Lecture Hop: Homeless, Meet Adam Smith
Written by Bwog Staff
Jim Downie, Chief Housing Or Lack Thereof Correspondent, covers the lecture of Professor Brendan O’Flaherty, an associate professor of economics and the co-director of Columbia’s Center for Homelessness Prevention Studies. His Facebook fan group claims: “whenever we get an email from [email protected] we all feel 1/5th of an orgasm.”
Due to the recession, more families are turning to shelters and subsidized housing. Seeking to answer the question of “When Should Homeless Families Get Subsidized Housing?” Professor Dan O’Flaherty’s background in economics to informed the advocation incentive-driven social policy.
According to O’Flaherty, there are two “totally incoherent” schools of thought on this issue of who and when to help: one side emphasizing “early placement” (i.e. as quickly as possible), while the other is emphasizing “chronic homelessness” (i.e. those that have waited for the longest time).
Fortunately, O’Flaherty says, “this happens to be a problem that economic theory is pretty good at addressing.” Since the audience was almost entirely people without economic backgrounds, O’Flaherty set up a simple “game tree.” The game tree maps out three decision points: first, the shelter operator decides to give a new family subsidized housing or not. If not, then the family decides to look for housing on its own or not, and is either successful or not if it does decide to look. Either the family succeeds in finding housing on its own, or returns to the original choice of the shelter operator whether to place the family in subsidized housing or not. Any decision model, O’Flaherty argued, has to follow this decision path while minimizing cost, preventing the shelter/housing system from becoming so good a deal that too many people crowd it.
With that very dry explanation aside (punctuated by O’Flaherty’s constant self-deprecation about his own intelligence), O’Flaherty concluded that there should be more than one placement system depending on the family applying for housing. Those families who are likely to recover in short order should be placed as soon as possible, while families likely to be chronically homeless should go into shelters for a period of time before being placed. The restructured incentives encourage families at all levels to apply for housing without needing to misrepresent themselves in any way.
The attendees, well versed in the realities of the issue, peppered O’Flaherty with smart questions about the cost of the program, the “front door” issue (i.e. keeping the program from becoming too popular), and whether a shelter operator can accurately judge a family. O’Flaherty suggested further questions could be answered by a more complicated model with more specific incentives; the audience, perhaps fearful of more numbers and several more doses of self-deprecation, seemed satisfied to leave those to the economics expert.