Homelessness Prevention
Introduction
Becoming homeless is costly, primarily for the individuals experiencing homelessness but also to landlords and the government. To address this, policymakers have been implementing homelessness prevention programs. These programs typically offer some temporary financial assistance, legal representation, and case management, all in an effort to stabilize housing in a lasting way using a short term intervention.
Phillips and Sullivan (2023) implement a randomized control trial to study the impact of Destination:Home, a homelessness prevention program that operates in Santa Clara County, CA. The program offers temporary financial support in the form of back payments of rent, security deposits, and utilities. It is the only program in the county that does not require verification of future expected income to sustain rent payments once assistance ends. The average assistance payment to households is $4,442. Program eligibility is determined by the Prevention-Vulnerability Index-Service Prioritization Decision Assistance Tool (PR-VI-SPDAT), which calculates risk assessment scores. Scores range from 0 to 29 with 0 indicating lowest risk and 29 indicating highest risk. Clients who score below an 8 are automatically ineligible, while those who score above a 13 are automatically eligible. Those that fall in the 8-13 range are entered into a random lottery to determine if they will receive assistance and are the population studied in the RCT.
The paper finds the intervention efforts of Destination:Home to be effective at preventing homelessness in Santa Clara County, CA. Those who were approved for financial assistance were 3.8 percentage points less likely to be homeless within 3 months from a base of 4.1 percentage points. These effects are more pronounced for households without children and with a history of homelessness.
Phillips and Sullivan (2023) estimates the MVPF of offering temporary financial assistance to households that are at risk of facing homelessness.
MVPF = 2.5
Net Cost
The paper estimates the direct costs of the program to be equal to the sum of the average assistance payment ($1,898) and the costs of administering the program. Assuming case managers spend 6 hours administering the program per client at an hourly wage of $40 per hour, administrative costs are $240 for a total direct cost of $2,138.
The paper estimates the fiscal externality of housing assistance as the savings to other public services that result from reduced homelessness. The paper estimates housing assistance reduces expenditure in the criminal justice and healthcare systems by $316 (Evans et al., 2016, Palmer et al., 2019, Downes et al., 2022).
The net cost of providing housing assistance is estimated to be $2,138 – $316 = $1,822 per recipient of housing assistance.
Willingness to Pay
The paper considers the benefit to both recipients of housing aid as well as the broader community in the willingness to pay estimate. Specifically, the paper accounts for the benefits to landlords and the benefits of reduced crime.
For those receiving housing assistance, the willingness to pay is the cash value of the benefit for those in the treatment group of the RCT ($1,898). The paper argues that this is a conservative estimate, as tenants that are evicted are likely credit constrained, are at risk of losing possessions, and may face difficulty finding housing in the future. For these reasons, the paper suggests that the cash transfer may be worth more to the beneficiaries than the dollar amount.
The paper also estimates benefits to non-recipients. When clients are evicted, landlords are left to repair any damage that the unit may have incurred. Landlords also need to fill the unit quickly so they do not miss out on monthly revenue. The benefits to landlords are estimated to be $219 (Garboden and Rosen, 2019).
There is evidence that homelessness prevention programs lead to a reduction in violent crime. The paper estimates the crime reduction to be associated with about $2,386 in benefits to victims of violent crime (Palmer et al., 2019).
The total willingness to pay for homelessness prevention is estimated to be $1,898+$219+$2,386= $4,503 per recipient of housing assistance.
MVPF Summary
The MVPF of providing housing assistance to households at risk of homelessness is $4,503/$1,822 = 2.47.
References
Downes, Henry, David C. Phillips, and James X. Sullivan (2022). “The Effect of Emergency Financial Assistance on Healthcare Use.” Journal of Public Economics: 208:104626. DOI: https://doi.org/10.1016/j.jpubeco.2022.104626
Evans, William N., James X. Sullivan, and Melanie Wallskog (2016). “The Impacts of Homelessness Prevention Programs on Homelessness.” Science: 353(6300). https://pubmed.ncbi.nlm.nih.gov/27516600/
Garboden, Philip ME and Eva Rosen (2019). “Serial Filing: How Landlords Use the Threat of Eviction.” City & Community, 18(2): 636-661. DOI: https://doi.org/10.1111/cico.12387
Phillips, David C. and James X. Sullivan (2023). “Do Homelessness Prevention Programs Prevent Homelessness? Evidence from a Randomized Controlled Trial.” The Review of Economics and Statistics: 1-30. DOI: https://doi.org/10.1162/rest_a_01344
Palmer, Caroline, David C. Phillips, and James X. Sullivan (2019). “Does Emergency Financial Assistance Reduce Crime?” Journal of Public Economics, 169: 34-51. DOI: https://doi.org/10.1016/j.jpubeco.2018.10.012
Policy Features
- Category
- In Kind Transfers
- Sub-Category
- Housing
- Beneficiary Type(s)
- Adults, People receiving housing assistance
- Average Age
- 44
- Country of Implementation
- United States
- Empirical Method
- RCT
- Research Type
- Primary
- Peer Reviewed
- Yes
- MVPF Publication Link
- doi.org/10.1162/rest_a_01344