Denver experimented with giving people $1,000 a month. It reduced homelessness and increased full-time employment, a study found.

Direct cash assistance reduced homelessness and increased employment in Denver, a study found.

About 800 unhoused Denver residents have been receiving monthly payments ranging from $50 to $1,000.

They reported fewer nights spent sleeping on the street.

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It does not necessarily buy happiness, but personal experience and academic research both suggest that when people have more money, they are more likely to lead a pleasant life. That's the premise of a social experiment in Denver, where for the past few months, several hundred of the city's most vulnerable people have been given straight-up cash with no strings attached.

The results, so far: People who were sleeping on the streets at the start of the experiment are now — with more money in their pocket — feeling safer, experiencing better mental health, and enjoying access to more stable and welcoming living arrangements.

Mark Donovan, founder and executive director of the Denver Basic Income Project, told Insider that he was "very encouraged" by the findings.

"Many participants reported that they have used the money to pay off debt, repair their car, secure housing, and enroll in a course," he said. "These are all paths that could eventually lead participants out of poverty and allow them to be less dependent on social support programs."

Donovan founded the Denver Basic Income Project in 2021. An entrepreneur, he made his money off Wooden Ships, a clothing company that specializes in sweaters for women, and an investment in Tesla that skyrocketed during the pandemic. He used some of that cash — and a $2 million contribution from the city — to actually begin distributing money to others last year.

Commentary on homelessness often focuses on mental health and addiction, perceived as the chief drivers of a spike in people sleeping on the streets in cities from Sacramento to Jacksonville. But as the Pew Charitable Trust noted in a recent analysis, research has "consistently found that homelessness in an area is driven by housing costs" (i.e., the rent, not the weather).

Six months in, most who received money from the project were better off — significantly so, according to researchers at the University of Denver's Center for Housing and Homelessness Research.

How Denver's universal basic income plan worked

Last October, more than 800 people were enrolled in the basic income plan, but they did not all receive the same stipend. There are three groups: One receives $1,000 a month for a year; another receives $6,500 up front and then $500 a month from there; and another gets just $50 a month.

While cautioning that this is only an interim report for what is a yearlong study, the researchers nonetheless found stark and encouraging changes in participants' material conditions. Those that received $500 or more per month saw the biggest gains. At the start, fewer than 10% were living in their own home or apartment, while at the six-month point, more than a third lived in their own housing.

The guaranteed income also dramatically reduced visible homelessness. When the initiative began, some 6% of the people in the $1,000/month group were sleeping outside; the number fell to zero six months later. The group that received a large lump sum similarly reported a decline from 10% sleeping outdoors to 3%. Even those who received just $50 moved indoors, to a degree, the rate declining from 8% to 4%.

Where were people going? Many, actually, to their own place. In the group that receives $1,000 a month, 34% of participants now reside in their own home or apartment, up from just 8% a half-year earlier. For all groups, the number sleeping in shelters was more than halved, and all reported increased feelings of safety in their current sleep location. Overall mental health also improved, though the group that received $50 reported slightly more stress and anxiety than before — and a little less hope.

Other cities are also trying UBI

That material gains were seen among all groups suggests that at least some of the improvements may be attributable to something other than cash, such as increased access to other services during the study period (the researchers do not speculate). And the study also relied on participants self-reporting their situations in exchange for payments of up to $30.

But the findings track with other cities' experiences.

In San Francisco, a study of 14 people receiving $500 a month found that two-thirds of those who were homeless at the start had found permanent housing six months later. Smaller cities, such as Santa Fe, have also experimented with cash payments, as have rural areas, including upstate New York. Philadelphia is even extending the concept to other vulnerable groups, including people who are pregnant.

Outside the United States, other countries are also finding that the carrot of direct cash assistance is looking to be a more effective means of addressing certain social ills than either the stick of policing or the patronization of more traditional assistance programs, where aid comes with strings.

Vancouver, Canada, recently gave about $5,600 to a group of more than a hundred people experiencing poverty.

"Housing improved, it reduced homelessness, it increased spending and savings over time, and was a net savings for government and taxpayers," Jiaying Zhao, an associate professor of psychology at the University of British Columbia, told The Guardian.