☆ Economist: SCC income subsidies tricky to justify, evaluate, upscale

Stanford University economics professor and Hoover Institution fellow John Cochrane scrutinizes Ellenberg's guaranteed income program for homeless SCC students. Whereas some subsidies encourage private sector participation, Cochrane doubts if SCC's—arbitrarily targeted and dismissive of underlying trammels—will indeed make positive change. An Opp Now exclusive.

In these types of programs, it’s actually hard to object to $4,000 (three months) if they really are homeless and it gets them into some sort of effective counseling program.

Too bad with a limited number (50), SCC won't do a proper randomized controlled trial: Enroll 100 people, randomly give the money to 50, track them all, and compare outcomes over a few years to see if it actually works, or if the outcomes are the same (good or bad) either way.

The obvious objections come when one wants to scale this program up. If we scale up to all teens who say they are homeless, for as long as they say they are homeless, how many is that and how much does it cost? (Including staff, counselors, and administrative support.) Incentives: How many will move to SJ or declare themselves homeless once there is a $1,300 monthly check on the line? How many will stay homeless once getting an apartment costs an extra $1,300 per month?

Is this fair to people who struggle, work hard at low wage jobs, and pay the high rents it costs to stay in SJ, or commute long distances? Why is “homeless” the right criterion rather than low income, assets, and other struggles?

“Homeless teen” begs the question... parents? Presumably, they have homeless parents? How can you treat a homeless teen as an individual without addressing the family dysfunction behind it?

Labor market? SJ desperately needs young and low skilled workers. The fraction of people from poor backgrounds who actually work is tragically low. If the program does produce additional workers, that’s great all around. I’ve never seen a government program that actually produces more people who work in the private sector, but who knows, this might be the first.

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