Power-Laws and Redistribution

In a recent issue of the New Yorker, Malcolm Gladwell revealed some surprising statistics about chronic homelessness and healthcare. The costs were more expensive than I could have imagined. But the problem was not nearly as widespread -- and that gave cause for optimism. In an interview with an administrator in Nevada, Gladwell wrote:
"We came up with three names that were some of our chronic inebriates in the downtown area, that got arrested the most often," O’Bryan said. "We tracked those three individuals through just one of our two hospitals. One of the guys had been in jail previously, so he’d only been on the streets for six months. In those six months, he had accumulated a bill of a hundred thousand dollars—and that’s at the smaller of the two hospitals near downtown Reno. It’s pretty reasonable to assume that the other hospital had an even larger bill. Another individual came from Portland and had been in Reno for three months. In those three months, he had accumulated a bill for sixty-five thousand dollars. The third individual actually had some periods of being sober, and had accumulated a bill of fifty thousand."

Gladwell interviewed Dr. Culhane, who had written his graduate dissertation on homelessness and had slept in shelters, for research:
Homelessness doesn’t have a normal distribution, it turned out. It has a power-law distribution. "We found that eighty per cent of the homeless were in and out really quickly," he said. "In Philadelphia, the most common length of time that someone is homeless is one day. And the second most common length is two days. And they never come back. Anyone who ever has to stay in a shelter involuntarily knows that all you think about is how to make sure you never come back."

The next ten per cent were what Culhane calls episodic users. They would come for three weeks at a time, and return periodically, particularly in the winter. They were quite young, and they were often heavy drug users. It was the last ten per cent—the group at the farthest edge of the curve—that interested Culhane the most. They were the chronically homeless, who lived in the shelters, sometimes for years at a time. They were older. Many were mentally ill or physically disabled, and when we think about homelessness as a social problem—the people sleeping on the sidewalk, aggressively panhandling, lying drunk in doorways, huddled on subway grates and under bridges—it’s this group that we have in mind.

Culhane’s database suggested that New York City had a quarter of a million people who were homeless at some point in the previous half decade —which was a surprisingly high number. But only about twenty-five hundred were chronically homeless.

It turns out, furthermore, that this group costs the health-care and social-services systems far more than anyone had ever anticipated.

The guy I saw on the sidewalk, that summer evening? He may well be one of the city's 2500. But New York's Bravest said they didn't recognize him as a regular, when they took him down the street to the hospital. Either way, as a first timer to the hospital, he would have had forms generated, labs drawn. Depending on the attending, maybe even a head CT. If his belly was tender on physical exam, maybe much more. It's easy to see how an indigent substance abuser can rack up millions of dollars of healthcare charges over the year. Faced with this tremendous expense from a relative small group, Gladwell found people proposing a revolutionary solution:
"I spoke with people doing services there. They had a very difficult group of people they couldn’t reach no matter what they offered. So I said, Take some of your money and rent some apartments and go out to those people, and literally go out there with the key and say to them, 'This is the key to an apartment. If you come with me right now I am going to give it to you, and you are going to have that apartment.' And so they did. And one by one those people were coming in. Our intent is to take homeless policy from the old idea of funding programs that serve homeless people endlessly and invest in results that actually end homelessness."

There's an obvious challenge to such generosity:
Post had just been on a conference call with some people in New York City who run a similar program, and they talked about whether giving clients so many chances simply encourages them to behave irresponsibly. For some people, it probably does. But what was the alternative? If this young man was put back on the streets, he would cost the system even more money. The current philosophy of welfare holds that government assistance should be temporary and conditional, to avoid creating dependency. But someone who blows .49 on a Breathalyzer and has cirrhosis of the liver at the age of twenty-seven doesn’t respond to incentives and sanctions in the usual way.

Power-law solutions have little appeal to the right, because they involve special treatment for people who do not deserve special treatment; and they have little appeal to the left, because their emphasis on efficiency over fairness suggests the cold number-crunching of Chicago-school cost-benefit analysis. Even the promise of millions of dollars in savings or cleaner air or better police departments cannot entirely compensate for such discomfort.

Yet, despite their lack of appeal to both ends of the political spectrum, these programs may just work.

Gladwell's piece ends on a sour note -- one of the more lovable alcoholics, who had been a regular to many healthcare workers, dies. When his caregivers grieved, it reminded me that homelessness isn't just a problem that needs a solution, a cost that needs to be controlled.

And it provided me with the proper perspective to answer a friend, who recently asked me, "Now that you're well into your internship, and have seen countless drunks and alcoholics -- many repeatedly -- would you call 911 again?"