The economics of... homelessness
Why do people live on the streets? / 54
It’s getting cold in Berlin. Being homeless is now even more dangerous than it already is.
Have you ever lived on the streets? Probably not. Fortunately, few have this experience – in the US, for example, 0.2 per cent.
Thanks for reading The Strolling Economist! Subscribe for free to receive new posts and support my work.
What makes people homeless?
The first thing that comes to mind is substance abuse. But experts say it does not always come prior to becoming homeless but is a habit that’s picked up as a result of being on the streets.
Another reason is escaping domestic violence. It is one of the most common causes of situational homelessness – both men and women. It’s a consequence of making a quick exit and finding a place where their abuser can’t find them. Many of those people end up on the streets.
Mental issues, disabilities and poverty are further issues.
A frequently underestimated reason is rising rental costs. The (older but fundamental) study “The Economics of Homelessness: The Evidence from North America” found this as a crucial factor. The authors John M. Quigley and Steven Raphael wrote: “Our results suggest that simple economic principles governing the availability and pricing of housing and the growth in demand for the lowest quality housing explain a large portion of the variation in homelessness among US metropolitan housing markets.”
It is not surprising that the proposal of the two economists is to make more affordable living space available. Quigley and Raphael again: “Rather modest improvements in the affordability of rental housing or its availability can substantially reduce the incidence of homelessness in the US.”
Certainly, the situation in the USA cannot be transferred to the whole world. At least this is certain: Homelessness is terrible everywhere. And a shame for the society that isn’t able to give everyone shelter.