them individually."
One recipient of the money told the researchers that they used the cash to "catch up on bills" and for a much-needed car repair, while another reported that they spent "a lot of the money on food on the go."
For those who received the funds, the proportion of people who reported being unsheltered in the past month dropped from 30% at the start of the trial to under 12% at the six-month follow-up, according to the study.
Those in the control group had a small decrease from 28% to 23%.
Researchers behind the study plan to publish a follow-up report based on the full year of data.
Other basic income experiments showed similar positive results
The news out of Los Angeles is the latest in a series of basic income experiments that appear to show the benefits of just giving money directly to people in need.
Business Insider previously reported that Durham, North Carolina, experimented with guaranteed income, giving formerly incarcerated residents a stipend each month.
The recipients had employment and housing rates rise, and during the year-long project, no one went back to jail.
Pilot programs in Denver, Colorado, and Stockton, California, showed similar results. People who were given monthly stipends were more likely to find full-time jobs and housing by the end of the experiments, the researchers found.