College of Humanities and Social Sciences

Essays on Non-Market Entrepreneurship and Public Policy: The Case of Homelessness in the United States

David S. Lucas

Major Professor: Christopher Coyne, PhD, Department of Economics

Committee Members: Peter J. Boettke, Peter T. Leeson, Maria Minniti

Buchanan Hall (formerly Mason Hall), #D135
March 22, 2018, 10:00 AM to 12:00 PM


Homelessness is a pressing social issue. Nearly 550,000 people were counted as homeless in the U.S. in January 2016. 1.4 million people entered shelters throughout 2013; this excludes the many individuals and families sleeping in cars, parks, and other places not meant for human habitation. Homelessness disproportionately affects veterans; homeless children face considerable challenges in terms of physical and mental health, exposure to violence, and educational achievement. One third of the homeless are families. 

Since the early 1980’s, the federal government has been a key source of support for the organizations that provide shelter and other services to the homeless, and targeted homelessness funding now exceeds $5 billion per year. Yet, scholarly consensus is that the problem of homelessness has persisted if not worsened. 

For-profit entrepreneurs have much to offer in the face of social problems. But much of the response to homelessness takes place beyond the market—in the public and non-profit spheres. For example, activists often operate as political entrepreneurs, engaging with the political process to pursue policy change. In turn, policy influences the way that third sector organizations (e.g., organizations that serve the homeless) pursue their social goals, providing valuable resources and leadership while posing unique challenges like mission drift and donation crowd-out. Together, the public and non-profit responses to homelessness can be thought of as manifestations of “non-market entrepreneurship.” Using mixed methods across three chapters, my dissertation explores the interactions between non-market entrepreneurs (e.g., activists and homeless services organizations) and public policy in the fight against homelessness. 

The first chapter, “Federal Funding and the Rise of Permanent Supportive Housing in the Homeless Shelter Industry,” investigates how public support alters non-market organizations’ behavior. I draw on the emerging literature on organizational sponsorship to understand how public support affects the diffusion of a new homeless shelter model. I find that public funding alters the non-market entrepreneurial process, leading organizations to radically change their approach to homelessness by adopting the government’s preferred shelter type in lieu of traditional or alternative programs. 

The second chapter, “Evidence-Based Policy as Public Entrepreneurship,” asks why the government came to support innovation in homeless services in the first place. I synthesize insights from several core strands of entrepreneurship theory alongside the logic of entangled political economy to provide a theory of public entrepreneurship that explicitly considers the role of evidence in the policy process. I apply this theory to explain how a complex process of public entrepreneurship involving activists, experts, and policymakers gave rise to a shift in homelessness policy in the United States at the turn of the 21st century. 

The final chapter, “The Impact of Federal Homelessness Funding on Homelessness,” asks whether federal homelessness funding reduced homelessness in communities in the period I study. I find that communities that receive greater funding have higher rates of “sheltered” homelessness (people housed by homeless services organizations); however, they do not actually have lower rates of “unsheltered” homelessness (people sleeping outside). This finding suggests a tenuous link between non-market organizations, policy change, and people experiencing homelessness—highlighting some of the limits on the government’s ability to “guide” the entrepreneurial response to complex social problems.

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