Cost Effectiveness of Ending Homelessness

Cost Effectiveness of Ending Homelessness

While there are strong ethical reasons for eliminating homelessness, it has also been argued that it is also more cost effective.  This may seem counter-intuitive – don’t we rely on charitable services, emergency shelters and soup kitchens because we can’t afford to house people?

In recent years, many researchers have begun to argue that our current response to homelessness – one that relies heavily on the provision of emergency services – is in fact a very expensive way of responding to a seemingly intractable problem.  The cost of homelessness encompasses direct costs, including shelters and services, as well as indirect costs (which economists refer to as externalities), such as increased use of health services, policing and the criminal justice system, for instance.  The recent State of Homelessness in Canada 2013 has argued that the cumulative annual cost of our current approach is $7 billion dollars.

Real Cost of Homelessness cover

Is it cheaper to do things differently.  In the report, “The Real Cost of Homelessness – Can We Save Money by Doing the Right Thing?” argues that it is cheaper to provide people with housing and supports, than to let them stay mired in homelessness.  When people remain homeless, their health worsens, leading to more expensive health care interventions.  They are more likely to become involved in the criminal justice system, because one of our key responses to homelessness is to criminalize it.

The research that exists uses different methodological approaches, and it is important to point out that some of the purported savings from doing things differently will not actually lead to a reduction in spending (for instance, if homeless people use fewer health services, it doesn’t lead to budget reductions, but rather means those health resources can be allocated differently).  Nevertheless, the most compelling case of shifting our focus to housing with supports comes from the At Home/Chez Soi project, which has done some interesting analyses comparing the average shelter, health and justice costs of those in Housing First against those receiving treatment as usual (TAU).  The project has also conducted  an analysis comparing High Service Users against the whole group.  The findings are illustrative.  

For instance, it was found that implementing Housing First requires an additional investment of over $4000 per person, per year.  For the full group (ranging from high to low needs) there is a return of $7 for every $10 spent on Housing First. If one focuses only on the high service user group (10% of the sample) arguably the group with the most complex mental health and addictions issues, there are even greater savings: for the high service users, an investment in Housing First saves almost $22,000 per year.