Sunday, March 26, 2006

Power Law Theory and the Homeless

For decades, the strategy to deal with homelessness in America has been to manage the problem, rather than fixing the problem. So says author Malcolm Gladwell in his New Yorker essay “Million Dollar Murray,” which details the complexity of dealing with the homeless population and the hopelessness of our current state and federal policies.

Gladwell is a refreshing read, as he’s a liberal who actually gets it. He makes reasoned arguments, and when he addresses a conservative position on a particular issue, his argument actually represents an actual conservative position, rather than an easily disposable lefty fantasy. Needless to say, arguments from people that use reason should be taken much more seriously than those who use hysterics and hyperbole.

Gladwell’s theory is essentially this: while Americans generally view the “homeless” as a unitary group with similar characteristics, statistics show that the most extreme cases, or the “chronically homeless,” make up only ten percent of the homeless population. Gladwell cites studies to support his theory that the homeless follow a “power law” distribution, meaning about ten percent of the homeless are far and away the most costly to society, due to the constant medical attention they need for mental disorders and substance abuse.

As an example, Gladwell uses “Murray,” an alcoholic homeless man in Reno who the police had to pull out of casinos on a regular basis. Local authorities estimate that Murray needed over a million dollars’ worth of medical care before he finally died. The tab for his medical care is either picked up by taxpayers or via private insurance payers through higher premiums.

One homeless service program in Boston tracked the medical expenses of 119 chronically homeless people. Their study showed that over five years, 33 people died and seven were sent to nursing homes, but that group of 119 people accounted for 18,834 emergency room visits, with a minimum cost of $1,000 per visit. While 90% of individuals are homeless for only a few days or weeks, it is the remaining 10% of the most severe homeless that are overburdening our social service system.

Gladwell proposes that instead of merely managing the homeless problem, it would be in our best interest to expend the resources necessary to solve the problem. He argues that our system of soup kitchens and shelters only allows the homeless to remain homeless, thereby providing a disincentive for people to straighten their lives out. Gladwell’s solution means identifying the chronically homeless and doing whatever it takes to help them, including providing stable housing, substance abuse services, and career counseling.

There are good conservative arguments against this type of approach. For instance, government would be going out of their way to help people that either don’t want help or don’t deserve it. Some families work extra jobs to make ends meet, and government would be picking up the tab to provide a new life for people who have shown no personal responsibility or initiative.

On the other hand, government will be paying for these people one way or another. It appears that spending money up front to help people with severe problems could be much less costly than our current system of paying their substantial medical bills on the back end. If it was necessary to shift resources away from the current soup kitchen-shelter system to fund such a re-prioritization, then that may be a worthwhile endeavor.

American government has a strong egalitarian streak which forces it to treat individuals the same no regardless of individual circumstance. This causes a lot of people to be partially dependent on government to maintain their way of life. It may be time to challenge this way of thinking and provide a few people with a lot of help.