scarcity and economics case study #1 answer key

school Campus Bookshelves
menu_book Bookshelves
perm_media Learning Objects
login Login
how_to_reg Request Instructor Account
hub Instructor Commons
Download Page (PDF)
Download Full Book (PDF)
Periodic Table
Physics Constants
Scientific Calculator
Reference & Cite
Tools expand_more
Readability

selected template will load here

This action is not available.

2.2: Scarcity and Opportunity Cost

Last updated
Save as PDF
Page ID 71390

Learning Objective

Define economics.
Explain the concepts of scarcity and opportunity cost and how they relate to the definition of economics.
Understand the three fundamental economic questions: What should be produced? How should goods and services be produced? For whom should goods and services be produced?

Economics is a social science that examines how people choose among the alternatives available to them. It is social because it involves people and their behavior. It is a science because it uses, as much as possible, a scientific approach in its investigation of choices.

Scarcity, Choice, and Cost

All choices mean that one alternative is selected over another. Selecting among alternatives involves three ideas central to economics: scarcity, choice, and opportunity cost.

Our resources are limited. At any one time, we have only so much land, so many factories, so much oil, so many people. But our wants, our desires for the things that we can produce with those resources, are unlimited. We would always like more and better housing, more and better education—more and better of practically everything.

If our resources were also unlimited, we could say yes to each of our wants—and there would be no economics. Because our resources are limited, we cannot say yes to everything. To say yes to one thing requires that we say no to another. Whether we like it or not, we must make choices.

Our unlimited wants are continually colliding with the limits of our resources, forcing us to pick some activities and to reject others. Scarcity is the condition of having to choose among alternatives. A scarce good is one for which the choice of one alternative requires that another be given up.

Consider a parcel of land. The parcel presents us with several alternative uses. We could build a house on it. We could put a gas station on it. We could create a small park on it. We could leave the land undeveloped in order to be able to make a decision later as to how it should be used.

Suppose we have decided the land should be used for housing. Should it be a large and expensive house or several modest ones? Suppose it is to be a large and expensive house. Who should live in the house? If the Lees live in it, the Nguyens cannot. There are alternative uses of the land both in the sense of the type of use and also in the sense of who gets to use it. The fact that land is scarce means that society must make choices concerning its use.

Virtually everything is scarce. Consider the air we breathe, which is available in huge quantity at no charge to us. Could it possibly be scarce?

The test of whether air is scarce is whether it has alternative uses. What uses can we make of the air? We breathe it. We pollute it when we drive our cars, heat our houses, or operate our factories. In effect, one use of the air is as a garbage dump. We certainly need the air to breathe. But just as certainly, we choose to dump garbage in it. Those two uses are clearly alternatives to each other. The more garbage we dump in the air, the less desirable—and healthy—it will be to breathe. If we decide we want to breathe cleaner air, we must limit the activities that generate pollution. Air is a scarce good because it has alternative uses.

Not all goods, however, confront us with such choices. A free good is one for which the choice of one use does not require that we give up another. One example of a free good is gravity. The fact that gravity is holding you to the earth does not mean that your neighbor is forced to drift up into space! One person’s use of gravity is not an alternative to another person’s use.

There are not many free goods. Outer space, for example, was a free good when the only use we made of it was to gaze at it. But now, our use of space has reached the point where one use can be an alternative to another. Conflicts have already arisen over the allocation of orbital slots for communications satellites. Thus, even parts of outer space are scarce. Space will surely become more scarce as we find new ways to use it. Scarcity characterizes virtually everything. Consequently, the scope of economics is wide indeed.

Scarcity and the Fundamental Economic Questions

The choices we confront as a result of scarcity raise three sets of issues. Every economy must answer the following questions:

What should be produced? Using the economy’s scarce resources to produce one thing requires giving up another. Producing better education, for example, may require cutting back on other services, such as health care. A decision to preserve a wilderness area requires giving up other uses of the land. Every society must decide what it will produce with its scarce resources.
How should goods and services be produced? There are all sorts of choices to be made in determining how goods and services should be produced. Should a firm employ a few skilled or a lot of unskilled workers? Should it produce in its own country or should it use foreign plants? Should manufacturing firms use new or recycled raw materials to make their products?
For whom should goods and services be produced? If a good or service is produced, a decision must be made about who will get it. A decision to have one person or group receive a good or service usually means it will not be available to someone else. For example, representatives of the poorest nations on earth often complain that energy consumption per person in the United States is 17 times greater than energy consumption per person in the world’s 62 poorest countries. Critics argue that the world’s energy should be more evenly allocated. Should it? That is a “for whom” question.

Every economy must determine what should be produced, how it should be produced, and for whom it should be produced. We shall return to these questions again and again.

Opportunity Cost

It is within the context of scarcity that economists define what is perhaps the most important concept in all of economics, the concept of opportunity cost. Opportunity cost is the value of the best alternative forgone in making any choice.

The opportunity cost to you of reading the remainder of this chapter will be the value of the best other use to which you could have put your time. If you choose to spend $20 on a potted plant, you have simultaneously chosen to give up the benefits of spending the $20 on pizzas or a paperback book or a night at the movies. If the book is the most valuable of those alternatives, then the opportunity cost of the plant is the value of the enjoyment you otherwise expected to receive from the book.

The concept of opportunity cost must not be confused with the purchase price of an item. Consider the cost of a college or university education. That includes the value of the best alternative use of money spent for tuition, fees, and books. But the most important cost of a college education is the value of the forgone alternative uses of time spent studying and attending class instead of using the time in some other endeavor. Students sacrifice that time in hopes of even greater earnings in the future or because they place a value on the opportunity to learn. Or consider the cost of going to the doctor. Part of that cost is the value of the best alternative use of the money required to see the doctor. But, the cost also includes the value of the best alternative use of the time required to see the doctor. The essential thing to see in the concept of opportunity cost is found in the name of the concept. Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice.

The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up. The existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it.

Key Takeaways

Economics is a social science that examines how people choose among the alternatives available to them.
Scarcity implies that we must give up one alternative in selecting another. A good that is not scarce is a free good.
The three fundamental economic questions are: What should be produced? How should goods and services be produced? For whom should goods and services be produced?
Every choice has an opportunity cost and opportunity costs affect the choices people make. The opportunity cost of any choice is the value of the best alternative that had to be forgone in making that choice.

Identify the elements of scarcity, choice, and opportunity cost in each of the following:

The Environmental Protection Agency is considering an order that a 500-acre area on the outskirts of a large city be preserved in its natural state, because the area is home to a rodent that is considered an endangered species. Developers had planned to build a housing development on the land.
The manager of an automobile assembly plant is considering whether to produce cars or sport utility vehicles (SUVs) next month. Assume that the quantities of labor and other materials required would be the same for either type of production.
A young man who went to work as a nurses’ aide after graduating from high school leaves his job to go to college, where he will obtain training as a registered nurse.

Case in Point: The Rising Cost of Energy

Oil is an exhaustible resource. The oil we burn today will not be available for use in the future. Part of the opportunity cost of our consumption of goods such as gasoline that are produced from oil includes the value people in the future might have placed on oil we use today.

It appears that the cost of our use of oil may be rising. We have been using “light crude,” the oil found in the ground in deposits that can be readily tapped. As light crude becomes more scarce, the world may need to turn to so-called “heavy crude,” the crude oil that is found in the sandy soil of places such as Canada and Venezuela. That oil exists in such abundance that it propels Venezuela to the top of the world list of available oil. Saudi Arabia moves to the second position; Canada is third.

The difficulty with the oil mixed in the sand is that extracting it is far more costly than light crude, both in terms of the expenditures required and in terms of the environmental damage that mining it creates. Northern Alberta, in Canada, boasts a Florida-sized area whose sandy soils are rich in crude oil. Some of that oil is 1,200 feet underground. Extracting it requires pumping steam into the oily sand and then pumping up the resultant oily syrup. That syrup is then placed into huge, industrial-sized washing machines that separate crude oil. What is left over is toxic and will be placed in huge lakes that are being created by digging pits in the ground 200 feet deep. The oil produced from these sands has become important—Alberta is the largest foreign supplier of oil to the United States.

Sands that are closer to the surface are removed by bulldozers and giant cranes; the forest over it is cleared away. The oily sand is then hauled off in two-story dump trucks which, when filled, weigh more than a Boeing 747. Total SA, a French company, is leading the race to develop Canada’s oil. Jean Luc-Guiziou, the president of Total SA’s Canadian operations, says that the extraordinarily costly process of extracting heavy crude is something the world is going to have to get used to. “The light crude undiscovered today is getting scarcer and scarcer,” he told The Wall Street Journal . “We have to accept the reality of geoscience, which is that the next generation of oil resources will be heavier.”

Already, Total SA has clear-cut thousands of acres of forest land in order to gain access to the oily sand below. The process of extracting heavy crude oil costs the company $25 a barrel—compared to the $6 per barrel cost of extracting and refining light crude. Extracting heavy crude generates three times as much greenhouse gas per barrel as does light crude. By 2015, Fort McMurray, the small (population 61,000) town that has become the headquarters of Northern Alberta’s crude oil boom, will emit more greenhouse gas than the entire country of Denmark (population 5.4 million). Canada will exceed its greenhouse gas quota set by the Kyoto Accords—an international treaty aimed at limiting global warming—largely as a result of developing its heavy crude deposits.

No one even considered the extraction of heavy crude when light crude was cheap. In the late 1990s, oil cost just $12 per barrel, and deposits of heavy crude such as those in Canada attracted little attention. By mid-2006, oil sold for more than $70 per barrel, and Canada’s heavy crude was suddenly a hot commodity. “It moved from being just an interesting experiment in northern Canada to really this is the future source of oil supply,” Greg Stringham of the Canadian Association of Petroleum Producers told Al Jazeera.

Alberta’s energy minister, Greg Melchin, defends the province’s decision to proceed with the exploitation of its oily sand. “There is a cost to it, but the benefits are substantially greater,” he insists.

Not everyone agrees. George Poitras, a member of the Mikisew Cree tribe, lives downstream from the oil sands development. “You see a lot of the land dug up, a lot of the boreal forest struck down and it’s upsetting, it fills me with rage,” he says. Diana Gibson of the Parkland Institute, an environmental advocacy group, says that you can see the environmental damage generated by the extraction of oil sands around Fort McMurray from the moon. “What we are going to be having is destruction of very, very valuable ecosystems, and permanent pollution,” she says.

Sources: “Alberta’s Heavy Oil Burden,” Al Jazeera English, March 17, 2008 (see english.aljazeera.net ); and Russell Gold, “As Prices Surge, Oil Giants Turn Sludge into Gold,” The Wall Street Journal Online , March 27, 2006, A1.

Answers to Try It! Problems

The 500-acre area is scarce because it has alternative uses: preservation in its natural state or a site for homes. A choice must be made between these uses. The opportunity cost of preserving the land in its natural state is the forgone value of the land as a housing development. The opportunity cost of using the land as a housing development is the forgone value of preserving the land.
The scarce resources are the plant and the labor at the plant. The manager must choose between producing cars and producing SUVs. The opportunity cost of producing cars is the profit that could be earned from producing SUVs; the opportunity cost of producing SUVs is the profit that could be earned from producing cars.
The man can devote his time to his current career or to an education; his time is a scarce resource. He must choose between these alternatives. The opportunity cost of continuing as a nurses’ aide is the forgone benefit he expects from training as a registered nurse; the opportunity cost of going to college is the forgone income he could have earned working full-time as a nurses’ aide.

ECON102: Principles of Macroeconomics (2021.A.01)

Economics: the study of choice, 1.1 defining economics, scarcity, choice, and cost.

All choices mean that one alternative is selected over another. Selecting among alternatives involves three ideas central to economics: scarcity, choice, and opportunity cost.

If our resources were also unlimited, we could say yes to each of our wants - and there would be no economics. Because our resources are limited, we cannot say yes to everything. To say yes to one thing requires that we say no to another. Whether we like it or not, we must make choices.

Virtually everything is scarce. Consider the air we breathe, which is available in huge quantity at no charge to us. Could it possibly be scarce?

The test of whether air is scarce is whether it has alternative uses. What uses can we make of the air? We breathe it. We pollute it when we drive our cars, heat our houses, or operate our factories. In effect, one use of the air is as a garbage dump. We certainly need the air to breathe. But just as certainly, we choose to dump garbage in it. Those two uses are clearly alternatives to each other. The more garbage we dump in the air, the less desirable - and healthy - it will be to breathe. If we decide we want to breathe cleaner air, we must limit the activities that generate pollution. Air is a scarce good because it has alternative uses.

Not all goods, however, confront us with such choices. A free good is one for which the choice of one use does not require that we give up another. One example of a free good is gravity. The fact that gravity is holding you to the earth does not mean that your neighbor is forced to drift up into space! One person's use of gravity is not an alternative to another person's use.

There are not many free goods. Outer space, for example, was a free good when the only use we made of it was to gaze at it. But now, our use of space has reached the point where one use can be an alternative to another. Conflicts have already arisen over the allocation of orbital slots for communications satellites. Thus, even parts of outer space are scarce. Space will surely become scarcer as we find new ways to use it. Scarcity characterizes virtually everything. Consequently, the scope of economics is wide indeed.

Scarcity and the Fundamental Economic Questions

The choices we confront as a result of scarcity raise three sets of issues. Every economy must answer the following questions:

What should be produced? Using the economy's scarce resources to produce one thing requires giving up another. Producing better education, for example, may require cutting back on other services, such as health care. A decision to preserve a wilderness area requires giving up other uses of the land. Every society must decide what it will produce with its scarce resources.
How should goods and services be produced? There are all sorts of choices to be made in determining how goods and services should be produced. Should a firm employ a few skilled or a lot of unskilled workers? Should it produce in its own country or should it use foreign plants? Should manufacturing firms use new or recycled raw materials to make their products?
For whom should goods and services be produced? If a good or service is produced, a decision must be made about who will get it. A decision to have one person or group receive a good or service usually means it will not be available to someone else. For example, representatives of the poorest nations on earth often complain that energy consumption per person in the United States is many times greater than energy consumption per person in the world's scores of poorest countries. Critics argue that the world's energy should be more evenly allocated. Should it? That is a "for whom" question.

Every economy must determine what should be produced, how it should be produced, and for whom it should be produced. We shall return to these questions again and again.

Opportunity Cost

The concept of opportunity cost must not be confused with the purchase price of an item. Consider the cost of a college or university education. That includes the value of the best alternative use of money spent for tuition, fees, and books. But the most important cost of a college education is the value of the forgone alternative uses of time spent studying and attending class instead of using the time in some other endeavor. Students sacrifice that time in hopes of even greater earnings in the future or because they place a value on the opportunity to learn. Or consider the cost of going to the doctor. Part of that cost is the value of the best alternative use of the money required to see the doctor. But the cost also includes the value of the best alternative use of the time required to see the doctor. The essential thing to see in the concept of opportunity cost is found in the name of the concept. Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice.

CS Question #1: What are the most important factors you consider when making a purchasing decision?

How much money do you have in your purse or wallet? How much money is available to you in credit cards, in your bank account or from your parents? Your response to these questions tells you about the scarcity of your financial resources. The amount of resources that you have is limited. Your financial resources change from time to time, and therefore your ability to purchase products or services also changes. In the next paragraph, you will be presented with a situation regarding scarcity. As you review the situation and answer the questions, think about what caused you to make certain decisions.

CS Question #2: Can you think of a resource that is not scarce? What resource can you identify that is extremely scarce?

You have just arrived at college and received your college loan money. With the money, you need to buy books, buy school supplies, buy a computer, pay your bills for the semester and save some money for entertainment. You have $3,000. The following is a list of the projected cost of each item:

books: $300
school supplies: $50
computer: $1200 - $2000
bills: $200
entertainment: $50 - $1000.

CS Question #3: Which of the items do you consider important to achieve success in college? How would you spend your $3000?

The process of deciding how you will spend your money is often referred to as budgeting. Any resource that you have can be budgeted. The resources most often budgeted are money and time. Scarcity is an issue that you will constantly face. You must make choices that affect your happiness and satisfaction now and in the long run. In the above situation, you must decide what you are willing to sacrifice for what you can gain. Is it more important to have a great computer or money for entertainment? You might decide that the computer could be your entertainment. Today, you have an infinite amount of choices. A smart purchasing decision considers both your available resources and your values.

CS Question #4: How can you solve the problem of scarce resources when you want to purchase something but you don't have enough money?

Further Thought:

When you make a choice to purchase a product or service, what are you losing, besides the money required to purchase the item?
How do you think scarcity influences the amount of money a person is paid for a job?
How do you think scarcity affects your household's budget?

If you're seeing this message, it means we're having trouble loading external resources on our website.

If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked.

To log in and use all the features of Khan Academy, please enable JavaScript in your browser.

Microeconomics

Course: microeconomics > unit 1.

Introduction to economics
Scarcity and rivalry
Four factors of production

Economic models

Normative and positive statements

Lesson summary: Scarcity, choice, and opportunity costs

Key takeaways, scarcity and choice, positive vs. normative analysis, common errors.

Not all costs are monetary costs. Opportunity costs are usually expressed in terms of how much of another good, service, or activity must be given up in order to pursue or produce another activity or good.
You might hear the fourth economic resource referred to as either entrepreneurship or technology. The terms are used interchangeably but mean the same thing: the ability to make things happen. Take the example of computers—a computer itself would be considered a good, but our ability to make computers would be considered technology.
The word capital is used in everyday language to mean what economists would call financial capital . If you see the word capital on its own in an economics context, it refers to physical capital —equipment, machinery, or tools used to produce goods and services. Physical capital is tangible, but financial capital isn't always so.

Want to join the conversation?

Upvote Button navigates to signup page
Downvote Button navigates to signup page
Flag Button navigates to signup page

Module 1: Economic Thinking

Understanding economics and scarcity, learning objectives.

Describe scarcity and explain its economic impact
Describe factors of production

Photo of Kansas summer wheat and storm panorama: dark purplish sky, brilliant golden wheat field.

Figure 1. Food, like the wheat shown here, is a scarce good because it exists in limited supply.

The resources that we value—time, money, labor, tools, land, and raw materials—exist in limited supply. There are simply never enough resources to meet all our needs and desires. This condition is known as scarcity.

At any moment in time, there is a finite amount of resources available. Even when the number of resources is very large, it’s limited. For example, according to the U.S. Bureau of Labor Statistics, in 2016, the labor force in the United States contained more than 158 million workers—that’s a lot, but it’s not infinite. Similarly, the total area of the United States is 3,794,101 square miles—an impressive amount of acreage, but not endless. Because these resources are limited, so are the numbers of goods and services we can produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.

Throughout the course, you will find these “Try It” boxes with questions to help you check your understanding and apply the concepts from the reading. Choose an answer, then select “check answer” to get feedback about how you did.

When faced with limited resources, we have to make choices. Again, economics is the study of how humans make choices under conditions of scarcity. These decisions can be made by individuals, families, businesses, or societies.

Let’s consider a few decisions that we make based on limited resources. Take the following:

1. What classes are you taking this term?

Are you the lucky student who is taking every class you wanted with your first-choice professor during the perfect time and at the ideal location? The odds are that you have probably had to make trade-offs on account of scarcity. There is a limited number of time slots each day for classes and only so many faculty available to teach them. Every faculty member can’t be assigned to every time slot. Only one class can be assigned to each classroom at a given time. This means that each student has to make trade-offs between the time slot, the instructor, and the class location.

2. Where do you live?

Think for a moment, if you had all the money in the world, where would you live? It’s probably not where you’re living today. You have probably made a housing decision based on scarcity. What location did you pick? Given limited time, you may have chosen to live close to work or school. Given the demand for housing, some locations are more expensive than others, though, and you may have chosen to spend more money for a convenient location or to spend less money for a place that leaves you spending more time on transportation. There is a limited amount of housing in any location, so you are forced to choose from what’s available at any time. Housing decisions always have to take into account what someone can afford. Individuals making decisions about where to live must deal with limitations of financial resources, available housing options, time, and often other restrictions created by builders, landlords, city planners, and government regulations.

Watch it: Scarcity and Choice

Throughout this course you’ll encounter a series of short videos that explain complex economic concepts in very simple terms. Take the time to watch them! They’ll help you master the basics and understand the readings (which tend to cover the same information in more depth).

As you watch the video, consider the following key points:

Economics is the study of how humans make choices under conditions of scarcity.
Scarcity exists when human wants for goods and services exceed the available supply.
People make decisions in their own self-interest, weighing benefits and costs.

Problems of Scarcity

Economics helps us understand the decisions that individuals, families, businesses, or societies make, given the fact that there are never enough resources to address all needs and desires.

Economic Goods and Free Goods

Most goods (and services) are economic goods , i.e. they are scarce. Scarce goods are those for which the demand would be greater than the supply if their price were zero. Because of this shortage, economic goods have a positive price in the market. That is, consumers have to pay to get them.

What is an example of a good which is not scarce? Water in the ocean? Sand in the desert? Any good whose supply is greater than the demand if their price were zero is called a free good , since consumers can obtain all they want at no charge. We used to consider air a free good, but increasingly clean air is scarce.

Productive Resources

Having established that resources are limited, let’s take a closer look at what we mean when we talk about resources. There are four productive resources (resources have to be able to produce something), also called factors of production :

Land: any natural resource, including actual land, but also trees, plants, livestock, wind, sun, water, etc.
Econ omic capital: anything that’s manufactured in order to be used in the production of goods and services. Note the distinction between financial capital (which is not productive) and economic capital (which is). While money isn’t directly productive, the tools and machinery that it buys can be.
Labor: any human service—physical or intellectual. Also referred to as human capital .
Entrepreneurship : the ability of someone (an entrepreneur) to recognize a profit opportunity, organize the other factors of production, and accept risk.

Productive resources and factors of production are explained again in more detail in the following video:

Contribute!

Improve this page Learn More

Revision and adaptation. Provided by : Lumen Learning. License : CC BY: Attribution
What Is Economics, and Why Is It Important?. Authored by : OpenStax College. Provided by : Rice University. Located at : https://cnx.org/contents/[email protected]:mdNAtxNF/What-Is-Economics-and-Why-Is-I . License : CC BY: Attribution . License Terms : Download for free at http://cnx.org/contents/[email protected]
Kansas Summer Wheat and Storm Panorama. Authored by : James Watkins. Located at : https://www.flickr.com/photos/23737778@N00/7115229223/ . License : CC BY: Attribution
Episode 2: Scarcity and Choice. Authored by : Dr. Mary J. McGlasson. Located at : https://www.youtube.com/watch?v=yoVc_S_gd_0 . License : CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives
Episode 3: Resources. Authored by : Dr. Mary J. McGlasson. Located at : https://www.youtube.com/watch?v=0PgP0dXAGAE&feature=youtu.be . License : CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives

1.1 What Is Economics, and Why Is It Important?

Learning objectives.

By the end of this section, you will be able to:

Discuss the importance of studying economics
Explain the relationship between production and division of labor
Evaluate the significance of scarcity

Economics is the study of how humans make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions. If you look around carefully, you will see that scarcity is a fact of life. Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Of course, the ultimate scarce resource is time- everyone, rich or poor, has just 24 expendable hours in the day to earn income to acquire goods and services, for leisure time, or for sleep. At any point in time, there is only a finite amount of resources available.

Think about it this way: In 2015 the labor force in the United States contained over 158 million workers, according to the U.S. Bureau of Labor Statistics. The total land area was 3,794,101 square miles. While these are certainly large numbers, they are not infinite. Because these resources are limited, so are the numbers of goods and services we produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.

Introduction to FRED

Data is very important in economics because it describes and measures the issues and problems that economics seek to understand. A variety of government agencies publish economic and social data. For this course, we will generally use data from the St. Louis Federal Reserve Bank's FRED database. FRED is very user friendly. It allows you to display data in tables or charts, and you can easily download it into spreadsheet form if you want to use the data for other purposes. The FRED website includes data on nearly 400,000 domestic and international variables over time, in the following broad categories:

Money, Banking & Finance
Population, Employment, & Labor Markets (including Income Distribution)
National Accounts (Gross Domestic Product & its components), Flow of Funds, and International Accounts
Production & Business Activity (including Business Cycles)
Prices & Inflation (including the Consumer Price Index, the Producer Price Index, and the Employment Cost Index)
International Data from other nations
U.S. Regional Data
Academic Data (including Penn World Tables & NBER Macrohistory database)

For more information about how to use FRED, see the variety of videos on YouTube starting with this introduction.

If you still do not believe that scarcity is a problem, consider the following: Does everyone require food to eat? Does everyone need a decent place to live? Does everyone have access to healthcare? In every country in the world, there are people who are hungry, homeless (for example, those who call park benches their beds, as Figure 1.2 shows), and in need of healthcare, just to focus on a few critical goods and services. Why is this the case? It is because of scarcity. Let’s delve into the concept of scarcity a little deeper, because it is crucial to understanding economics.

The Problem of Scarcity

Think about all the things you consume: food, shelter, clothing, transportation, healthcare, and entertainment. How do you acquire those items? You do not produce them yourself. You buy them. How do you afford the things you buy? You work for pay. If you do not, someone else does on your behalf. Yet most of us never have enough income to buy all the things we want. This is because of scarcity. So how do we solve it?

Visit this website to read about how the United States is dealing with scarcity in resources.

Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn’t enough money in the budget to do everything. How do we use our limited resources the best way possible, that is, to obtain the most goods and services we can? There are a couple of options. First, we could each produce everything we each consume. Alternatively, we could each produce some of what we want to consume, and “trade” for the rest of what we want. Let’s explore these options. Why do we not each just produce all of the things we consume? Think back to pioneer days, when individuals knew how to do so much more than we do today, from building their homes, to growing their crops, to hunting for food, to repairing their equipment. Most of us do not know how to do all—or any—of those things, but it is not because we could not learn. Rather, we do not have to. The reason why is something called the division and specialization of labor , a production innovation first put forth by Adam Smith ( Figure 1.3 ) in his book, The Wealth of Nations .

The Division of and Specialization of Labor

The formal study of economics began when Adam Smith (1723–1790) published his famous book The Wealth of Nations in 1776. Many authors had written on economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way. In the first chapter, Smith introduces the concept of division of labor , which means that the way one produces a good or service is divided into a number of tasks that different workers perform, instead of all the tasks being done by the same person.

To illustrate division of labor, Smith counted how many tasks went into making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, and packaging pins for sale, to name just a few. Smith counted 18 distinct tasks that different people performed—all for a pin, believe it or not!

Modern businesses divide tasks as well. Even a relatively simple business like a restaurant divides the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located. A complex business like a large manufacturing factory, such as the shoe factory ( Figure 1.4 ), or a hospital can have hundreds of job classifications.

Why the Division of Labor Increases Production

When we divide and subdivide the tasks involved with producing a good or service, workers and businesses can produce a greater quantity of output. In his observations of pin factories, Smith noticed that one worker alone might make 20 pins in a day, but that a small business of 10 workers (some of whom would need to complete two or three of the 18 tasks involved with pin-making), could make 48,000 pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons.

First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage. (In later chapters, we will develop this idea by discussing comparative advantage .) People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents. Only those with medical degrees qualify to become doctors, for instance. For some goods, geography affects specialization. For example, it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more effective than if they produce a combination of things, some of which they are good at and some of which they are not.

Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better.

A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products (sometimes called its “ core competency ”) is more successful than firms that try to make a wide range of products.

Third, specialization allows businesses to take advantage of economies of scale , which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only 100 cars per year, each car will be quite expensive to make on average. However, if a factory produces 50,000 cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower. The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity.

Trade and Markets

Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need. In short, specialization requires trade.

You do not have to know anything about electronics or sound systems to play music—you just buy an iPod or MP3 player, download the music, and listen. You do not have to know anything about artificial fibers or the construction of sewing machines if you need a jacket—you just buy the jacket and wear it. You do not need to know anything about internal combustion engines to operate a car—you just get in and drive. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy.

Why Study Economics?

Now that you have an overview on what economics studies, let’s quickly discuss why you are right to study it. Economics is not primarily a collection of facts to memorize, although there are plenty of important concepts to learn. Instead, think of economics as a collection of questions to answer or puzzles to work. Most importantly, economics provides the tools to solve those puzzles.

Consider the complex and critical issue of education barriers on national and regional levels, which affect millions of people and result in widespread poverty and inequality. Governments, aid organizations, and wealthy individuals spend billions of dollars each year trying to address these issues. Nations announce the revitalization of their education programs; tech companies donate devices and infrastructure, and celebrities and charities build schools and sponsor students. Yet the problems remain, sometimes almost as pronounced as they were before the intervention. Why is that the case? In 2019, three economists—Esther Duflo, Abhijit Banerjee, and Michael Kremer—were awarded the Nobel Prize for their work to answer those questions. They worked diligently to break the widespread problems into smaller pieces, and experimented with small interventions to test success. The award citation credited their work with giving the world better tools and information to address poverty and improve education. Esther Duflo, who is the youngest person and second woman to win the Nobel Prize in Economics, said, "We believed that like the war on cancer, the war on poverty was not going to be won in one major battle, but in a series of small triumphs. . . . This work and the culture of learning that it fostered in governments has led to real improvement in the lives of hundreds of millions of poor people.”

As you can see, economics affects far more than business. For example:

Virtually every major problem facing the world today, from global warming, to world poverty, to the conflicts in Syria, Afghanistan, and Somalia, has an economic dimension. If you are going to be part of solving those problems, you need to be able to understand them. Economics is crucial.
It is hard to overstate the importance of economics to good citizenship. You need to be able to vote intelligently on budgets, regulations, and laws in general. When the U.S. government came close to a standstill at the end of 2012 due to the “fiscal cliff,” what were the issues? Did you know?
A basic understanding of economics makes you a well-rounded thinker. When you read articles about economic issues, you will understand and be able to evaluate the writer’s argument. When you hear classmates, co-workers, or political candidates talking about economics, you will be able to distinguish between common sense and nonsense. You will find new ways of thinking about current events and about personal and business decisions, as well as current events and politics.

The study of economics does not dictate the answers, but it can illuminate the different choices.

As an Amazon Associate we earn from qualifying purchases.

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Access for free at https://openstax.org/books/principles-economics-3e/pages/1-introduction

Authors: Steven A. Greenlaw, David Shapiro, Daniel MacDonald
Publisher/website: OpenStax
Book title: Principles of Economics 3e
Publication date: Dec 14, 2022
Location: Houston, Texas
Book URL: https://openstax.org/books/principles-economics-3e/pages/1-introduction
Section URL: https://openstax.org/books/principles-economics-3e/pages/1-1-what-is-economics-and-why-is-it-important

© Jan 23, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

Search Search Please fill out this field.

What Is Scarcity?

Understanding scarcity.

Natural Resource Scarcity

Relative Scarcity of Inputs

Scarcity as market mover.

Scarcity FAQs

Scarcity: What It Means in Economics and What Causes It

scarcity and economics case study #1 answer key

Scarcity is an economics concept rooted in one of the most basic facts of life: We live in a world of limited resources that requires choices about how they are allocated. In that sense, every product down to a pack of gum or a book of matches is scarce, since someone expended resources that could have been deployed elsewhere to produce it.

Scarcity is so fundamental to economics that scarce goods are also known as economic goods. In economics, scarce goods are those for which demand would exceed supply at a price of zero.

Some natural resources that may appear to be free because they are easily and widely accessible eventually prove scarce as they are depleted from overuse in a tragedy of the commons . Economists increasingly view clean air and a climate compatible with human welfare as scarce goods because of the significant cost of protecting them, and may place a price on them for the purposes of a cost-benefit analysis .

Key Takeaways

In economics, the concept of scarcity conveys the opportunity cost of allocating limited resources.
Scarce goods are those for which demand would exceed supply if they were free
Common resources like clean air and a sustainable climate have been increasingly recognized as scarce, with costs as well as value.
Scarcity can also be used to denote the relative availability of production inputs or the decrease in the supply of a resource or product relative to demand over time.

Investopedia / Mira Norian

In his 1932 An Essay on the Nature and Significance of Economic Science , British economist Lionel Robbins defined the discipline in terms of scarcity:

Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

In a hypothetical world in which everything of value—from food and water to masterworks of art—were so abundant it had no cost, economists would have nothing to study. There would be no need to make decisions about how to allocate resources, hence no need for theories about the interplay of such decisions and tradeoffs in an economy.

In the real world, on the other hand, all factors of production have a cost and therefore so too does every product. Every input incurs an opportunity cost because it can't be put to alternate use as a result. This opportunity cost reflects the inputs' scarcity.

Natural Resource Scarcity

Even abundant common resources long consumed at zero apparent cost often prove neither free nor limitless eventually. Climate isn't a tangible asset and its value is hard to calculate, but the costs of climate change for companies as well as the society are all too real. Air is free, but clean air has a cost in terms of the economic activity discouraged to prevent pollution, as well as value for health and quality of life .

To preserve the benefits associated with these resources, governments may require manufacturers and utilities to invest in pollution control equipment, or to adopt cleaner power sources. Governments and the regulated industries eventually pass on these costs to taxpayers and consumers. Breathing freely, in other words, is not really free.

While scarcity is fundamental to economics and the human condition, the term is also used to describe the relative availability of factors or production or economic inputs.

For example, imagine a hypothetical widget requiring just two labor inputs: workers and managers, with one manager required per 20 workers. Imagine further that the available labor pool consists of 20,000 workers and 5,000 managers. Clearly, there are more available workers than managers. Yet in terms of the proportion required to produce the widgets, workers are the relatively scarce resource, since they're required in a ratio of 20 per manager for production, but outnumber managers by a ratio of only 4 to 1 in the labor pool.

The factors of production compared this way could just as easily be land and dairy cattle. If pasture land were the limiting factor in milk production, land could be said to be relatively scarce. Conversely, if the principal production constraint were the size of the herd, cattle would be the relatively scarce factor of production.

Scarcity may also be used to denote a change in a market equilibrium raising the price of the resource based on the law of supply and demand . In those instances, scarcity denotes a decrease over time in the supply of the product or commodity relative to the demand for it.

The growing scarcity reflected in the higher price required to attain a market equilibrium could be attributable to one or more of the following:

Demand-induced scarcity reflecting rising demand
Supply-induced scarcity caused by diminished supply
Structural scarcity attributable to mismanagement or inequality

Does Scarcity Mean Something Is Hard to Obtain?

None of the economic definitions of scarcity requires a product or resource to be unavailable to be called scarce. In fact, the definition of a market price is one at which supply equals demand, meaning all those willing to obtain the resource at a market price can do so. Scarcity can be used to explain a market shift to a higher price, to compare the availability of economic inputs, or to convey the opportunity cost involved in allocating limited resources.

Are There Goods That Are Not Scarce?

This article is free to read. Other forms of easily reproduced intellectual property , including films and music, derive their scarcity from copyright protection , while the inventors of new drugs and devices must secure patents to deter imitators. In a world of limited resources, many apparently free goods may have an indirect or hidden cost . If the free stock trade does not ensure best execution , perhaps it has a cost, just like clean air.

How Can a Society Deal With Scarcity?

Societies can deal with scarcity by increasing supply. The more goods and services available to all, the less scarcity there will be. Of course, increasing supply comes with limitations, such as production capacity, land available for use, time, and so on. Another way to deal with scarcity is by reducing demand. Rising prices may play that role in market economies , while command economies might use quotas or rationing . In practice, mixed economies also frequently use quotas and price caps .

SSRN. " Relative Prices and Climate Policy: How the Scarcity of Non-Market Goods Drives Policy Evaluation ."

Energy & Climate Intelligence Unit. “ Climate Economics - Costs and Benefits .”

Lionel Robbins. “ An Essay on the Nature and Significance of Economic Science ," Page 15. MacMillan, 1932. Download PDF.

ScienceDirect. " Population and Technological Change in Agriculture ."

Economics Help. " Scarcity in Economics ."

Terms of Service
Editorial Policy
Privacy Policy
Your Privacy Choices

Study Guides
Homework Questions

Exam 1 Study Guide-1

share this!

April 8, 2024

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility:

fact-checked

trusted source

written by researcher(s)

Why is Ghana so hot this year? An expert explains

by Yaw Agyeman Boafo, The Conversation

Ghana's meteorological agency and the state's health service have issued warnings about a period of very high temperatures expected in the first half of 2024 around the country. Ghana's experience is part of a global phenomenon: record temperatures were recorded in 2023.

Yaw Agyeman Boafo, the programs coordinator and a senior research fellow at the University of Ghana's Centre for Climate Change and Sustainability Studies, answers some key questions.

What is unusual about the weather in Ghana?

Since the 1960s, Ghana has been getting warmer, with temperatures going up by about 1°C —a little over 0.2°C every ten years. There are more really hot days now, with temperatures over 35°C, and this is happening 13% more often each year. The amount of rain that falls can differ from one year to the next. But since the 1960s, there has been less rain overall, with about 2.4% less every ten years , although this is highly variable across the country's agroecological zones.

The rapid rate of these changes is also a sign that the weather is not following the usual patterns and is part of broader climate change impacts.

Based on available data from the Ghana Meteorological Agency backed by research , Ghana is experiencing a shift towards warmer temperatures. This is unusual in the context of historical climate patterns. These trends point to a changing climate , with the increased likelihood of extreme heat events. This is a global trend .

The Ghana data also suggests that there hasn't been a consistent pattern in rainfall over the years. There's evidence of fluctuations in the amount of rain from year to year, but without a clear trend of increase or decrease over the long term.

This lack of a uniform response to rising temperatures is unusual. Normally, we might expect it to get either hotter and drier, or hotter and wetter, depending on how the extra heat affects evaporation and rainfall patterns. The variability poses challenges for agriculture and water supply across the country.

Why is the weather suddenly hot?

A number of factors are at play. Most notable are the effects of human-induced climate change.

The earth's warming is largely due to the increased amount of greenhouse gases like carbon dioxide, methane and nitrous oxide in our atmosphere. These gases come from burning fossil fuels in cars and factories, deforestation, and certain agricultural practices. Essentially, as we burn fossil fuels and cut down forests, we're adding more of these gases into the air, which trap heat and cause the planet to warm up. This process is speeding up due to human activities, leading to changes in weather patterns, rising sea levels, and more extreme weather events.

These conditions are supported by empirical data from scientific observations and measurements. For example, weather stations and climate models provide evidence of the trend towards higher temperatures . This scientific data underpins the conclusion that the weather is indeed becoming hotter in Ghana.

Another localized factor is urbanization . The rapid urbanization in Ghana, with over half the population living in urban areas (58.62%), contributes to extreme heat in urban areas due to the " urban heat island " effect. This is where buildings, asphalt and reduced greenery absorb and re-radiate heat more than in rural areas.

In Ghana, people living in cities and bigger towns such as Accra, Kumasi, Tamale and Sekondi-Takoradi are already bearing the brunt of extreme heat events .

What's the effect of rising temperatures?

The effects are multiple.

Urban and rural communities feel the effects in different ways. For urban residents , rising temperatures can affect personal comfort, causing sleep disruption and leading to health concerns.

In addition, heat increases energy demand for cooling, reduces air quality and raises health risks such as acute heat stroke, dehydration, mental fatigue and central nervous system malfunction, particularly in densely populated cities.

Extreme heat also strains health infrastructure and can lead to heat-related illnesses such as heat exhaustion and heatstroke.

Vulnerable households, including older people, children and low-income families, face increased health risks and financial burdens . High out-of-pocket health expenditures strain their financial stability and call for coping strategies that compromise their long term economic well-being.

The productivity and daily lives of urban populations are affected, with alterations in environmental conditions posing challenges to urban agricultural output and overall well-being.

In rural Ghana, farmers face challenges as rising temperatures are damaging vital crops like cocoa, which is the backbone of Ghana's agricultural sector. This threatens many people's livelihoods as well as the country's economy.

In Ghana's savanna regions for example, rising temperatures are making droughts more severe and rainfall patterns less predictable . This leads to significant challenges including water scarcity, food shortages, increased migration and displacement, and a higher risk of bush fires.

Several studies, including one of my own, have revealed that rising temperatures in northern Ghana influence the incidence and spread of cerebrospinal meningitis.

What needs to be done

To address the issue of rising temperatures in Ghana, a coordinated plan for rural and urban areas needs to be put in place. Reforestation programs and climate-smart agriculture can help rural communities improve resilience to heat. Water conservation efforts, such as rainwater gathering, would help agriculture survive dry spells.

Urban areas could benefit from smart city design that integrates and enhances natural or eco-friendly systems like parks,urban forests,community gardens and the use of reflecting materials in buildings to cool neighborhoods.

Enhancing renewable energy , promoting clean cooking and lighting, and improving energy efficiency are essential for both rural and urban households to adapt to extreme heat, ensuring safer and cooler living environments. In addition, improving weather forecasts and health care services can improve preparedness and response to heat-related health hazards. In all these, community involvement in the design, and implementation of these activities ensures that solutions are relevant and sustainable.

Provided by The Conversation

Explore further

Feedback to editors

A microbial plastic factory for high-quality green plastic

6 hours ago

Can the bias in algorithms help us see our own?

8 hours ago

Humans have converted at least 250,000 acres of estuaries to cities and farms in last 35 years, study finds

9 hours ago

Mysterious bones may have belonged to gigantic ichthyosaurs

Hurricane risk perception drops after storms hit, study shows

Peter Higgs, who proposed the existence of the 'God particle,' has died at 94

Scientists help link climate change to Madagascar's megadrought

11 hours ago

Heat from El Niño can warm oceans off West Antarctica—and melt floating ice shelves from below

12 hours ago

Peregrine falcons expose lasting harms of flame retardant use

13 hours ago

The hidden role of the Milky Way in ancient Egyptian mythology

Relevant physicsforums posts, iceland warming up again - quakes swarming, m 4.8 - whitehouse station, new jersey, us.

Apr 6, 2024

Major Earthquakes - 7.4 (7.2) Mag and 6.4 Mag near Hualien, Taiwan

Apr 5, 2024

Unlocking the Secrets of Prof. Verschure's Rosetta Stones

‘our clouds take their orders from the stars,’ henrik svensmark on cosmic rays controlling cloud cover and thus climate.

Mar 27, 2024

Higher Chance to get Lightning Strike by Large Power Consumption?

Mar 20, 2024

Food prices will climb everywhere as temperatures rise due to climate change

Mar 25, 2024

Cities need plans for extreme heat, says expert, as heat waves stretch across the globe

Jul 20, 2023

Why your perception of climate change threats might depend on where you live

Sep 12, 2023

Assessment of urban water-energy interactions and heat island signatures in Rhode Island

Dec 14, 2022

Estimating heat wave frequency and strength: A Chicago case study

Mar 10, 2022

China's Lunar New Year exodus cools major cities, study shows

Jan 25, 2023

Recommended for you

Study finds 17 mountains at high risk of losing biodiversity under climate change

15 hours ago

Let us know if there is a problem with our content

Use this form if you have come across a typo, inaccuracy or would like to send an edit request for the content on this page. For general inquiries, please use our contact form . For general feedback, use the public comments section below (please adhere to guidelines ).

Please select the most appropriate category to facilitate processing of your request

Thank you for taking time to provide your feedback to the editors.

Your feedback is important to us. However, we do not guarantee individual replies due to the high volume of messages.

E-mail the story

Your email address is used only to let the recipient know who sent the email. Neither your address nor the recipient's address will be used for any other purpose. The information you enter will appear in your e-mail message and is not retained by Phys.org in any form.

Newsletter sign up

Get weekly and/or daily updates delivered to your inbox. You can unsubscribe at any time and we'll never share your details to third parties.

More information Privacy policy

Donate and enjoy an ad-free experience

We keep our content available to everyone. Consider supporting Science X's mission by getting a premium account.

E-mail newsletter

Homelessness in California The State Must Do More to Assess the Cost‑Effectiveness of Its Homelessness Programs

April 9, 2024 2023-102.1

The Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814

Dear Governor and Legislative Leaders:

The Joint Legislative Audit Committee requested an audit of the State’s homelessness funding, including an evaluation of the efforts undertaken by the State and two cities to monitor the cost‑effectiveness of such spending. The following report (2023‑102.1) focuses primarily on the State’s activities, in particular the California Interagency Council on Homelessness (Cal ICH)—while a separate report (2023‑102.2) details our findings and conclusions for the two cities we reviewed—San José and San Diego. In general, this report concludes that the State must do more to assess the cost-effectiveness of its homelessness programs.

The State lacks current information on the ongoing costs and outcomes of its homelessness programs, because Cal ICH has not consistently tracked and evaluated the State’s efforts to prevent and end homelessness. Although Cal ICH reported in 2023 financial information covering fiscal years 2018–19 through 2020–21 related to all state-funded homelessness programs, it has not continued to track and report this data since that time, despite the significant amount of additional funding the State awarded to these efforts in the past two years. Cal ICH has also not aligned its action plan to end homelessness with its statutory goals to collect financial information and ensure accountability and results. Thus, it lacks assurance that the actions it takes will effectively enable it to achieve those goals. Another significant gap in the State’s ability to assess programs’ effectiveness is that it does not have a consistent method for gathering information on the costs and outcomes for individual programs.

We also reviewed five state-funded homelessness programs to assess their cost-effectiveness. After comparing reported costs and outcomes to alternative possible courses of action, we determined that the Department of Housing and Community Development’s Homekey program and the California Department of Social Services’ CalWORKs Housing Support Program appear to be cost‑effective. However, we were unable to assess the cost‑effectiveness of three other programs we reviewed because the State has not collected sufficient data on the outcomes of these programs. Among the recommendations we make is that the Legislature mandate reporting by state agencies on the costs and outcomes of their homelessness programs and that it require Cal ICH to compile and publicly report this information.

Respectfully submitted,

GRANT PARKS California State Auditor

Selected Abbreviations Used in This Report

The Joint Legislative Audit Committee requested an audit of the State’s homelessness funding, including an evaluation of the efforts undertaken by the State and two cities to monitor the cost‑effectiveness of such spending. This report (2023‑102.1) focuses primarily on the State’s activities—in particular, the California Interagency Council on Homelessness (Cal ICH)—and a separate report (2023‑102.2) details our findings and conclusions about homelessness spending by the cities of San José and San Diego.

More than 180,000 Californians experienced homelessness in 2023—a 53 percent increase from 2013. To address this ongoing crisis, nine state agencies have collectively spent billions of dollars in state funding over the past five years administering at least 30 programs dedicated to preventing and ending homelessness. Cal ICH is responsible for coordinating, developing, and evaluating the efforts of these nine agencies. In this audit, we reviewed the State’s efforts to track and evaluate the effectiveness of the homelessness programs that it funds, and we drew the following conclusions:

Cal ICH Has Not Consistently Tracked and Evaluated the State’s Efforts to End Homelessness

In February 2021, we reported that the lack of coordination among the State’s homelessness programs had hampered the effectiveness of the State’s efforts to end homelessness. 1 Homelessness in California: The State’s Uncoordinated Approach to Addressing Homelessness Has Hampered the Effectiveness of Its Efforts , Report 2020‑112, February 2021. Subsequently, the Legislature required Cal ICH to evaluate and report financial information related to all state‑funded homelessness programs. Cal ICH published this assessment in 2023 and it covered fiscal years 2018–19 through 2020–21; however, it has not continued to track and report on this information since that time. Further, it has not aligned its action plan for addressing homelessness with its statutory goals, nor has it ensured that it collects accurate, complete, and comparable financial and outcome information from homelessness programs. Until Cal ICH takes these critical steps, the State will lack up‑to‑date information that it can use to make data‑driven policy decisions on how to effectively reduce homelessness.

Two of the Five State‑Funded Programs We Reviewed Are Likely Cost‑Effective, but the State Lacks Outcome Data for the Remaining Three

When we selected five of the State’s homelessness programs to review, we found that two were likely cost‑effective: Homekey and the CalWORKs Housing Support Program (housing support program). Specifically, Homekey refurbishes existing buildings to provide housing units to individuals experiencing homelessness for hundreds of thousands of dollars less than the cost of newly built units. Similarly, the Housing Support Program’s provision of financial support to families who were at risk of or experiencing homelessness has cost the State less than it would have spent had these families remained or become homeless. However, we were unable to fully assess the other three programs we reviewed—the State Rental Assistance Program, the Encampment Resolution Funding Program, and the Homeless Housing, Assistance and prevention grant program—because the State has not collected sufficient data on the programs’ outcomes. In the absence of this information, the State cannot determine whether these programs represent the best use of its funds.

Agency Comments

Cal ICH agreed with our recommendations and identified actions it plans to take to implement them.

Although we did not make recommendations to the California Department of Social Services (CDSS), it indicated that it reviewed the draft report for factual inaccuracies and found none.

Introduction

The number of people experiencing homelessness in the State has increased significantly during the last 10 years. According to federal regulations, any individual or family who lacks a fixed, regular, and adequate nighttime residence is experiencing homelessness . When people primarily spend their nights in public or private locations not normally used for sleeping, it is considered unsheltered homelessness . When people stay in emergency shelters, transitional housing programs, or safe havens, it is considered sheltered homelessness . People experiencing homelessness face devastating challenges to their health and well‑being. For example, a study by the University of California, San Francisco from June 2023 found that two‑thirds of participants reported current mental health symptoms and that homelessness worsened participants’ mental health symptoms. 2 Toward a New Understanding: The California Statewide Study of People Experiencing Homelessness , a study published by the UCSF Benioff Homelessness and Housing Initiative in June 2023. Figure 1 shows that although the number of people experiencing homelessness in California decreased slightly from 2013 through 2015 to fewer than 116,000 individuals, it had increased to more than 181,000 individuals as of 2023.

California’s Population of People Experiencing Homelessness Has Increased Since 2013

Source: The U.S. Department of Housing and Urban Development (HUD) point-in-time (PIT) counts, Annual Homeless Assessment Report, and HUD memorandum.

Note: HUD requires Continuums of Care (CoCs) to conduct a PIT count of people experiencing sheltered homelessness annually and a count of people experiencing unsheltered homelessness at least biennially. To present the total number of people experiencing homelessness, we therefore used the year in which both categories of PIT counts were conducted.

* HUD waived the PIT count requirement for unsheltered homelessness in 2021 because of the COVID‑19 pandemic, but it required the count again in 2022.

Figure 1 description:

Figure 1 is a bar graph that depicts the number of people experiencing homelessness in California generally increasing since 2013 through to 2023. The bar graph is a stacked bar which depicts the total count of people experiencing homelessness with two different colors in the bars. The blue-gray colored section of the bars represent the counts of people experiencing unsheltered homelessness in a given year and dark blue colored sections of the bars represent the count of people experiencing sheltered homelessness in the same year. Each bar also lists the actual count within each category of homelessness culminating with the total count for that year presented on top of the bar. For example, in the bar for year 2013, the dark blue section has a count of 45,554 and the blue-gray section has a count of 72,998, and therefore the total count for that whole 2013 bar is 118,552. The years represented in the bar graph include 2013, 2015, 2017, 2019, 2022, and 2023. There was a slight decrease in the total count of people experiencing homelessness from 2013 to 2015, but the count has since continued to grow. Below the bar graph is a list of sources used and some notes further explaining where the count data originated and how we calculated total counts.

Figure 2 shows the three main phases of homelessness: entering homelessness , experiencing homelessness , and exiting homelessness . The University of California, San Francisco’s June 2023 study of people experiencing homelessness describes economic, social, and health factors that can lead to homelessness. The study found that high housing costs and low incomes had left participants vulnerable to homelessness and that the most frequently reported economic reason for entering homelessness was loss of income. Resolutions to this situation include preventing people from entering homelessness and helping people exit homelessness to live in permanent housing. Factors such as scarcity of housing, high cost of housing, lack of rental subsidies, and lack of assistance in identifying housing, create barriers to accessing housing.

The Three Phases of Homelessness Each Have Mitigating Solutions

Source: Federal regulations, Federal Strategic Plan, Business, Consumer Services, and Housing Agency documentation, and Toward a New Understanding: The California Statewide Study of People Experiencing Homelessness , a study published by the UCSF Benioff Homelessness and Housing Initiative in June 2023.

Figure 2 description:

Figure 2 is an image depicting how one person experiences the three phases of homelessness. In the first third of the figure, a person is depicted as losing their housing and entering homelessness. This part of the image also lists the methods by which this could have been prevented. The middle part of the figure depicts the same person sleeping on the ground outside and experiencing homelessness. This part of the image also lists the methods that programs can employ to mitigate the impacts of experiencing this unsheltered homelessness. The last part of the figure shows the same person finding permanent housing and exiting homelessness. This part of the image also lists the methods that programs could use to help achieve this outcome.

Numerous Entities Have Roles in Funding Homelessness Services in California

Description of the five programs we reviewed.

Homekey: Created as an opportunity for local public agencies to purchase motels and other housing types to increase their communities’ capacity to respond to the COVID‑19 pandemic. The target population was individuals and families who are experiencing homelessness or at risk of homelessness.

Homeless Housing, Assistance and Prevention (HHAP): Provides local jurisdictions with funds to support regional coordination and expand or develop local capacity to address their immediate homelessness challenges.

State Rental Assistance Program (SRAP): Provides funds for rental arrears, prospective rental payments, utility and home energy cost arrears, utility and home energy costs, and other expenses related to housing incurred during or due, directly or indirectly, to the COVID-19 pandemic. Eligible households must demonstrate a risk of homelessness or housing instability.

Encampment Resolution Funding (ERF): Provides competitive grants to assist local jurisdictions in ensuring the wellness and safety of people experiencing homelessness in encampments by providing services and supports that address their immediate physical and mental wellness and result in meaningful paths to safe and stable housing.

CalWORKs Housing Support Program (housing support program): Offers financial assistance and housing‑related wraparound supportive services, including rental assistance and case management. The program serves families with children enrolled in CalWORKs who are at risk of or experiencing homelessness.

Source: State law and program documentation.

Numerous entities are involved in funding homelessness prevention and support services, and permanent housing in California. Federal, state, and local governments all issue funding that flows through other entities before reaching people experiencing or at risk of homelessness. Most notably, the State recently increased its financial role in addressing housing affordability and homelessness. According to the Legislative Analyst’s Office, the State allocated nearly $24 billion for homelessness and housing during the last five fiscal years, or from 2018–19 through 2022–23.

Nine different state agencies funded and administered over 30 programs geared toward preventing and ending homelessness. 3 This information comes from the State’s 2023 landscape assessment covering fiscal years 2018–19 through 2020–21. It is the best information available at this time because, as we describe in this report, the State does not centrally track this information for all existing programs. These programs deliver a wide range of services, including creating temporary shelters, providing mental health treatment, and addressing encampments of those experiencing homelessness. 4 Encampments are places where a group of individuals experiencing homelessness reside, which are not intended for occupancy. Encampments can consist of tents, pallets, or shacks, and can also be a collection of individuals who reside in cars near each other. As part of this audit, we reviewed the five state programs that the text box describes. We selected these programs based on multiple factors, including program funding amounts and services offered. Some of these programs initially received one‑time funding. If the Legislature provided a program with subsequent appropriations of one‑time funding, then this is referred to as a round . For example, the Legislature originally appropriated $650 million in one‑time funding in 2019 for the HHAP program, which was called HHAP Round 1 . The Legislature has since approved more than $3 billion in additional funds through four subsequent rounds.

CoCs Are Central to California’s Provision of Homelessness Services

As Figure 3 shows, CoCs are central to the provision of homelessness services in California. In 1993 HUD established the CoC system. A CoC is a group composed of individuals and organizations, such as homeless service providers, cities, and counties, formed pursuant to federal regulations and recognized by the federal government to achieve the goal of ending homelessness within a geographic area. Congress codified the CoC system into law to promote communitywide commitment to the goal of ending homelessness by providing funding for the efforts of states, local governments, and nonprofit service providers to quickly re‑house people experiencing homelessness. The 44 CoCs that cover California’s 58 counties provide regional collaboration among member entities, including cities, but do not direct the actions of those member entities. The State and HUD provide funding through a variety of programs to CoCs and to the entities within CoCs, such as counties, cites, and nonprofits. Those entities are responsible for following the eligible uses and reporting requirements of the funding they receive.

There Are Many Layers to Homelessness Funding and Services

Source: State law; grant agreements; documentation from Cal ICH, HUD, CDSS, HCD, cities, and counties; and a service provider's website.

Figure 3 description:

Figure 3 is an organizational chart that depicts the many agencies involved in homelessness funding and services and how the funding flows through these agencies to eventually reach people experiencing or at risk of experiencing homelessness through the provision of services. There are arrows connecting all the layers which depict either the flow of funding through solid green colored arrows or the flow of services through dotted arrows. At the top layer of the figure are images representing the federal Department of Housing and Urban Development (HUD) and the government of the State of California. As shown through solid green colored arrows, HUD provides funding to the State as well as directly to Continuums of Care (CoCs) and entities within CoCs. The State also provides funding to CoCs and entities within CoCs, also shown through the directions of solid green arrows. The middle layer of the chart depicts CoCs and entities within CoCs, specifically Counties and Cities, receiving funding from HUD and the State. The middle layer of the chart also depicts Nonprofit Homelessness Service Providers within CoCs receiving funding from HUD, Counties, and Cities, also shown through the directions of solid green arrows. The last layer of the figure depicts Nonprofit Homelessness Service Providers giving funding to subcontractors shown by the direction of a solid green arrow as well as providing services directly to people at risk of or experiencing homelessness shown by the direction of a dotted arrow. The last layer also shows people at risk of or experiencing homelessness receiving services from the cities and counties directly as well, which are again shown by the directions of dotted arrows.

Local jurisdictions and nonprofit service providers deliver various services that include identifying the needs of people experiencing homelessness, placing them into temporary shelters, providing them with supportive services, and funding housing for them. Data show that nearly 316,000 individuals experiencing homelessness accessed housing and services in California’s 44 CoCs in 2022. 5 Because the PIT count of people experiencing homelessness is on a single night in a given year, the amount of people experiencing homelessness derived from that count may be less than the total number of people experiencing homelessness at any point during an entire year. The COVID‑19 pandemic, which occurred during the period we reviewed, had significant effects on homelessness and resulted in substantial funding being made available to address the crisis.

The CoCs are also responsible for counting individuals who are experiencing homelessness. Specifically, to identify the number of people experiencing homelessness, HUD requires annual PIT counts of those experiencing sheltered homelessness and biennial counts of those experiencing unsheltered homelessness. On a single night in January, CoCs attempt to count the number of people, sheltered and unsheltered, experiencing homelessness. The information collected during the PIT count is critical. Specifically, it is the main source of data used by the federal government to track the number of people experiencing homelessness and to determine federal funding allocations to address homelessness. Additionally, states and local jurisdictions rely on PIT count data to inform their strategic planning efforts, funding allocations, and the effectiveness of homeless programs.

Cal ICH Coordinates, Evaluates, and Develops the State’s Efforts to Prevent and End Homelessness

Cal ich includes leaders or representatives from 18 state entities and two appointed members.

Business, Consumer Services and Housing Agency
California Health and Human Services Agency
California Department of Transportation
California Department of Housing and Community Development

California Department of Social Services

California Housing Finance Agency (CalHFA)
Department of Health Care Services (DHCS)
California Department of Veterans Affairs
California Department of Corrections and Rehabilitation (CDCR)
California Tax Credit Allocation Committee (TCAC)
California Department of Public Health
California Department of Aging
Department of Rehabilitation
Department of State Hospitals
California Workforce Development Board
California Governor’s Office of Emergency Services (CalOES)
California Department of Education
California Community Colleges (CCCCO), University of California, or California State University
Two appointments from stakeholder organizations

Source: State law.

The Legislature created Cal ICH by statute in 2017 to coordinate the State’s efforts to prevent and end homelessness. As the top text box describes, Cal ICH (originally named the Homeless Coordinating and Financing Council) is composed of representatives from 18 different state entities as well as two members appointed by the Legislature from stakeholder organizations. Cal ICH’s responsibilities are in the 19 statutory goals that the Legislature has established. Some of these statutory goals include making policy and procedural recommendations to the Legislature, and collecting, compiling, and making available to the public financial data provided to Cal ICH from all state funded homelessness programs. Cal ICH is led by an executive officer and staffed by more than 40 employees.

Action Plan’s Five Action Areas

Strengthening our systems to better prevent and end homelessness in California.
Equitably addressing the health, safety, and service needs of Californians experiencing unsheltered homelessness.
Expanding communities’ capacity to provide safe and effective shelter and temporary housing.
Expanding and ensuring equitable access to permanent housing in our communities.
Preventing Californians from experiencing the crisis of homelessness.

Source: Cal ICH’s 2021 action plan and 2022 and 2023 updates.

In 2021 Cal ICH adopted an Action Plan for Preventing and Ending Homelessness in California (action plan) to orient the State’s efforts and updated it in 2022 and again in 2023. The action plan details five action areas, which the text box lists. These action areas are divided into objectives, which are further divided into activities. Cal ICH also published a Statewide Homelessness Assessment (homelessness assessment) in 2023 for the Legislature. The Legislature’s intent in requesting this assessment was to obtain trustworthy information to connect funding allocated to prevent and end homelessness with established sheltering and housing resources, and to provide state agencies with accurate information for more precise forecasting to target future investments. The homelessness assessment covered fiscal years 2018–19 through 2020–21 and reported how State funds were used to provide housing and services to people experiencing homelessness, demographic information about the population served by these programs, the types of services provided, and the outcomes of the programs. The report found that the State has expanded its role in addressing homelessness by investing in new programs—increasing its investment in homelessness‑focused programs by more than $1.5 billion, from $2.3 billion in fiscal year 2018–19 to $3.8 billion in 2020–21. Appendix A presents information about the programs and funding identified in the homelessness assessment.

In addition, Cal ICH administers several grant programs intended to prevent and end homelessness, such as HHAP and the ERF program. However, the Legislature intends to transfer all grant programs administered by Cal ICH to the California Department of Housing and Community Development (HCD) by July 2024. This transfer is intended to allow Cal ICH to better focus its efforts on providing statewide policy development and coordination.

CoCs Collect Data About Homelessness in Local Information Systems

Examples of data collected.

Project Type
Participant Demographics
Participant Living Situation
Project Funding Source
Project Start and Exit Date
Project Location

Source: 2024 HMIS Data Standards Manual.

Federal regulations require each CoC to use a Homeless Management Information System (HMIS)—a local information technology system in which recipients and subrecipients of federal funding record and analyze client, service, and housing data for individuals and families at risk of or experiencing homelessness. The CoCs must designate a lead agency to operate the HMIS, and that lead agency must comply with HUD’s requirements for data collection, management, and reporting. In alignment with HUD’s requirements, the text box shows that CoCs collect certain data from entities that provide services to people experiencing homelessness. These services include the project types of homelessness prevention, street outreach, emergency shelter, and rapid re‑housing. The CoCs also collect demographic data about the people who access these services.

In 2021 Cal ICH launched the State’s Homeless Data Integration System (state data system). This Cal ICH data system securely collects data from each local HMIS. Cal ICH intended to provide the State with data that it can analyze to make data‑driven policy decisions to prevent and end homelessness in California. Individual CoCs send data from their local HMIS to the state data system quarterly. Cal ICH’s data system aggregates data from HMISs, including client‑level data.

Cal ICH Has Not Consistently Tracked and Evaluated the State’s Efforts to End Homelessness

Cal ICH has not tracked and reported on the State’s funding for homelessness programs statewide since its 2023 assessment covering fiscal years 2018–19 through 2020–21. Currently, it has no plans to perform a similar assessment in the future. In the absence of an up‑to‑date assessment, the State and its policymakers are likely to struggle to understand homelessness programs’ ongoing costs and achieved outcomes.
Cal ICH has not aligned its action plan with its statutory goals. Consequently, it lacks assurance that the actions it takes will effectively enable it to reach those goals.
Cal ICH has not established a consistent method for gathering information on homelessness programs’ costs and outcomes. As a result, the State lacks information that would allow it to make data‑driven policy decisions and identify gaps in services.
Cal ICH has neither ensured the accuracy of the information in the state data system, nor has it used this information to evaluate homelessness programs’ success.

Cal ICH Has Not Regularly Tracked Statewide Homelessness Funding

From July 2018 through June 2021, the State allocated billions of dollars in public funds to address homelessness. Given the financial resources the State has dedicated to reducing homelessness, transparency and accountability regarding its efforts are crucial. Nonetheless, in February 2021, we reported that the lack of coordination among the State’s homelessness programs had hampered the effectiveness of the State’s efforts to end homelessness. 6 Homelessness in California: The State’s Uncoordinated Approach to Addressing Homelessness Has Hampered the Effectiveness of Its Efforts , Report 2020‑112, February 2021. We recommended at that time that Cal ICH collect and track funding data on all state homelessness programs. Subsequently, the Legislature set a goal in September 2021 for Cal ICH to report to the public the financial information of the State’s homelessness programs. Cal ICH’s goal to collect, compile, and make available to the public financial data from all state‑funded homelessness programs is the most recent of 19 statutory goals that the Legislature has established for Cal ICH since it was created in 2017.

Collecting and reporting all state homelessness programs’ financial data allows for more complete and timely information about the State’s overall spending on homelessness. It also makes possible greater coordination of homelessness programs’ funding and may enable cost‑effectiveness comparisons. However, the law does not specify when or how often Cal ICH should report these data. In the absence of such requirements, Cal ICH has only done so once, as Figure 4 shows. Specifically, in response to separate legislation, Cal ICH conducted a one‑time statewide assessment of state‑administered programs and funding (homelessness assessment), covering the period of July 2018 through June 2021.

Cal ICH Does Not Regularly Collect Cost and Outcome Information, Limiting Its Evaluation of Effectiveness

Source: Analysis of state law and Cal ICH documentation.

Figure 4 description:

Figure 4 is a figure with images and text that describes Cal ICH's actions that have limited its evaluation of the effectiveness of state programs meant to address homelessness. At the top of figure is an image of a group of people meant to represent those that makeup the Cal ICH. The next part of the figure is an image that shows that Cal ICH's only report on the costs and outcomes of state programs is outdated. The next part of the figure is an image of Cal ICH personnel depicting them as being inhibited from aggregating and evaluating program data to provide to decision-makers across the state. The final part of the figure is an image of puzzle pieces being put together that is meant to represent the benefits of Cal ICH collecting program data, specifically the cost per program outcome which could be used to compare programs on an ongoing basis.

Cal ICH believes the homelessness assessment fulfills the statutory goal. However, those results are now nearly three years old and out of date. Since the homelessness assessment, the State has awarded a significant amount of additional funding and created new homelessness programs that the assessment does not address.

If Cal ICH does not conduct these types of assessments on a periodic basis, the State will continue to lack complete and timely information about the ongoing costs and associated outcomes of its homelessness programs. We believe that the State’s policymakers and the public need up‑to‑date information to evaluate the efficacy and effectiveness of billions of dollars in state spending. Appendix A lists the State’s programs and funding amounts in the homelessness assessment.

Cal ICH Did Not Address Certain Statutory Goals in Its Action Plan

Key performance measures from cal ich’s action plan.

The number of Californians experiencing sheltered and unsheltered homelessness at a point in time, including veterans, people experiencing chronic homelessness, families with children, adults, and unaccompanied youth.
The number of Continuums of Care in California reporting increases versus decreases in the number of people experiencing sheltered and unsheltered homelessness within annual PIT counts.
The number of people spending time in emergency shelter and transitional housing in California annually, including veterans, people experiencing chronic homelessness, families with children, adults, and unaccompanied youth.
The number of Californians experiencing homelessness for the first time each year.
The number of Californians successfully exiting homelessness each year.
The number of Californians returning to homelessness each year.
The number of children and youth experiencing homelessness at some point during the school year in California, including students in families and unaccompanied students.
Comparison of California’s performance across these measures and data points to national and regional trends.

Source: Cal ICH’s Action Plan update 2022.

Cal ICH adopted an action plan in 2021 for achieving its statutory goals, and it updated that plan in 2022. Cal ICH’s plan outlines five action areas—shown previously in the text box —and presents objectives and specific activities for preventing and ending homelessness. However, the action plan does not define the efforts Cal ICH will take toward specific statutory goals, including those involving funding and outcomes. For example, none of the action plan’s listed objectives addresses Cal ICH’s statutory goals to collect financial information or ensure accountability and results. As a result of this misalignment, Cal ICH may achieve the plan’s objectives yet still not consistently deliver on the Legislature’s goals.

The action plan’s key performance measures—which the text box lists—are similarly misaligned. Although these performance measures could be useful, they do not provide insight on specific program outcomes. Without such insight, Cal ICH again cannot fully achieve its statutory goal of ensuring accountability and results. Measuring program‑specific outcomes would allow Cal ICH to identify successful programs worthy of replicating and help policymakers prioritize investment .

Cal ICH’s executive officer explained that the council recognizes that it needs to be led by its statutory goals. However, she also explained that its next updated plan may not include the statutory goals. Until Cal ICH aligns its action plan with its statutory goals, it may struggle to ensure that it meets those goals. To improve transparency and accountability for state spending, we recommend that the Legislature direct Cal ICH to require state agencies to report to it annually about homelessness spending and associated outcomes.

Cal ICH Has Not Established a Consistent Methodology for Gathering Information on Programs’ Costs and Outcomes

Cal ICH has not established a central reporting method that is consistent across all of the State’s homelessness programs and provides uniform specifications for the data they report. The law that established Cal ICH does not require state agencies to report to it the funding and outcome information on all state homelessness programs they administer. Consequently, state agencies report their program costs and outcomes using a variety of methods that cannot be readily compared, including online dashboards and written reports to the Legislature.

Programs also collect different types of data. For example, Homekey is a program that is focused on building housing for people experiencing homelessness. The program required Homekey Round 1 grantees to report on the number of properties they produced and the location of these properties. HHAP—a different program than Homekey—also provides funding to grantees that could be used to develop housing, but the law that established that program did not require Round 1 grantees to report on the location of properties built with HHAP funds.

State law requires state agencies to provide any relevant information about state homelessness programs upon request of Cal ICH, positioning Cal ICH to collect these data. To more usefully gather and report program costs and outcomes and to better facilitate policy discussions, Cal ICH could develop a scorecard similar to the one we present in Figure 5. Agencies could use it to report their program funding and performance outcome information to Cal ICH. For example, a program that provides interim housing could report the number of people experiencing homelessness whom the program placed in housing and the number who received case management services.

Cal ICH Could Use This Hypothetical Example of a State Homelessness Program Scorecard

Source: Analysis of Cal ICH data and HCD data.

Note: Data in the example scorecard is included only for illustrative purposes and does not represent actual program data.

* In this category, the services are more distinct and could be totaled individually: if there are four programs for interim housing there could be a different total specific to interim housing.

Figure 5 description:

Figure 5 is a depiction of a hypothetical example of a state homelessness program scorecard separated by the three phases of homelessness and includes categories that would allow the user to organize and determine the cost per outcome of a specific state homelessness program. The top part of the scorecard figure shows hypothetical demographic information and includes a line graph being used to show a trend in PIT counts increasing and also three pie charts to show the hypothetical breakdown of certain demographic characteristics of the hypothetical population experiencing homelessness. There is one pie chart for racial distribution, one pie chart for gender distribution, and one pie chart for the distribution of veteran status in the hypothetical population. The middle part of the figure is for a list and description of programs being evaluated. The hypothetical programs that mitigate the impacts of homelessness are divided by their categorization into one of the three phases of homelessness. The three phases of homelessness are entering homelessness, experiencing homelessness, and exiting homelessness. The last part of the scorecard figure again lists the hypothetical programs under their specific phase of homelessness, but now also includes the programs' hypothetical funding and outcomes. Each program has spaces for the entry of information on how much funding was appropriated to the program, how much was spent on the program, and how much funding remains to be spent. Each program also has spaces for the entry of information on the outcomes of each program. Lastly, each program has space for the calculation of the cost per program outcome based on the information organized in the previous spaces. Once all the programs that fall under one specific phase of homelessness have been individually assessed, the programs in that category can be compared as a whole against a trend or amount relevant to that phase of homelessness. For example, once the overall effect of all programs meant to prevent people from entering homelessness has been calculated, then that amount can be compared to the number of people who nonetheless entered homelessness for the first time in that same time period.

To enable comparisons among similar types of programs, Cal ICH could categorize programs according to the phase of homelessness that the programs address: entering, experiencing, or exiting homelessness. This categorization would allow the State to identify gaps in its efforts or funding to address these three phases. The Legislature could then use the scorecard to make data‑driven policy decisions and to more easily make inquiries about why funding appropriated for certain programs is not fully spent and the anticipated timing of such spending.

Cal ICH Has Not Ensured the Accuracy of the Data in the State Data System

As we previously discuss, Cal ICH has not established a statewide methodology for state‑funded homelessness programs to report their outcomes. However, Cal ICH has access to some program data through the state data system, which collects records from local CoC’s HMIS. State law requires that, beginning in January 2023, grantees or entities operating any of 10 specific homelessness programs existing as of 2021 to report to HMIS information about the services individuals receive, such as start dates, end dates, and exit destinations—grantees are not required to report cost information to HMIS. The 10 programs include Homekey, HHAP, and the CalWORKs Housing Support Program—three of the five programs we reviewed and describe in the next section of this report. All programs that began after July 1, 2021, are also required to report this information; thus, Cal ICH now generally collects some data related to several homelessness programs using the state data system.

Nonetheless, Cal ICH has not used the reporting programs’ data to evaluate the programs’ success in reducing homelessness. Although it has performed some research about the types of services received by various populations among those experiencing homelessness, it has not used the data to determine the effectiveness of any particular program. Instead, Cal ICH uses the data to populate a public-facing dashboard. The dashboard displays the number of people experiencing homelessness that each CoC served, provides information about services provided, and displays the age, race and ethnicity, gender, and veteran status of those who received the services.

Because Cal ICH does not analyze the available data to determine program effectiveness, it cannot provide critical information that state policymakers could use when prioritizing funding decisions for the myriad state homelessness programs. The executive officer of Cal ICH explained that the council intends to assess the effectiveness of state homelessness programs, but she did not provide us with any tangible plans or evidence of efforts to initiate such an assessment.

If Cal ICH begins using the available data in more meaningful ways, it will need to take steps to ensure those data are reliable. In fact, we identified a number of problems with the data in the state data system. For example, the CoC for Santa Clara County, which includes San José, provided all records from its HMIS to Cal ICH, including those that the CoC had marked as deleted. The CoC explained that some records were deleted because they were created in error. However, Cal ICH asserted that it treated at least some of the deleted records as valid and included them in publicly reported information. Similarly, in multiple CoCs statewide we found a small number of likely fictitious clients. For example, we identified more than 100 enrollment records with client names such as “Mickey Mouse,” “Super Woman,” or a name indicating it was a test client, such as “Test Participant.” While this is a small number of entries that are likely system test entries or erroneous records that were never removed, the true magnitude of such records is unknown because a CoC could enter similar records using any name. Nonetheless, Cal ICH was unaware of any test records in the data.

We also identified questionable entries in the state data system’s bed inventory and enrollment data, with some shelters showing enrollment numbers significantly over their bed capacity. In one example, a shelter reported nearly 1,100 people enrolled in fewer than 300 beds. When we asked about these entries, Cal ICH staff explained that enrollment records do not always show when individuals stopped receiving services. As a result of these errors, some of the enrollment numbers we present in this report may be overstated.

Although Cal ICH takes steps to adjust the data to improve the data quality when reporting certain metrics, such as excluding records with known illogical values, and these steps result in what Cal ICH believes is the correct data, the corrections do not necessarily result in a reflection of what actually occurred. In fact, Cal ICH did not correct for all of the errors we identified. Cal ICH staff recognize that the accuracy and completeness of the data depends on the information that each CoC records and submits to Cal ICH. Therefore, Cal ICH should work with the CoCs to ensure that they submit appropriate data.

Cal ICH’s statutory goals give it specific responsibilities as the State’s primary resource for homelessness policy coordination and accountability. However, it has also been directly managing multiple large grant programs as mandated by statute, including the multibillion‑dollar HHAP program and the more‑than‑$700 million ERF program . The Legislature appeared to recognize this focus in 2023 when it passed legislation transferring responsibility for the grant programs from Cal ICH to HCD, effective July 2024, which will likely allow Cal ICH to focus its efforts on meeting its statutory goals. Cal ICH’s executive officer acknowledged that changes in key leadership roles and in programmatic statutory language have hindered the council’s ability to meet its statutory goals.

Two of the Five State‑Funded Programs We Reviewed Are Likely Cost‑Effective, but the State Lacks Clear Outcome Data for the Other Three

Data indicate that two of the five programs we reviewed—Homekey and the Housing Support Program—are likely cost‑effective. Homekey allows the State to provide individuals with housing that is less expensive than newly built units. The Housing Support Program helps house families who are experiencing or at risk of homelessness and costs less than the State would spend if these families were homeless.
The State has not collected adequate outcome data to assess the cost‑effectiveness of the remaining three programs. Without such data, it will lack assurance that these programs represent the best use of state funding.

Both Homekey and the Housing Support Program Are Likely Cost‑Effective Approaches to Addressing Homelessness

Department: California Department of Housing and Community Development

Year established: 2020

Funding: Round 1–$846 million; Round 2–$1.95 billion; Round 3–$817.3 million

Number of Recipients: Round 1–94; Round 2–116

Eligible uses: To convert existing buildings into housing for people experiencing homelessness.

Acquisition or rehabilitation of motels, hotels, or hostels.
Master leasing of properties.
Acquisition of other sites and assets with existing residential uses, such as care facilities.
Conversion of units from nonresidential to residential.
Purchase of affordability covenants and restrictions for units.
Relocation costs for individuals who are being displaced as a result of rehabilitation of existing units.
Capitalized operating subsidies.

Source: State law and Homekey funding notices.

When considering how best to spend the public’s money, the State’s policymakers should have the information necessary to compare program costs and outcomes. To determine the cost‑effectiveness of the state‑funded efforts to address homelessness, we reviewed the five programs we described in the Introduction. We selected these programs by considering the amount of funding provided, and the types of assistance the programs offered. We found that two of the five—Homekey and the Housing Support Program—were likely cost‑effective.

We reached this conclusion by reviewing the reported outcomes and costs of a selection of projects and services funded by each program. We then identified alternative possible courses of action to compare for cost‑effectiveness. As we discuss in the next section , we did not have the data necessary to fully assess the other three, either because the programs were recently implemented or because program staff had not collected sufficient information on program outcomes.

As we previously explain , Homekey —which focuses on converting existing buildings into housing units for people at risk of or experiencing homelessness—appears cost‑effective when compared to the cost of building new affordable housing units. This saves time and money and allows Homekey to create more units and house more people. Table 1 shows the cost‑effectiveness comparison for Homekey.

Assessment of the Cost-Effectiveness of Homekey Round 1

Source: Analysis of program documentation and Making It Pencil: The Math Behind Housing Development , published by the Terner Center for Housing Innovation cited in HCD’s 2021 report to the Legislature on Homekey Round 1.

We reviewed eight Homekey projects that received funding from Round 1 of the program. To calculate the average cost to produce a Homekey unit, we divided the amount of funds spent by the number of units the project was expected to produce. The average cost per unit for the eight projects we reviewed was about $144,000. A project in San Francisco had the highest per‑unit cost of about $200,000, whereas a project in Fresno had the lowest per‑unit cost of about $90,000 per unit.

These costs are significantly lower than the costs of building other affordable housing in the State. HCD compared the cost of Homekey housing to other affordable housing, reporting to the Legislature in 2021 that the average cost of one unit of newly built affordable housing in California in 2019 ranged from about $380,000 to $570,000, while the average cost of a Homekey unit in HCD’s analysis was $129,000. This information aligns with the average we calculated for the eight projects we reviewed. In some parts of the State, such as the Bay Area, a newly built affordable housing unit can reportedly cost up to $1 million.

HCD’s assistant deputy director explained that the program was more cost‑effective and faster than building new construction units, and that data from Round 1 Homekey projects informed HCD’s decisions in the program’s subsequent funding rounds. For example, the State increased the time it allowed Round 2 projects to rehabilitate acquired units and ensure they were substantially occupied from three months to 15 months.

Although Homekey Rounds 2 and 3 have the potential to be as cost‑effective as Round 1, those rounds are still in progress. Until the data are available on units built and people housed, we cannot fully determine the cost‑effectiveness of these rounds.

CalWORKs Housing Support Program (housing support program)

Department: California Department of Social Services

Year Established: 2014

Funding: FY 2019–20: $95 million; FY 2020–21: $95 million; FY 2021–22: $285 million; FY 2022–23: $285 million

Recipients: As of fiscal year 2021–22, 55 counties operated the Housing Support Program.

Eligible uses: The program offers financial assistance and housing‑related wraparound supportive services, including rental assistance, housing navigation, case management, security deposits, utility payments, moving costs, interim shelter assistance, legal services, and credit repair. The program serves families with children enrolled in CalWORKs who are experiencing homelessness or at risk of homelessness.

Source: State law and CDSS Website.

The Housing Support Program, which provides financial assistance to families at risk of or experiencing homelessness , is also likely cost‑effective. Table 2 shows our cost‑effectiveness comparison for the Housing Support Program. When we reviewed expenditure and outcome data for 10 counties in the Housing Support Program during the past four fiscal years, we found that those counties spent an average of $12,000 to $22,000 per fiscal year on families that received housing support through the program during this period. The U.S. Interagency Council on Homelessness noted that studies have found that a single chronically homeless person costs taxpayers as much as $30,000 to $50,000 per year. The National Alliance to End Homelessness reported a per‑person cost to taxpayers of $35,578 per year, and in the legislation creating Cal ICH, the Legislature cited a cost of $2,897 per month—or approximately $35,000 annually—in crisis response services for a person experiencing homelessness in Los Angeles County. Thus, the Housing Support Program spent less to house or keep housed a family than taxpayers might otherwise expect to pay for an individual to be homeless. During the past four fiscal years, the 10 counties housed nearly 6,000 families. According to California Department of Social Services (CDSS) staff, comparing the cost of the Housing Support Program to the cost of a person’s homelessness is a reasonable method of assessing the program’s cost‑effectiveness.

Assessment of the Cost-Effectiveness of the CalWORKs Housing Support Program

Source: Analysis of program documentation and homelessness cost estimates cited by the U.S. Interagency Council on Homelessness, the National Alliance to End Homelessness, and the Legislature.

The data that CDSS collected from the counties related to the Housing Support Program contained sufficient outcome and expenditure information for us to assess cost‑effectiveness . To track program performance and outcomes throughout the year, the department uses targets set by the counties for the number of families they intend to house. It also tracks monthly how many families continue to receive housing. We saw evidence it evaluated and monitored counties’ activities to ensure that the counties adhered to evidence‑based interventions, such as Housing First and Rapid Rehousing best practices, including not making housing contingent on participation in services. Cal ICH could consider CDSS’s example when it creates its own approach to collecting and reporting data on state‑funded homelessness programs, as we previously discuss.

The State Has Not Collected Sufficient Data to Assess the Cost‑Effectiveness of the Other Three Programs We Reviewed

We were unable to fully assess the cost‑effectiveness of three of the programs we reviewed—SRAP, HHAP, and ERF—because of limitations with the data the State has collected. Collectively, these programs received more than $9.4 billion in funding since 2020.

State Rental Assistance Program (SRAP)

Year Established: 2021

Funding: The federal government provided $4.8 billion to cities and counties in California.

Recipients: 67 cities and counties.

Eligible uses:

Rental arrears.
Prospective rent payments.
Utilities, including arrears and prospective payments.
Any other expenses related to housing.
Any additional use authorized by federal law.

Source: Federal and state law, SRAP funding notices.

For example, we could not determine the long‑term cost‑effectiveness of SRAP, which provided financial assistance in response to the COVID‑19 pandemic to help renters facing eviction, because HCD did not collect clear eviction outcome data. According to the online dashboard for the program as of January 2024, SRAP has served more than 370,000 households since its inception, averaging nearly $12,000 per household. HCD staff asserted that SRAP was effective because the program awarded the funding within statutory deadlines and assisted nearly 400,000 households, which staff believe prevented them from becoming homeless. According to state law, it was the Legislature’s intent that the state monitor the usage of funding to ensure that the program stabilized households and prevented evictions; however, the law did not specifically require HCD to track evictions for those receiving SRAP funding. Although it is likely that the rental assistance provided by the program helped some avoid evictions, HCD did not collect eviction data that would enable it to determine whether and how many SRAP beneficiaries might have fallen back into homelessness. The program has now essentially ended because it is no longer accepting applications, and the State is left without an understanding of what percentage of SRAP recipients were unable to avoid eviction, or whether the amounts provided to households were sufficient.

Homeless Housing, Assistance and Prevention Program (HHAP)

Department: California Interagency Council on Homelessness

Year Established: 2019

Funding: Round 1–$650 million; Round 2–$300 million; Round 3–$1 billion; Round 4–$1 billion; Round 5–$1 billion

Recipients: CoCs, counties, large cities.

Eligible Uses:

Rental assistance and rapid re‑housing.
Operating subsidies in new and existing units.
Landlord incentives.
Outreach and coordination.
Support for homelessness services and housing delivery systems.
Delivery of permanent housing and innovative housing solutions.
Prevention and shelter diversion to permanent housing.
New navigation centers and emergency shelters.

Source: State law and HHAP funding notices.

We were similarly unable to determine the cost‑effectiveness of HHAP Round 1 because of the lack of clear data about outcomes for people who received HHAP‑funded services . The HHAP program provides funding for a variety of services that address multiple aspects of homelessness, including providing interim housing. Cal ICH tracks the spending of HHAP funds by individual eligible use categories. Such tracking shows that, as of December 2022, about half of the HHAP Round 1 funding had been used for emergency shelters and operating subsidies. The amount used for each other eligible use was less than 15 percent.

Determining HHAP’s cost‑effectiveness would require data on the outcomes of each of the HHAP‑funded services and a comparison for each service. Although Cal ICH collects some data when a person exits an HHAP‑funded service, those data are insufficient for evaluating the program’s cost‑effectiveness. For example, CoCs’ exit survey data for people served by HHAP Round 1 funds document people’s intended destinations following their participation in a program. The survey options include permanent housing, a return to homelessness, or an unknown destination. The data we analyzed from four CoCs (Los Angeles, San Diego, San José/Santa Clara, and San Francisco) showed that nearly one‑third of the exits from HHAP Round 1‑funded services left those services for unknown destinations. Because an unknown destination can indicate that the person did not know the destination, that the person refused to answer, that the data was not collected, or that the exit interview was not conducted, we cannot determine whether these people actually exited homelessness. These ambiguous data for nearly one‑third of the exits inhibits any comparison of program costs and outcomes, demonstrating the need for Cal ICH to establish more specific parameters for the data that programs are required to collect and report.

Despite not conducting an analysis of the cost‑effectiveness of HHAP Round 1, the State authorized billions of dollars in funding for four additional rounds. The Legislature made significant changes to the program that began with Round 3, requiring that applicants establish measureable outcome goals, such as reducing the number of people experiencing homelessness and reducing the length of time that people remain homeless. To the extent CoCs establish meaningful outcome goals, the goals should provide better benchmarks against which the State can measure spending and evaluate cost‑effectiveness.

Grantees have until June 2026 to spend the funds from HHAP Rounds 2 and 3, and until June 2027 for Round 4. Consequently, the State will likely be unable to fully assess the effects of that $2.3 billion in funding for years. The HHAP Round 5 application period opened in September 2023; however, the State has not yet awarded $1 billion of funding. The Legislature intends to transfer all grant programs that Cal ICH administers to HCD on or before July 1, 2024, so HCD will likely be the entity that can perform future assessments of HHAP cost‑effectiveness.

Encampment Resolution Funding (ERF)

Department: California Interagency Council on Homelessness Year Established: 2021 Funding: $750 million ($50 million for round one; $300 million for round two, and $400 million for round 3). Recipients: Cities, Counties, CoCs. Round 1 Eligible Uses:

Direct Services and Housing Options.
Capacity Building.
Sustainable Outcomes.
Administration.

Source: State law, State Budget, and Cal ICH Funding Notice.

We also could not determine the cost‑effectiveness of the ERF program —which transitions people from encampments into safe and stable housing. Cal ICH has not collected complete outcome data for this program, and the expenditure data it has collected may be unreliable . As a condition of its grant agreement, Cal ICH requires that grantees use a template that it created to submit program outcome data about the people the grantees served. Despite this requirement, four of the 10 grantees we reviewed had submitted incomplete or unusable outcome data as of July 2023. Moreover, two of the four grantees did not use the required template. For the template fields for gathering information about people served, including those necessary to determine the number of people permanently housed, multiple grantees entered the words “data not collected” or simply left the fields blank. Cal ICH relies on self‑certified data from grantees and does not attempt to verify the completeness or accuracy of the data submitted. Therefore, the number of people reported as permanently housed through the program is likely incomplete or inaccurate.

Further, Cal ICH does not appear to enforce the reporting requirement. Cal ICH staff explained that the agency started with a small staff. They indicated that as the programs it administered grew in funding and new programs were added, it attempted to hire additional staff to monitor grantee reports. When we asked Cal ICH how it responded to incomplete or unusable outcome data, staff asserted that they contacted grantees to ensure that the outcome data was complete and in the required format. However, when we asked for documentation, staff could provide only emails they sent to three grantees after we brought the issue to Cal ICH’s attention. In these emails, they requested the grantees to use the required template.

State law requires ERF Round 1 grantees to spend 50 percent of grant funds by June 30, 2023, and Cal ICH provided documentation of its efforts to ensure that grantees met the expenditure deadline. It sent multiple emails to grantees reminding them of the deadline, held support meetings with grantees to determine how they would meet the deadline, and provided technical assistance. All 10 grantees we reviewed appear to have met the 50 percent expenditure deadline. However, Cal ICH relies on grantees’ self‑certifying the accuracy of the expenditure amounts.

The State awarded ERF Rounds 2 and 3 to grantees beginning in June 2023, and at the time of our review, the grantees were not yet required to spend the funds. The earliest deadline requires Round 2 grantees to spend half of their allocation by June 30, 2024. As a result, there were not enough data available at the time of our review to assess the cost‑effectiveness of these grants.

RECOMMENDATIONS

The following are the recommendations we made as a result of our audit. Descriptions of the findings and conclusions that led to these recommendations can be found in the sections of this report.

Legislature

To promote transparency, accountability, and effective decision‑making related to the State’s efforts to address homelessness, the Legislature should amend state law to require Cal ICH, by March 2025, to mandate reporting by state agencies of costs and outcomes of state homelessness programs. To implement such reporting, the Legislature should require Cal ICH to develop guidance establishing specifics on uniformity of data to be collected and how it is to be presented. The Legislature should require Cal ICH to annually compile and report this cost and outcome information publicly beginning in September 2025 and should provide resources for this effort, as necessary.

Cal ICH

To ensure that its 2024 update to its action plan aligns with the statutory goals that the Legislature has established, Cal ICH should clearly identify in that update the statutory goal or goals that each of the action plan’s objectives addresses.

To promote transparency, accountability, and effective decision‑making related to the State’s efforts to address homelessness, Cal ICH should request that state agencies responsible for administering state‑funded homelessness programs provide spending‑ and outcome‑related information for people entering, experiencing, and exiting homelessness. By March 2025, Cal ICH should develop and publish on its website a scorecard—or similar instrument—on the homelessness programs that would enable the Legislature and other policymakers to better understand each program’s specific costs and outcomes. Cal ICH should determine and request from the Legislature any necessary resources required for this effort.

To ensure that the State has consistent, accurate, and comparable data for all state‑funded homelessness programs, by March 2025, Cal ICH should work with CoCs to implement standardized data requirements that programs must follow when entering information into HMIS. The requirements should establish expectations defining CoCs’ responsibilities for ensuring data accuracy and reliability.

OTHER AREAS WE REVIEWED

To address the audit objectives approved by the Joint Legislative Audit Committee (Audit Committee), we also reviewed housing placements and the sharing of homelessness data.

Most Placements of Unsheltered People Into Interim Housing Do Not End Up in Permanent Housing

Types of interim housing.

Emergency Shelter: Any facility with the primary purpose of providing a temporary shelter for the homeless in general or for specific populations of the homeless and which does not require occupants to sign leases or occupancy agreements.

Transitional Housing: Housing that facilitates the movement of homeless individuals and families into permanent housing within 24 months or longer, as determined necessary.

Safe Haven: Supportive housing that serves hard‑to‑reach homeless persons with severe mental illness who came from the streets and have been unwilling or unable to participate in supportive services.

Types of Permanent Housing

Rapid Rehousing: Housing relocation and stabilization services and short‑term and medium‑term rental assistance as necessary to help a homeless individual or family move as quickly as possible into permanent housing and achieve stability in that housing.

Permanent Supportive Housing: Permanent housing in which supportive services are provided to assist homeless persons with a disability to live independently.

Other Permanent Housing: This includes permanent housing with supportive services for persons experiencing homelessness who do not have a disability and long‑term housing without supportive services.

Source: Federal Law.

The vast majority of housing placements for Californians experiencing unsheltered homelessness involve interim housing. The text box describes the types of interim and the types of permanent housing . Interim housing is a critical service that protects people from many of the impacts of unsheltered homelessness, including health and safety risks. Using information in the state data system, we identified placements of unsheltered people into housing from July 2019 through March 2023. As Figure 6 shows, 86 percent of placements statewide moved people into interim housing rather than into permanent housing. Appendix B shows additional details about placements. The placement of individuals into interim housing likely occurs in part because of the lack of available permanent housing in the State.

Nonetheless, the final phase of homelessness—exiting homelessness—should ideally culminate with individuals living in permanent housing. People experiencing unsheltered homelessness who were placed into interim housing had worse outcomes when exiting the placement than those placed into permanent housing. Specifically, the data show that only 13 percent of the exits from interim housing placements reported individuals moving into permanent housing. In contrast, the data show that 84 percent of exits from permanent housing placements reported individuals moving into other permanent housing. 7 People can “exit” from permanent housing placements and at that time they report their next living situation. For example, when someone receives short‑ or medium‑term rapid rehousing services, which HUD defines as a permanent housing placement, they “exit” after they stop receiving rental assistance or supportive services. At that time, their next living situation could be another permanent housing location, such as an apartment they rent, or could be a return to homelessness. The data further show that 44 percent of the exits from interim housing reported individuals returning to homelessness, as opposed to 4 percent of exits from permanent housing placements.

Unsheltered Placements and Outcomes

Source: Homeless Data Integration System.

Note: Rounding of numbers may prevent percentages from totaling 100.

* Some placements of individuals showed that the person had not yet exited the program and was still enrolled and receiving shelter or housing services as of the date we obtained the data; therefore, the number of placements is higher than the number of those who exited the program.

† Category Other can include the following: worker unable to determine, client doesn’t know, client prefers not to answer, data not collected, or other.

Figure 6 description:

Figure 6 is a tree diagram that depicts the total placements statewide of individuals experiencing unsheltered homelessness into interim and/or permanent housing types from the fiscal year 2019-20 through March 2023. At the top of the figure, the diagram bifurcates into two main branches, one branch for interim housing and the other branch for permanent housing. Both of these branches then list and describe the percentages of people who were placed in their specific types of housing. Both the interim and permanent branches then continue to how many total individuals exited the interim or permanent housing placement or placements they received. Finally, the branches culminate in listing the types of destinations individuals could have exited to and the percentages for each exit destination. For example of the 247,866 placements that exited interim housing, 31% of those placements returned to experiencing unsheltered homelessness. Of the 31,957 placements that exited a type of permanent housing, 3% returned to experiencing unsheltered homelessness. The text at the bottom of the figure provides more context on the data presented in the tree diagram.

Outcomes for People Exiting Placements in Permanent Housing Funded by Federal Programs

82 percent left to some type of permanent housing
4 percent left to homelessness

Source: State data system data for placements from July 2019 through March 2023.

Permanent housing outcomes for people in federally‑funded programs are shown in the text box at right and generally align with the outcomes of programs that were not federally‑funded. However, we were unable to separate out the permanent housing outcomes for the subcategory of state‑funded programs from the overall permanent housing outcomes because of inconsistent data. Each federal program has a code that a service provider selects when entering information about projects into HMIS. Using this code, we could determine the outcomes for federally funded programs. Until July 2023, state programs did not have similar program codes; instead, the service provider who entered the data typed the program name into a text field. This practice led to inconsistent entries for state programs, because each service provider might type something different for the same program. For example, the HHAP program has been entered as “CA‑HCFC‑HHAP 1,” ”HHAP,” ”State HHAP,” “County HHAP‑1,” as well as other variations. These inconsistencies make the data unreliable for identifying programs to determine permanent housing outcomes.

Since July 2023, providers that receive state funding are required to provide state funding information according to Cal ICH instructions that include state‑specific codes. Thus, going forward, the state data should have more complete funding source information. This will allow the State to better determine the outcomes associated with state programs such as HHAP.

Cal ICH Has Recently Begun Facilitating the Sharing of Certain Data Related to Homelessness Programs

Federal and state laws limit the data that can be shared without consent..

Health Insurance Portability and Accountability Act: Applies to health plans and certain health care providers. Some protected health information data may be disclosed without consent if the data will only be used for limited purposes.

Family Educational Rights and Privacy Act: Applies to educational agencies or institutions that receive federal funding. Personally identifiable information from educational records can be disclosed without consent as long as it is used for purposes related to that person’s education.

Violence Against Women Act: Applies to covered housing providers who serve victims of domestic or dating violence, sexual assault, or stalking. The providers cannot share a victim’s information without consent of the victim.

HMIS Standards: Client consent is required to share data, but not to enter data into HMIS.

Substance Abuse Records: Some records can be disclosed without consent in case of medical emergency, research, or audit purposes. Consent form must outline exactly what can be disclosed; can be revoked at any time.

Confidentiality of Medical Information Act: Individual must consent to disclosure of medical information by a healthcare plan or provider unless there is a court order, search warrant, death investigation, or need for diagnosis or treatment.

Information Privacy Act of 1977: Individual must consent to disclosure of personal information by a State agency unless there is a legal requirement or a medical necessity.

Juvenile Case Records: Files may only be accessed by someone who is related to, works with, or represents the child.

Source: Federal and state law.

Several federal and state laws and regulations may impede the ability of the State or local jurisdictions to accurately assess and track certain information about people who are experiencing homelessness. The text box lists some of these laws. Generally, the laws and regulations protect the confidentiality of personal information. However, in doing so, they also could limit the collecting and sharing of data to evaluate homelessness efforts and may also affect access to supportive services.

The main source of data about people experiencing homelessness is local HMISs. As we previously discuss, the CoCs are responsible for collecting data in an HMIS from entities that provide services to people experiencing homelessness. When doing so, they must ensure compliance with federal privacy and security standards. These standards allow for certain uses of people’s protected personal information (protected information), including for the provision and coordination of services, service payment and reimbursement, administrative functions such as audits, and the removal of duplicate data. CoCs use signed consent forms to allow them to share the data provided by people who access homelessness services.

Although local governments generally have access to the data they input into their HMIS, they might not have access to personal information added by other entities. However, effective January 2018, state law began allowing agencies that provide services to people experiencing homelessness, including cities, to establish multidisciplinary teams to share information that is confidential under state law with one another under certain circumstances. Each county that establishes a multidisciplinary team must have protocols for sharing data within these teams. Further, they must provide these protocols to CDSS, which is a member agency of Cal ICH. However, we recognize that federal law might still present barriers to sharing data.

In addition, Cal ICH has begun to facilitate some data‑sharing with CoCs by making available a dashboard with anonymized aggregate data—such as the number of people accessing particular services—that it receives from each of the CoCs. Doing so may enable local jurisdictions to analyze the data and to better identify and understand the services that are being provided and outcomes of those services.

We conducted this performance audit in accordance with generally accepted government auditing standards and under the authority vested in the California State Auditor by Government Code section 8543 et seq. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on the audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

April 9, 2024

Staff: Nicholas Kolitsos, CPA, Principal Auditor Jordan Wright, CFE, Principal Auditor Chris Paparian, Senior Auditor Nicole Menas Eduardo Moncada

Data Analytics: Ryan Coe, MBA, CISA Brandon Clift, CPA

Legal Counsel: Joe Porche

Appendix A—Statewide Homelessness Assessment: Programs and Funding

Appendix B—Placements Into Interim and Permanent Housing

Appendix C—Scope and Methodology

Statewide Homelessness Assessment: Programs and Funding

Fiscal Years 2018–19 Through 2020–21

Cal ICH published a Statewide Homelessness Assessment (homelessness assessment) in 2023 for the Legislature. The Legislature’s intent in requesting the assessment was to obtain trustworthy information to connect funding allocated to prevent and end homelessness with established sheltering and housing resources and to provide state agencies with accurate information for more accurate forecasting to target future investments. The homelessness assessment covered fiscal years 2018–19 through 2020–21. Table A shows the list of state programs and funding that Cal ICH identified in the homelessness assessment. Because the State has awarded a significant amount of additional funding and created new homelessness programs, we believe that the State’s policymakers and the public need regular updates of this information to evaluate the effectiveness of state spending to prevent and end homelessness.

Statewide Homelessness Assessment Programs and Funding

Source: Statewide Homelessness Assessment.

Note: Since the period covered by the statewide homelessness assessment, the State has implemented additional homelessness programs and awarded additional funding.

Placements Into Interim and Permanent Housing

From Fiscal Year 2019–20 through March 2023

We used the state data system to identify the number of times a reporting entity placed people into different types of housing. Table B below shows the number of placements into both permanent and interim housing. Statewide, the table shows how many placements of people were in each category of housing, with the majority placed into interim housing—emergency shelter, in particular.

Interim and Permanent Housing Placements

Source: State data system.

* This table counts an individual once for each housing placement; therefore, a person can be counted more than once.

Scope and Methodology

The Audit Committee directed the California State Auditor to conduct an audit to assess the effectiveness of the State’s spending on homelessness. Specifically, the Audit Committee asked us to review the State’s structure and efforts for funding and addressing homelessness and the cost‑effectiveness of a selection of five state homelessness programs. Table C below lists the objectives that the Audit Committee approved and the methods we used to address them. The Audit Committee also requested that we review the outcomes that the city of San José and another city achieved with federal, state, and local homelessness funding. The results of our review of these two cities is included in a separate report (2023‑102.2). Unless otherwise stated in the table or elsewhere in the report, statements and conclusions about items selected for review should not be projected to the population.

Audit Objectives and the Methods Used to Address Them

Source: Audit workpapers.

Assessment of Data Reliability

The U.S. Government Accountability Office, whose standards we are statutorily obligated to follow, requires us to assess the sufficiency and appropriateness of any computer‑processed information we use to support our findings, conclusions, and recommendations. In performing this audit, we relied on electronic data obtained from Cal ICH’s state data system for the period July 1, 2019, through March 31, 2023. To evaluate the data, we reviewed existing information, interviewed people knowledgeable about the data, and performed electronic testing of key elements of the data. We identified problems with the state data system data, such as the inclusion of deleted records, test entries, and illogical entries, such as some enrollment numbers that exceeded the bed capacity of the corresponding shelters. Consequently, we found the data to be of undetermined reliability for the purposes of analyzing the number and duration of those enrolled in homelessness services. Although the data may contain errors that affect the precision of the numbers we presented, we concluded that there is sufficient evidence in total to support our findings, conclusions, and recommendations.

California Interagency Council on Homelessness

February 16, 2024

Grant Parks California State Auditor 621 Capitol Mall, Suite 1200 Sacramento, CA 95814

SUBJECT: CALIFORNIA STATE AUDITOR REPORT 2023-102

Dear Mr. Parks:

The California Department of Social Services (CDSS) submits below the responses to the California State Auditor’s (CSA) 2023-12 draft report.

CSA DRAFT REPORT:

CSA found that the CalWORKs Housing Support Program was likely cost-effective and did not have any recommendations for CDSS to address. CDSS further reviewed the draft report for factual inaccuracies and found none.

Questions or requests for clarification regarding the information in this letter should be directed to Marta Galan, Branch Manager of the Housing and Homelessness Division, Operations, Data, and Integration Branch at [email protected] and copied to Debbie Richardson at [email protected].

In partnership, Hanna Azemati Deputy Director Housing and Homelessness Division

cc Nicolas Kolitsos, CSA Jordan Wright, CSA Claire Ramsey, Chief Deputy Director, CDSS Julianna Vignalats, Chief Operating Officer (Acting), CDSS Keri Tippins, Senior Assistant Chief Counsel, Legal Division, CDSS Maria Hudson, Deputy Director, Administration Division, CDSS Debbie Richardson, Chief, Office of Audit Services Branch, CDSS

February 21, 2024

Grant Parks, State Auditor California State Auditor 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 Re: 2023-102.1 State and Local Homelessness Audit Dear Mr. Parks,

The California Interagency Council on Homelessness (Cal ICH) hereby submits the enclosed response to the California State Auditor (CSA) draft report number 2023-102.1 titled, “The State Must Do More to Assess the Cost-Effectiveness of Homelessness Programs.”

Cal ICH, formerly known as the Homeless Coordinating and Financing Council, was established in 2016 and tasked with the mission of providing state level policy coordination, overseeing the implementation of Housing First, and identifying resources and services with the end goal to prevent and end homelessness in California. 1 Senate Bill 1380 (Chapter 847, Statutes of 2016) Starting in 2018, Cal ICH was tasked with administering state grant programs. Cal ICH takes seriously its responsibility to effectively administer these programs and safeguard public funds.

As CSA mentions in the report, AB 129 (Chapter 40, Statutes of 2023) was enacted last year and expressly states legislative intent to transition grants administration from Cal ICH to the Department of Housing and Community Development commencing in Fiscal Year 2024-25. 2 Health and Safety Code § 50231. This administrative transition is intended to serve the dual purpose of streamlining the administration of the State’s housing and homelessness programs, and support Cal ICH in providing statewide policy coordination and development. 3 Id . As Cal ICH continues its efforts to effectuate this administrative transition, it is critically important to adopt measures to improve program administration, including recommendations identified by the CSA that are either already being implemented or planned to be implemented in the near future.

Based on the foregoing, Cal ICH generally agrees with the recommendations provided by CSA and will take appropriate measures to implement where possible.

Responses to Cal ICH specific recommendations are as follows:

Recommendation 1: “ To ensure that its 2024 update to its action plan aligns with its statutory goals, the homelessness council should clearly identify in that update the statutory goal or goals that each of the action plan’s objectives addresses.”

Cal ICH agrees with this recommendation.

The purpose of the Action Plan was to orient the State’s efforts to drive purposeful, meaningful, and measurable progress toward preventing and ending homelessness in California. While Councilmember agencies and departments do report on specific program outcomes in the Action Plan Implementation Report, Cal ICH agrees the Action Plan should be a vehicle to more directly track progress towards its 19 statutory goals. The most recent Action Plan Implementation Progress Report can be found here.

① Recommendation 2: “To promote transparency, accountability, and effective decision-making related to the State’s efforts to address homelessness, the homelessness council should request that state agencies responsible for administering state-funded homelessness programs provide spending- and outcome-related information for people entering, experiencing, and exiting homelessness. By March 2025, the council should develop and publish on its website a scorecard—or similar instrument—on the homelessness programs that would enable the Legislature and other policy-makers to better understand each program’s specific costs and outcomes.”

Cal ICH generally agrees with the intent of the recommendation but notes that limited existing resources and authorities limit its ability to implement this recommendation.

AB 140 (Chapter 111, Statutes of 2021) required Cal ICH to complete a one-time assessment of homelessness funding and outcomes. This assessment directly supported the nineteenth statutory goal “to collect, compile, and make available to the public financial data provided to the council from all state-funded homelessness programs.” Due to the lack of existing resources to conduct this assessment internally, Cal ICH was provided with one-time funding of $5.6 million to complete this report . Additional resources would be needed to conduct and update the same or similar analysis on an ongoing basis.

① Cal ICH agrees with CSA that it has a goal “to collect, compile, and make available to the public financial data provided to the council from all state-funded homelessness programs,” and that Cal ICH has legal authority to request departments and agencies to provide internal, financial data on specific programs. However, without additional resources on an ongoing basis, Cal ICH will not have the capacity to effectively use all of the financial data that it has authority to request. Cal ICH requests CSA expand their recommendation to include ongoing funding to support the effective implementation of this request.

Additionally, Cal ICH notes that significant additional data requests from Cal ICH to relevant departments imposes workload on those departments—as such, resource levels at those departments may also impact the ability to implement this recommendation.

Recommendation 3: “ To ensure that the State has consistent, accurate, and comparable data for all state-funded homelessness programs, by March 2025 the homelessness council should work with CoCs to implement standardized data requirements that programs must follow when entering information into HMIS. The requirements should establish expectations defining CoC’s responsibilities for ensuring data accuracy and reliability.”

Cal ICH agrees with this recommendation and notes that the existing Homeless Data Integration System (HDIS) already serves to standardize much of the data reporting from the 44 CoCs across the state and Cal ICH remains committed to continuously improving data quality and consistency.

Cal ICH created HDIS in 2021 to improve statewide data collection and coordination on homelessness. HDIS compiles and processes data collected from all 44 CoCs into a statewide data warehouse. HDIS was the first state-level system of its kind in California, providing the most comprehensive and accurate data system available to measure the provision of homelessness services and associated outcomes. Cal ICH would like to respond to CSA findings related to data quality and consistency.

1. Cal ICH Uses a Multi-Layer Verification System to Ensure Data Quality

Cal ICH uses a multi-layer process to ensure data quality. First, CoCs are responsible for ensuring the accuracy of the information submitted to HDIS. Cal ICH has agreements with each CoC (referred to as Data Use Agreements) that outline the terms of data sharing between the State and the respective CoC. These agreements outlined that the “CoC shall have responsibility for the accuracy and quality of the Data” provided to BCSH.

Second, to further support data accuracy, Cal ICH reviews the data provided by CoCs to ensure the data is complete, in the correct format, and that changes in the record counts are consistent with local and statewide trends. In the event of data issues or data outliers, Cal ICH connects with the CoC in question to resolve errors. Cal ICH cannot make corrections to the underlying data and relies on the CoC to correct any errors through their local Homeless Management Information System (HMIS). To support CoCs in this effort, the fifth round of Homelessness Housing and Assistance Program (HHAP) added HMIS as an eligible use under System Improvements, thereby providing additional state resources to support CoCs in improving data accuracy and quality.

Cal ICH performs data quality checks at multiple stages in the process of loading the data. The errors in the underlying data that CSA highlighted are not due to the state's data loading process or analytics. Despite this multi-layer verification system, Cal ICH agrees with CSA that improving data quality from external parties is a priority. To that end, Cal ICH is in the process of implementing multiple processes to increase data quality. These include expanding data quality checks performed by state staff, including developing more automated data error reporting. Cal ICH is also developing tools and technical assistance to support CoCs with improving data quality.

2. AB 977 and HDIS Provide a Consistent Method of Tracking and Analyzing Data Across State Programs

Cal ICH has established a consistent method for gathering information on homelessness program’s outcomes for the programs required to report data as part of AB 977 (Chapter 397, Statutes of 2021), which became operative on January 1, 2023. Using HDIS for tracking outcomes allows for consistent comparisons across state programs and tracking longer term outcomes for program participants.

Reporting applies to the following state entities and programs:

Cal ICH: HHAP, ERF, Family Homeless Challenge Grants
HCD: Homekey, Housing for a Healthy California, No Place Like Home, Multifamily Housing Program, Veterans Housing and Homelessness Program
CDSS: Bringing Families Home Program, CalWORKs Housing Support Program, Housing and Disability Income Advocacy Program
CCCCO: Homeless and Housing Insecure Pilot Project
CalVet: Veterans Support to Self-Reliance Program
DHCS: Behavioral Health Bridge Housing Program
New State funded homelessness programs that commence on or after July 1, 2021.

The draft report states that Cal ICH has not yet used the data received from these state programs to evaluate the programs’ success in reducing homelessness. As part of a previously determined project timeline, informed by the operative date of the statute, Cal ICH had not begun receiving data project codes for these projects until after the State and Local Homelessness audit commenced. During interviews with CSA staff, Cal ICH shared its plan to use data to evaluate program outcomes and appreciates that CSA is supportive of this approach. Cal ICH will be providing administering departments with dashboards of outcomes data for their programs beginning in Spring 2024 and will continue to explore opportunities to report publicly on outcomes for these programs beginning in 2025.

Cal ICH appreciates the CSA’s efforts to support and further our collective interest in providing oversight and accountability over homelessness funding. My staff and I thank the audit team for its professionalism, and we look forward to providing future updates on our efforts to implement the report’s recommendations. If you have any further questions regarding this response, please feel free to contact BCSH Assistant Deputy General Counsel, Laurance Lee.

Meghan Marshall Executive Officer Cal ICH

CC: Tomiquia Moss, Secretary Melinda Grant, Undersecretary Tad Egawa, General Counsel Dhakshike Wickrema, Deputy Secretary of Homelessness Business, Consumer Services, and Housing Agency 500 Capitol Mall Suite 1850 Sacramento, CA 95814

CALIFORNIA STATE AUDITOR’S COMMENT ON THE RESPONSE FROM THE CALIFORNIA INTERAGENCY COUNCIL ON HOMELESSNESS

To provide clarity, we are commenting on the response to our audit report from the California Interagency Council on Homelessness (Cal ICH). The number below corresponds with the number we have placed in the margin of Cal ICH’s response.

① As is our standard practice, we communicated with Cal ICH while it was reviewing our draft report to discuss any concerns it may have about the report. After these conversations, we informed Cal ICH that we would make changes to the recommendation that Cal ICH develop and publish a scorecard of the cost and outcomes of the State’s homelessness programs. The recommendation can be found here.

IMAGES

Economics Case Studies Scarcity And Economics Answer Key
Quiz & Worksheet
Scarcity & Economics Assignment .pdf
Quiz & Worksheet
1 Scarcity and Economics.pdf
Scarcity, Opportunity Cost, and Production Possibilities Curves

VIDEO

2025 AL Economics Day 03 Scarcity, Choice and Opportunity Cost
9) Unveiling Economics: Decoding Assets, Liabilities, Utility, Scarcity, and Ceteris Paribus
BA/BSC Part 1 Economics || Most important chapters || PU
Economic Geology: How to Prepare
Indian Economic Development Most expected MCQ One shot Economics Board Exam 2024 Class 12 Revision
Micro Economics

COMMENTS

3 Lesson 3 1.1 Scarcity and Economics- Case Study 1.docx
Case Study #1-Read the scenario and use only the information below to answer the questions. It's your last year of high school and you have been asked to organize the annual senior party that takes place in your school's gym. Last year, the price was $15 per person and 460 students attended. You plan to charge the same price this year and expect the same number of students to show up.
Economics Case Studies: Understanding Scarcity and Economics
Scarcity refers to the limited availability of resources that cannot fulfill all human wants and needs, while the economics answer key provides a framework for analyzing and making choices in the face of scarcity. One case study that illustrates the concept of scarcity is the global water crisis. As the world's population continues to grow ...
2.2: Scarcity and Opportunity Cost
The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up. The existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it.
Scarcity, opp cost, and prod possibilites curve
Macroeconomics LESSON 1 ACTIVITY 1 (continued) 10. 12. 0 1 GOOD A. GOOD B. 2 3. 6. 8. 2. 4. Figure 1. Production Possibilities Curve 2 1 Part C. Use Figure 1 to answer the next five questions. Each question starts with Curve BB' as a country's production possibilities curve.
Economics: The Study of Choice: Scarcity, Choice, and Cost
The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up. The existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it.
Major Grade Scarcity and Economics and Demand Supply Case Studies (1
Economics. Name: Class Period: Scarcity and Economics Case Study #1- Read the scenario and use only the information below to complete the following. It's your last year of high school and you have been asked to organize the annual senior party that takes place in your school's gym. Last year, the price was $15 per person and 460 students attended.
PDF LECTURE 1 SCARCITY AND CHOICE
1. Scarcity and Choice. January 21, 2020 ... • Please turn off and put away all phones, laptops, and tablets. I. O. VERVIEW OF THE. C. OURSE. Microeconomics • Study of economic behavior at a fairly narrow level. • How individual consumers and producers make decisions; what happens in the market for ... Two Key Features of Economic ...
Introduction to Choice in a World of Scarcity
Introduction to Demand and Supply; 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services; 3.2 Shifts in Demand and Supply for Goods and Services; 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process; 3.4 Price Ceilings and Price Floors; 3.5 Demand, Supply, and Efficiency; Key Terms; Key Concepts and Summary; Self-Check Questions; Review Questions
Thinking Economics
Case Study 1.2e "The Basics of Scarcity" Directions: Complete the following case study and record your answers on a separate sheet of paper. Topic: The fundamental economic problem of scarcity and choices. Objective: To identify that productive resources are limited.Therefore, people cannot have all the goods and services that they want, and they must choose certain things and be willing to ...
Chapter 1, Section 1
Scarcity. Exists when there are not enough resources to satisfy human wants. Economics. The study of how individuals and societies satisfy their unlimited wants with limited resources. Goods. Objects, such as food, clothing, and furniture, that can be bought. Services. Work that one person does for another.
PDF CHAPTER 1: LIMITS, ALTERNATIVES, AND CHOICES Introduction Scarcity and
While the College Board has developed separate AP microeconomics and macroeconomics exams, many concepts are central to both disciplines. The issues of scarcity, the economizing problem, opportunity cost, and production possibilities introduced in Chapter 1 are concepts that will very likely appear on both exams.
Chapter 1, Section 1: Scarcity and the Science of Economics
Economics. - the study of how people try to satisfy seemingly unlimited and competing needs and wants through the careful use of relatively scarce resources. Need. - a basic requirement for survival, such as food, clothing, and shelter. Want. - something we would like to have but it not necessary for survival.
Scarcity (article)
In microeconomics, scarcity refers to the idea that resources are limited. It applies to physical resources like land, water, and oil, as well as intangible resources like time, skills, and attention. We have to make choices about how to allocate those resources. There are two main types of scarcity: absolute and relative.
Lesson summary: Scarcity, choice, and opportunity costs
Definition. Scarcity. The fact that there is a limited amount of resources to satisfy unlimited wants. Economic resources. Things that are inputs to production of goods and services. There are four economic resources: land, labor, capital, and technology. Technology is sometimes referred to as entrepreneurship.
Scarcity and Economics Flashcards
Study with Quizlet and memorize flashcards containing terms like Economics, Opportunity Cost, Factors of production and more. Fresh features from the #1 AI-enhanced learning platform. Explore the lineup
PDF UNIT 1 Microeconomics LESSON 2
1. Define scarcity, opportunity cost and trade-offs. 2. Identify the conditions that give rise to the eco-nomic problem of scarcity. 3. Identify the opportunity costs of various cours-es of action involving a hypothetical problem. 4. Construct production possibilities curves from sets of hypothetical data. 5.
Understanding Economics and Scarcity
Economics. When faced with limited resources, we have to make choices. Again, economics is the study of how humans make choices under conditions of scarcity. These decisions can be made by individuals, families, businesses, or societies. Let's consider a few decisions that we make based on limited resources. Take the following: 1.
1.1 What Is Economics, and Why Is It Important?
Introduction to Demand and Supply; 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services; 3.2 Shifts in Demand and Supply for Goods and Services; 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process; 3.4 Price Ceilings and Price Floors; 3.5 Demand, Supply, and Efficiency; Key Terms; Key Concepts and Summary; Self-Check Questions; Review Questions
Scarcity: What It Means in Economics and What Causes It
Scarcity refers to the basic economic problem, the gap between limited - that is, scarce - resources and theoretically limitless wants. This situation requires people to make decisions about ...
Economics
Study with Quizlet and memorize flashcards containing terms like Economics, Scarcity, Who faces scarcity problems? and more.
Exam 1 Study Guide-1 (pdf)
A price floor is imposed at $12, which means that quantity demanded falls to 1,400. As a result, the new consumer surplus is G, and the new producer surplus is H + I. Deadweight loss = J + K. Economics document from University of North Carolina, Charlotte, 6 pages, Study Guide for Exam 1 (ECON 2101) Chapter 1: Review Questions 1.
News Hour at 7pm #NewsHour
News Hour at 7pm
Why is Ghana so hot this year? An expert explains
Since the 1960s, Ghana has been getting warmer, with temperatures going up by about 1°C —a little over 0.2°C every ten years. There are more really hot days now, with temperatures over 35°C ...
Chapter 1: Scarcity and the Science of Economics Flashcards
Terms in this set (43) Scarcity. fundamental economic problem of meeting people's virtually unlimited needs and wants with scarce resources. economics. social science dealing with how people satisfy seemingly unlimited and competing needs and wants with careful use of scarce resources. need.
Report 2023-102.1
The following report (2023‑102.1) focuses primarily on the State's activities, in particular the California Interagency Council on Homelessness (Cal ICH)—while a separate report (2023‑102.2) details our findings and conclusions for the two cities we reviewed—San José and San Diego. In general, this report concludes that the State ...
Sustainability
Since Tacna is a hyper-arid region, greywater is a potential alternative water source. This study aimed to quantify and characterize greywater in a university building with 732 students, as well as assess their perception of greywater reuse. Water meters were used to calculate greywater quantity. To assess untreated greywater quality, physical-chemical and microbiological parameters were ...
Lesson 1 Scarcity and the Science of Economics Flashcards
Terms in this set (15) scarcity. fundamental economic problem facing all societies resulting from a combination of scarce resources and people's virtually unlimited needs and wants. economics. social science dealing with how people seemingly unlimited and competing needs and wants with the careful use of scarce resources. need.

2.2: Scarcity and Opportunity Cost

Learning Objective

Scarcity, Choice, and Cost

Scarcity and the Fundamental Economic Questions

Opportunity Cost

Key Takeaways

Case in Point: The Rising Cost of Energy

Answers to Try It! Problems

ECON102: Principles of Macroeconomics (2021.A.01)

Scarcity and the Fundamental Economic Questions

Opportunity Cost

Microeconomics

Economic models

Lesson summary: Scarcity, choice, and opportunity costs

Want to join the conversation?

Module 1: Economic Thinking

Watch it: Scarcity and Choice

Problems of Scarcity

Economic Goods and Free Goods

Productive Resources

Contribute!

1.1 What Is Economics, and Why Is It Important?

Introduction to FRED

The Problem of Scarcity

The Division of and Specialization of Labor

Why the Division of Labor Increases Production

Trade and Markets

Why Study Economics?

What Is Scarcity?

Relative Scarcity of Inputs

Scarcity: What It Means in Economics and What Causes It

Key Takeaways

Natural Resource Scarcity

Does Scarcity Mean Something Is Hard to Obtain?

Are There Goods That Are Not Scarce?

How Can a Society Deal With Scarcity?

Exam 1 Study Guide-1

Why is Ghana so hot this year? An expert explains

What is unusual about the weather in Ghana?

Why is the weather suddenly hot?

What's the effect of rising temperatures?

What needs to be done

A microbial plastic factory for high-quality green plastic

Can the bias in algorithms help us see our own?

Humans have converted at least 250,000 acres of estuaries to cities and farms in last 35 years, study finds

Mysterious bones may have belonged to gigantic ichthyosaurs

Hurricane risk perception drops after storms hit, study shows

Peter Higgs, who proposed the existence of the 'God particle,' has died at 94

Scientists help link climate change to Madagascar's megadrought

Heat from El Niño can warm oceans off West Antarctica—and melt floating ice shelves from below

Peregrine falcons expose lasting harms of flame retardant use

The hidden role of the Milky Way in ancient Egyptian mythology

Major Earthquakes - 7.4 (7.2) Mag and 6.4 Mag near Hualien, Taiwan

Unlocking the Secrets of Prof. Verschure's Rosetta Stones

Higher Chance to get Lightning Strike by Large Power Consumption?

Related Stories

Food prices will climb everywhere as temperatures rise due to climate change

Cities need plans for extreme heat, says expert, as heat waves stretch across the globe

Why your perception of climate change threats might depend on where you live

Assessment of urban water-energy interactions and heat island signatures in Rhode Island

Estimating heat wave frequency and strength: A Chicago case study

China's Lunar New Year exodus cools major cities, study shows

Recommended for you

Study finds 17 mountains at high risk of losing biodiversity under climate change

Let us know if there is a problem with our content

E-mail the story

Newsletter sign up

Donate and enjoy an ad-free experience

E-mail newsletter

Homelessness in California The State Must Do More to Assess the Cost‑Effectiveness of Its Homelessness Programs

Selected Abbreviations Used in This Report

Cal ICH Has Not Consistently Tracked and Evaluated the State’s Efforts to End Homelessness

Two of the Five State‑Funded Programs We Reviewed Are Likely Cost‑Effective, but the State Lacks Outcome Data for the Remaining Three

Agency Comments

Introduction

California’s Population of People Experiencing Homelessness Has Increased Since 2013

Figure 1 description:

The Three Phases of Homelessness Each Have Mitigating Solutions

Figure 2 description:

Numerous Entities Have Roles in Funding Homelessness Services in California