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NNTP-Posting-Date: Thu, 29 Aug 2024 09:15:13 +0000
Subject: Re: Bad News for Universal Basic Income.
From: danmin@danminart-dot-com.no-spam.invalid (Danart)
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 > D wrote:
 > Bad News for Universal Basic Income
 > 
 > Researchers found that giving people $1,000 every month for three
years 
 > resulted in decreased productivity and earnings, and more leisure
time.
 > 
 > (https://reason.com/2024/07/25/bad-news-for-universal-basic-income)
 > 
 > The largest study into the real-world consequences of giving people
an 
 > extra $1,000 per month, with no strings attached, has found that
those 
 > individuals generally worked less, earned less, and engaged in more

 > leisure time activities.
 > 
 > It's a result that seems to undercut some of the arguments for
universal 
 > basic income (UBI), which advocates say would help lower- and
middle-class 
 > Americans become more productive. The idea is that a UBI would
reduce the 
 > financial uncertainty that might keep some people from pursuing new

 > careers or entrepreneurial opportunities. Andrew Yang, the
businessman and 
 > one-time Democratic presidential candidate who popularized the idea
during 
 > his 2020 primary campaign, believes that a $1,000 monthly UBI would

 > "enable all Americans to pay their bills, educate themselves,
start 
 > businesses, be more creative, stay healthy, relocate for work,
spend time 
 > with their children, take care of loved ones, and have a real stake
in the 
 > future."
 > 
 > In theory, that sounds great. In reality, that's not what most
people do, 
 > according to a working paper published this month.
 > 
 > The five researchers who published the paper tracked 1,000 people
in 
 > Illinois and Texas over three years who were given $1,000 monthly
gifts 
 > from a nonprofit that funded the study. The average household
income for 
 > the study's participants was about $29,000 in 2019, so the monthly 
 > payments amounted to about a 40 percent increase in their income.
 > 
 > Relative to a control group of 2,000 people who received just $50
per 
 > month, the participants in the UBI group were less productive and
no more 
 > likely to pursue better jobs or start businesses, the researchers
found. 
 > They also reported "no significant effects on investments in
human 
 > capital" due to the monthly payments.
 > 
 > Participants receiving the $1,000 monthly payments saw their income
fall 
 > by about $1,500 per year (excluding the UBI payments), due to a two

 > percentage point decrease in labor market participation and the
fact that 
 > participants worked about 1.3 hours less per week than the members
of the 
 > control group.
 > 
 > "You can think of total household income, excluding the
transfers, as 
 > falling by more than 20 cents for every $1 received," wrote
Eva Vivalt, a 
 > University of Toronto economist who co-authored the study, in a
post on X. 
 > "This is a pretty substantial effect."
 > 
 > But if those people are working less, the important question to ask
is how 
 > they spent the extra time—time that was, effectively, purchased
by the 
 > transfer payments.
 > 
 > Participants in the study generally did not use the extra time to
seek new 
 > or better jobs—even though younger participants were slightly
more likely 
 > to pursue additional education. There was no clear indication that
the 
 > participants in the study were more likely to take the risk of
starting a 
 > new business, although Vivalt points out that there was a
significant 
 > uptick in "precursors" to entrepreneurialism. Instead,
the largest 
 > increases were in categories that the researchers termed social and
solo 
 > leisure activities.
 > 
 > Some advocates for UBI might argue that the study shows
participants were 
 > better off, despite the decline in working hours and earnings.
Indeed, 
 > maybe that's the whole point?
 > 
 > "While decreased labor market participation is generally
characterized 
 > negatively, policymakers should take into account the fact that
recipients 
 > have demonstrated—by their own choices—that time away from work
is 
 > something they prize highly," the researchers note in the
paper's 
 > conclusion.
 > 
 > If you give someone $1,000 a month so they have more flexibility to
live 
 > as they choose, there's nothing wrong with the fact that most
people will 
 > choose leisure over harder work.
 > 
 > "So, free time is good [and] guaranteed income recipients use
some of the 
 > money to free up time," argued Damon Jones, a professor at the
University 
 > of Chicago's school of public policy, on X. "The results are
bad if you 
 > want low-income people to be doing other things with their time,
for 
 > example working."
 > 
 > Of course, if the money being used to fund a UBI program was simply

 > falling from the sky, policy makers would have no reason to care
about 
 > things like labor market effects and potential declines in
productivity. 
 > If a program like this is costless, then the only goal is to see as
many 
 > individuals self-actualize as much as possible. One person wants to
learn 
 > new skills or start a business? Great! Others want to play video
games all 
 > day? Awesome.
 > 
 > In reality, however, a UBI program is not costless and policy
makers 
 > deciding whether to implement one must decide if the benefits will
be 
 > worth the high price tag—Yang's proposal for a national UBI, for
example, 
 > is estimated to cost $2.8 trillion annually.
 > 
 > That's why a study like this one matters, and why it's so
potentially 
 > damaging to the case for a UBI. A welfare program—which is
ultimately what 
 > this is—that encourages people to work less and earn less is not
a 
 > successful public policy. Taxpayers should not be expected to fund
an 
 > increase in individuals' leisure time, regardless of the mechanism
used to 
 > achieve it.
 > 
 > In theory, substituting a UBI in place of the myriad, overlapping,
and 
 > often inefficient welfare systems operated by the federal and state

 > governments is an intriguing idea. In practice, this new study
suggests 
 > those tradeoffs might not be as desirable.
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