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Individual homelessness: Entries, exits, and policy

  • O’Flaherty, Brendan
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    Homelessness is part of the lives of many people. But almost no one is homeless for all or most of his or her life. The median shelter homeless spell is well under a month, and even “chronic homelessness” officially entails spells of a year or so. I model homelessness as part of people’s lives in a dynamic stochastic framework in continuous time. I can explain many empirical regularities with a parsimonious model: for instance, why the last addresses of homeless people are concentrated in a few low-rent neighborhoods, why homeless entries are hard to predict, why recidivism is common and past homelessness is a good predictor of future homelessness, why some groups recidivate more often than others, why the hazard rate for shelter exit is single-peaked, why effective homelessness prevention programs do not alter the average length of homeless spells. I also examine policy. The optimal homelessness prevention program is Pigouvian and starkly simple. With an optimal prevention program in place, optimal shelter quality maximizes a simple and intuitive expression, and insurance programs always raise social welfare. Most of the previous economics literature about homelessness has been static, but most literature about homelessness outside economics has been dynamic. This paper tries to bring the two strands of literature closer together.

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    Article provided by Elsevier in its journal Journal of Housing Economics.

    Volume (Year): 21 (2012)
    Issue (Month): 2 ()
    Pages: 77-100

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    Handle: RePEc:eee:jhouse:v:21:y:2012:i:2:p:77-100
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    1. R. C. Merton, 1970. "Optimum Consumption and Portfolio Rules in a Continuous-time Model," Working papers 58, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. O'Flaherty, Brendan & Wu, Ting, 2006. "Fewer subsidized exits and a recession: How New York City's family homeless shelter population became immense," Journal of Housing Economics, Elsevier, vol. 15(2), pages 99-125, June.
    3. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, volume 1, number 5474.
    4. Early Dirk W. & Olsen Edgar O., 2002. "Subsidized Housing, Emergency Shelters, and Homelessness: An Empirical Investigation Using Data from the 1990 Census," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-36, August.
    5. Olga Gorbachev, 2007. "Did Household Consumption Become More Volatile?," ESE Discussion Papers 161, Edinburgh School of Economics, University of Edinburgh.
    6. Cragg, Michael & O'Flaherty, Brendan, 1999. "Do Homeless Shelter Conditions Determine Shelter Population? The Case of the Dinkins Deluge," Journal of Urban Economics, Elsevier, vol. 46(3), pages 377-415, November.
    7. Allgood, Sam & Warren, Ronald Jr., 2003. "The duration of homelessness: evidence from a national survey," Journal of Housing Economics, Elsevier, vol. 12(4), pages 273-290, December.
    8. Allgood, Sam & Moore, Myra L. & Warren, Ronald Jr., 1997. "The Duration of Sheltered Homelessness in a Small City," Journal of Housing Economics, Elsevier, vol. 6(1), pages 60-80, March.
    9. Honig, Marjorie & Filer, Randall K, 1993. "Causes of Intercity Variation in Homelessness," American Economic Review, American Economic Association, vol. 83(1), pages 248-55, March.
    10. John M. Quigley, 1990. "Does rent control cause homelessness? taking the claim seriously," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 9(1), pages 89-93.
    11. Dennis P. Culhane & Stephen Metraux & Jung Min Park & Maryanne Schretzman & Jesse Valente, 2007. "Testing a typology of family homelessness based on patterns of public shelter utilization in four U.S. jurisdictions: Implications for policy and program planning," Housing Policy Debate, Taylor & Francis Journals, vol. 18(1), pages 1-28, January.
    12. O'Flaherty, Brendan, 2004. "Wrong person and wrong place: for homelessness, the conjunction is what matters," Journal of Housing Economics, Elsevier, vol. 13(1), pages 1-15, March.
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