The Postive Impact of Basic Income

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The Postive Impact of Basic Income

The answer defied Costello’s initial hypothesis. “I thought, ‘There’s such a pit of poverty there that this isn’t going to make any difference; it’s trivial,’” she remembers. “But it wasn’t.” Now the body of research that she and other academics have built has become a favorite point of reference for universal basic income advocates, providing some of the most compelling evidence yet of the positive effects of bestowing unconditional sums of cash on the poor.

….

Other researchers have used Costello’s data to look at different effects of the casino payments. One fear about basic income is that people will be content living on their subsidies and stop working. But a 2010 analysis of the data, led by Randall Akee, who researches public policy at UCLA’s Luskin School of Public Affairs, found no impact on overall labor participation.

Akee also looked at the effects of the money on education and found that more money in the household meant children stayed in school longer. The impact on crime was just as profound: A $4,000 increase in household income reduced the poorest kids’ chances of committing a minor crime by 22 percent.

Still, if anything is to be learned from the Cherokee experiment, it’s this: To imagine that a basic income, or something like it, would suddenly satisfy the disillusioned, out-of-work Rust Belt worker is as wrongheaded as imagining it would do no good at all, or drive people to stop working. There is a third possibility: that an infusion of cash into struggling households would lift up the youth in those households in all the subtle but still meaningful ways Costello has observed over the years, until finally, when they come of age, they are better prepared for the brave new world of work, whether the robots are coming or not.

HT Kee Hinckley

Originally shared by Jim Feig

Free Money: The Surprising Effects of a Basic Income Supplied by Government https://www.wired.com/story/free-money-the-surprising-effects-of-a-basic-income-supplied-by-government/ -via Flynx

https://www.wired.com/story/free-money-the-surprising-effects-of-a-basic-income-supplied-by-government

9 comments

  1. UBI is also an economic stimulus as poor people tend to spend the money on things they need, ploughing it right back in to businesses.

  2. Good post, Gideon Rosenblatt. In the 1970s, an experiment to alleviate poverty with basic income was conducted in Dauphin, Manitoba, Canada – http://www.cbc.ca/news/canada/manitoba/1970s-manitoba-poverty-experiment-called-a-success-1.868562http://www.cbc.ca/news/canada/manitoba/1970s-manitoba-poverty-experiment-called-a-success-1.868562.

    The goal of the program, which cost $17 million, was to find out whether a guaranteed income would improve health and community life. If a household’s income dropped below a certain amount, the program would top it up to an income equivalent to the welfare rates at the time. “

    Well, it was a success : accidents and injuries were down, hospitalisation for mental health issues was down . . . it was eventually scrapped; I suppose social workers’s jobs were on the line at that point, since people with an income coped better than without :=(

    cbc.ca – 1970s Manitoba poverty experiment called a success

  3. I have read about some experiments on universal basic income in the last few years. I am still puzzled about it. I tend to think the response to this may be sharply dependent on the culture of communities. It would be nice if it removes the tensions related to survival people face, and hence frees them up to pursuing the higher order needs in the Maslow’s hierarchy. Somehow I am skeptical about the success rate of this experiment universally, because I see rampant prevalence of begging in my country. Many beggars were found to have earned and saved a lot of money. Beggars rounded up and put in government homes meant to wean them away from begging, help them to learn a skill to earn a living, escape from such homes and return to begging. They seem to take to begging as their vocation.

    I am perhaps making a logical mistake here. The success measure I am looking at is how many strive to acquire skills for self sufficiency in adding value and earning their livelihood. That may require a random sample of the poor and how they respond to the experiment. If I choose a group of beggars, I may be looking at a bunch of lazy people with a disposition to ‘earn’ easy money. This may also have something to do with the philanthropic nature of the rest of the population. When it is easy to earn much more than basic survival, much more than what a honest hard day labour brings by begging, the incentive to work may be absent. Basic income schemes perhaps limit the income to a threshold just below a comfort zone, so the incentive to go beyond may be through work. Begging seems to assure an income far beyond the basic in India and hence the societal mechanism of citizen philanthropy is counter productive. The intervention required to build a more productive society seems to be in discouraging citizen philanthropy to individuals.

  4. Positive statistics Gideon Rosenblatt

  5. Oksana Szulhan , thank you for that background.

  6. I’m not an economist so this may be a stupid question. But wouldn’t UBI introduced on a national scale result in a sudden rise in prices, as suppliers simultaneously had knowledge of consumers new income?

  7. Seth Cohen , if it showed up as actual new demand, then yes. But I don’t think that prices could just go up in a sustained way purely on anticipation of an increase in demand.

  8. Excellent! Thanks Gideon Rosenblatt​

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