From substance use to homelessness or vice versa?

Homelessness is associated with substance use, but whether substance use precedes or follows homelessness is unclear. We investigate the nature of the relationship between homelessness and substance use using data from the unique Australian panel dataset Journeys Home collected in 4 surveys over the period from October 2011 to May 2013. Our data refer to 1325 individuals who were homeless or at risk of becoming homeless. We investigate dynamics in homelessness and substance use over the survey period. We find that the two are closely related: homeless individuals are more likely to be substance users and substance users are more likely to be homeless. These relationships, however, are predominantly driven by observed and unobserved individual characteristics which cause individuals to be both more likely to be homeless and to be substance users. Once we take these personal characteristics into account it seems that homelessness does not affect substance use, although we cannot rule out that alcohol use increases the probability that an individual becomes homeless. These overall relationships also hide some interesting heterogeneity by 'type' of homelessness.