The Denver Basic Income Project is being branded as a success story after giving homeless people up to $1,000 per month in an effort to study the money’s impact on their lives. But despite the praise, the project did not actually demonstrate that a universal basic income scheme was beneficial.
The project, which was funded by the city of Denver, began giving payments to people in the fall of 2022, and was extended by six months this January. Over 800 participants were split into three separate groups, with 631 of them completing the study and contributing to the final report.
Group A received $1,000 per month for 12 months. Group B received $6,500 up front, and then $500 for the rest of the 11 months. Group C acted as an “active comparison group,” and received a nominal $50 per month. Importantly, Group C was the functional control group against which researchers would be able to determine the success of Group A and Group B.
With the initial report released on June 18, outlets such as Business Insider proudly reported that the project had been a success, writing: “Denver gave people experiencing homelessness $1,000 a month. A year later, nearly half of participants had housing.”
On the official website, the report claimed that “all payment groups showed significant improvements in housing outcomes, including a remarkable increase in home rent and ownership, and decrease in nights spent unsheltered.”
They also boast that “all cohorts demonstrated significant reductions in public service utilization,” making the impressive claim that the scheme had saved the taxpayers $589,214 from the participants not using ambulances, being thrown in jail, or utilizing homeless shelters.
Project director Mark Donovan claimed in a press conference that the results showed it was a “really exciting time in the movement” for universal basic income. “If we’re able to move people into housing and out of homelessness at a lower cost and generate better long-term outcomes, why wouldn’t we try to expand and build upon that?”
However, looking past the headlines, the organization admits that “minimal differences were observed when comparing outcomes across the payment groups.”
On page 27 of their report, data reveals that the probability of being homeless across the first 12 months of the study barely differed between each of the three groups, with them all going down in close to the same rates.
While 44% of Group A participants were housed by the end of the study, a very comparable 43% of Group C participants were also housed.
“This may suggest that consistent cash assistance of even $50 can improve many aspects of one’s life,” the report states.
Notably, the project was not representative of all homeless people, as the participants in the study were required to be free of any “severe and unaddressed mental health or substance abuse needs.” They were also required to be enrolled in other social service resources.
Most significantly, the outcomes of Groups A and B, who received large sums of money, were not compared against Group C, the control group. Each group was simply compared to itself across time, marking “statistically significant” results when none actually existed.
The supposed savings themselves also did not take into account how much the program itself cost, and were only gross savings. With almost $10 million being spent on the project, the net savings were actually negative.
On social media, opinions on the results were split, with many activists jumping to praise the results of the trial. One post on X from Gravity Payments founder Dan Price racked up over 120,000 ‘likes,’ boasting of the project’s success.
But Price’s post was quickly struck with a Community Note, which corrected his claims and noted that the $1,000 per month group did not vary significantly from the $50 per month group.
Other users who actually read the study came to a very different conclusion, noting that the circulated results of the study were largely being fabricated or overplayed.
“These guys did a real experiment and they found an interesting result. Basic income payments don’t help the homeless that much,” said TikToker QuickThoughts.
“But rather than candidly and clearly communicating the interesting result that they observed, they instead told people the exact opposite.”
