Evidence from the largest universal basic income program in history, in collaboration with GiveDirectly, and featuring former Mayor of Stockton, CA Michael Tubbs
Good piece. I'd add that I wouldn't be concerned about the debt burdens being a condition of roll out. As shown in the case of student loan forgiveness, removing debt (or having excess income to repay it) will still be a net positive for the individual and society in terms of most outcomes https://www.nominalnews.com/p/economic-impacts-of-student-loan
My only concern with cash transfers is/was the potential for inflation/price gouging. That is as a service provider or retailer, I know that everyone has a minimal income, I can adjust my price for the fact. However, coupled with an appropriate income tax (that would tax away said benefit at some income level x), I think there won't be any such issues. Still something I'm mulling over.
Thank you for the link on student loan forgiveness - super interesting and helpful!
Inflation is a common and fair concern for UBI programs. Most of the US programs operate on such a small scale that we haven't seen those larger effects. In an international context, we find that cash transfers typically do not led to much inflation, even when they are on a comparable larger scale (like 15% of local GDP). Instead, new economic activity seems to bring in new businesses, who start new supply chains and compete prices downward.
Yes UBI or cash transfers is definitely still helpful even when there’s high debt, the main point is that we shouldn’t expect the same outcomes in that case (like starting new businesses, or leaving wage labor roles, or spending more on essential goods) because the pre-conditions are very different. Those outcomes MAY happen once households get to a more reasonable state of debt that is more similar to what Kenyan households had
Wanted to say that one has to be careful with Gini measurements, as they only measure legal income, not gray and black income. They are not very useful in places where tax evasion is rampant.
However, in this case, if it is a group of people getting UBI vs everybody else as the control group and not measuring Gini.
Still, on the general note, I warn everybody who writes about inequality to not trust Gini indices much.
When I was a teenager in the 1990's Hungary, every entrepreneur I knew, over 20, was officially hardly above the minimum wage, falsifying the books by buying fake invoices. I think VAT-based tax systems especially incentivize this.
Totally a fair point. Gini definitely misses a lot, including the points you mentioned as well as many other measures of wealth like capital, homes, etc which are not captured. I think directionally it can be helpful though and gives us some shared measure for looking across examples.
I always really appreciate when readers provide examples from their own lived experiences so definitely cool to hear about your experiences in Hungary! Thank you.
Immigrants are counted in the poverty statistics (both within regions and over time). This other piece I wrote in TIME Magazine explains a bit more about the poverty trends as it relates to rising immigration https://time.com/6320076/american-poverty-levels-state-by-state/
I am sorry, but I am skeptical on long term UBI support - and the basis for my caution is the Israeli Religious Scholars program, which over the past half century has evolved into a program supporting an all but permanently and rapidly exanding dependent population. You have to look at the incentives and to quote the economists "solve for the equilibrium". Somebody is likely to find a way to take advantage of the program and if they can do so in a way that is not self limiting, you are going to get a problem you will have to deal with.
No need to apologize at all - always good to have different views on here! One thing that is particularly worth mentioning here is that GiveDirectly's research shows that we do not observe people taking advantage of the program, and even for those who maybe benefited less (or for those who didn't use it as an opportunity to save more, buy more food, or try to start new businesses) the gains from the program still tremendously outweighed any neutral or negative outcomes
Some of my great grandparents were homesteaders. Given a basic income and free medical care, I would expect to see large numbers of people setting up in low income rural areas living a very simple life with the basic income to support them. Once they see the pattern done and can copy it, you can expect it to spread. Homesteading was a hard life - but with a basic income and health care provision, you don't need much land to make it work. You would probably end up with a large and non productive section of the population.
It is my understanding that the program grew problematic something like 2 generations later, as the number of recipients increased rapidly. If the program had been limited to a specified number of religious scholars (say 500, 1000) the later exponential growth and associated problems would have been prevented.
Excellent quote from the former Mayor of Stockton! Interesting to see how these programs can translate across countries and cultures.
Absolutely! Finding those pre-conditions that help set communities up for success in the future
Thanks for sharing this. A lot of our social programs need work. I take the opportunity to bring up this podcast series every chance I can https://www.marketplace.org/shows/the-uncertain-hour/season-6-the-welfare-to-work-industrial-complex/
I LOVE this podcast. Thanks for sharing it to this group.
Good piece. I'd add that I wouldn't be concerned about the debt burdens being a condition of roll out. As shown in the case of student loan forgiveness, removing debt (or having excess income to repay it) will still be a net positive for the individual and society in terms of most outcomes https://www.nominalnews.com/p/economic-impacts-of-student-loan
My only concern with cash transfers is/was the potential for inflation/price gouging. That is as a service provider or retailer, I know that everyone has a minimal income, I can adjust my price for the fact. However, coupled with an appropriate income tax (that would tax away said benefit at some income level x), I think there won't be any such issues. Still something I'm mulling over.
Thank you for the link on student loan forgiveness - super interesting and helpful!
Inflation is a common and fair concern for UBI programs. Most of the US programs operate on such a small scale that we haven't seen those larger effects. In an international context, we find that cash transfers typically do not led to much inflation, even when they are on a comparable larger scale (like 15% of local GDP). Instead, new economic activity seems to bring in new businesses, who start new supply chains and compete prices downward.
GiveDirectly maintains an interactive "Cash Evidence Explorer" with 300+ studies on cash transfers here: https://www.givedirectly.org/cash-evidence-explorer/
Yes UBI or cash transfers is definitely still helpful even when there’s high debt, the main point is that we shouldn’t expect the same outcomes in that case (like starting new businesses, or leaving wage labor roles, or spending more on essential goods) because the pre-conditions are very different. Those outcomes MAY happen once households get to a more reasonable state of debt that is more similar to what Kenyan households had
Let's bring UBI to the USA!
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Wanted to say that one has to be careful with Gini measurements, as they only measure legal income, not gray and black income. They are not very useful in places where tax evasion is rampant.
However, in this case, if it is a group of people getting UBI vs everybody else as the control group and not measuring Gini.
Still, on the general note, I warn everybody who writes about inequality to not trust Gini indices much.
When I was a teenager in the 1990's Hungary, every entrepreneur I knew, over 20, was officially hardly above the minimum wage, falsifying the books by buying fake invoices. I think VAT-based tax systems especially incentivize this.
Totally a fair point. Gini definitely misses a lot, including the points you mentioned as well as many other measures of wealth like capital, homes, etc which are not captured. I think directionally it can be helpful though and gives us some shared measure for looking across examples.
I always really appreciate when readers provide examples from their own lived experiences so definitely cool to hear about your experiences in Hungary! Thank you.
Sad to see these stats! In fact 40% of Americans have a side hustle. It's so important to have multiple income streams these days
If only many of them were paid well enough in their primary jobs so they didn’t have to!
I think it's also about freedom and taking back control and owning a creative project in life
For sure - And in the data we see many people who got extra funds using it to start their own businesses
What role does immigration play in your statistics?
Immigrants are counted in the poverty statistics (both within regions and over time). This other piece I wrote in TIME Magazine explains a bit more about the poverty trends as it relates to rising immigration https://time.com/6320076/american-poverty-levels-state-by-state/
No. The word immigration does not appear in that article even one time.
Wrong link sorry! https://americaninequality.substack.com/p/homelessness-and-inequality-2024 - more about other social issues (homelessness) than poverty
That is helpful!
I am sorry, but I am skeptical on long term UBI support - and the basis for my caution is the Israeli Religious Scholars program, which over the past half century has evolved into a program supporting an all but permanently and rapidly exanding dependent population. You have to look at the incentives and to quote the economists "solve for the equilibrium". Somebody is likely to find a way to take advantage of the program and if they can do so in a way that is not self limiting, you are going to get a problem you will have to deal with.
No need to apologize at all - always good to have different views on here! One thing that is particularly worth mentioning here is that GiveDirectly's research shows that we do not observe people taking advantage of the program, and even for those who maybe benefited less (or for those who didn't use it as an opportunity to save more, buy more food, or try to start new businesses) the gains from the program still tremendously outweighed any neutral or negative outcomes
Some of my great grandparents were homesteaders. Given a basic income and free medical care, I would expect to see large numbers of people setting up in low income rural areas living a very simple life with the basic income to support them. Once they see the pattern done and can copy it, you can expect it to spread. Homesteading was a hard life - but with a basic income and health care provision, you don't need much land to make it work. You would probably end up with a large and non productive section of the population.
It is my understanding that the program grew problematic something like 2 generations later, as the number of recipients increased rapidly. If the program had been limited to a specified number of religious scholars (say 500, 1000) the later exponential growth and associated problems would have been prevented.