Making Room: The Economics of Homelessness

Mentally ill people turned out of institutions, crack-cocaine use on the rise, more poverty, public housing a shambles: as attempts to explain homelessness multiply so do the homeless—and we still don’t know why. The first full-scale economic analysis of homelessness, Making Room provides answers quite unlike those offered so far by sociologists and pundits. It is a story about markets, not about the bad habits or pathology of individuals. One perplexing fact is that, though homelessness in the past occurred during economic depressions, the current wave started in the 1980s, a time of relative prosperity. As Brendan O’Flaherty points out, this trend has been accompanied by others just as unexpected: rising rents for poor people and continued housing abandonment. These are among the many disconcerting facts that O’Flaherty collected and analyzed in order to account for the new homelessness. Focused on six cities (New York, Newark, Chicago, Toronto, London, and Hamburg), his studies also document the differing rates of homelessness in North America and Europe, and from one city to the next, as well as interesting changes in the composition of homeless populations. For the first time, too, a scholarly observer makes a useful distinction between the homeless people we encounter on the streets every day and those “officially” counted as homeless. O’Flaherty shows that the conflicting observations begin to make sense when we see the new homelessness as a response to changes in the housing market, linked to a widening gap in the incomes of rich and poor. The resulting shrinkage in the size of the middle class has meant fewer hand-me-downs for the poor and higher rents for the low-quality housing that is available. O’Flaherty’s tightly argued theory, along with the wealth of new data he introduces, will put the study of homelessness on an entirely new plane. No future student or policymaker will be able to ignore the economic factors presented so convincingly in this plainspoken book.

Table of Contents:
Acknowledgments Introduction What Is Homelessness? Why Is It Bad? Homeless Histories Daytime Streetpeople How to Think about Housing Markets Income Distribution Interest Rates and Operating Costs Cross-Section Studies Government and Housing Income Maintenance Mental Health Substance Abuse Criminal Justice What We Should Do Appendix: Homeless Studies Notes References Index

About the Author :
Brendan O’Flaherty is Professor of Economics at Columbia University. His books include The Economics of Race in the United States and City Economics.

Review :
A longtime political operative in the city of Newark who happens to be something of a technical ace in a university economics department as well, O'Flaherty adopted a well-understood model of housing markets and put it to work testing various hypotheses...Thanks to him, the diagnosis [of the causes of homelessness] is increasingly clear. O'Flaherty has written an important book to explain the rise of the 'new homelessness'...An original and wide-ranging account, written with grace and subtlety. It should be read carefully by any social scientist interested in poverty, housing, or urban policy...A tour de force worthy of study by anyone with an interest in applied microeconomic theory. [O'Flaherty's] questions are key to any basic analysis of the problem: What is homelessness? Why is it bad? What happened? Why did it happen? What can we do, and what should we do about it?...O'Flaherty's strength is documenting [the] daytime symbols of public poverty. He is mainly interested in the extent to which...single adults--whom he labels, for want of a better word, the colloquial homeless--are affected by housing market and shelter policies. Are they really homeless? Are they inherently lazy? His findings are surprising. The most original and wide-ranging book ever written on the homeless. [O'Flaherty] intrepidly challenges conventional theories of the rise of homelessness and offers fresh ones...Brash, iconoclastic, and down-to-earth, Making Room belongs in the library of anyone interested in extreme poverty.