“GiveDirectly has been conducting the world’s largest test of basic income: It is giving around 6,000 people in rural Kenya a little more than $20 a month, every month, starting in 2016 and going until 2028. Tens of thousands more people are getting shorter-term or differently structured payments.”
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“It matters whether someone gets $20 a month for two years or $480 all at once. Those add up to the same amount of money; this isn’t a Side Hustle King situation. But how you get the money still matters. A certain $20 every month can help you budget and take care of regular expenses, while $480 all at once can give you enough capital to start a business or another big project.”
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“By almost every financial metric, the lump sum group did better than the monthly payment group. Suri and Banerjee found that the lump sum group earned more, started more businesses, and spent more on education than the monthly group. “You end up seeing a doubling of net revenues” — or profits from small businesses — in the lump sum group, Suri said. The effects were about half that for the short-term $20-a-month group.
The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate. “The lump sum group doesn’t have to save,” Suri explains. “They just have the money upfront and can invest it.”
Intriguingly, the results for the long-term monthly group, which will receive about $20 a month for 12 years rather than two, had results that looked more like the lump sum group. The reason, Suri and Banerjee find, is that they used rotating savings and credit associations (ROSCAs). These are institutions that sprout up in small communities, especially in the developing world, where members pay small amounts regularly into a common fund in exchange for the right to withdraw a larger amount every so often.
“It converts the small streams into lump sums,” Suri summarizes. “We see that the long-term arm is actually using ROSCAs. A lot of their UBI is going into ROSCAs to generate these lump sums they can use to invest.””
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“As you might expect, given how entrepreneurially minded the recipients are, the researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving. In fact, so many people who used to work for wages instead started businesses that there was less competition for wage work, and overall wages in villages rose as a result.
And they found one major advantage for monthly payments over lump sum ones, despite the big benefits of lump sum payments for business formation. People who got monthly checks were generally happier and reported better mental health than lump sum recipients. “The lump sum group gets a huge amount of money and has to invest it, and this might cause them some stress,” Suri speculates. In any case, the long-term monthly recipients are happiest of all, and “some of that is because they know it’s going to be there for 12 years … It provides mental health benefits in a stability sense.””
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“you could design it such that a recipient could opt into a $500 payment every two years or a $20 payment every month.
But barring that, long-term monthly payments seem to offer the best of all worlds because they enable people to use ROSCAs to generate lump sum payments when they want them. That enables flexibility: People who want monthly payments can get them, and people who need cash upfront can organize with their peers to get that.”
https://www.vox.com/future-perfect/2023/12/1/23981194/givedirectly-basic-income-experiment-abhijit-banerjee-tavneet-suri
“unless you pin down the details, basic income is too vague to mean anything politically concrete. Like the Rorschach inkblot, you can interpret and design UBI in an endless variety of ways. A program that provides $250 per month is a different ballgame than one providing $1,200 per month. The same goes for one that replaces all other welfare, like food aid (sometimes referred to as a “pure UBI,” which would actually leave the most disadvantaged worse off, and is a bad idea), compared with one that complements existing programs.
Ultimately, the effects of any income guarantee hinge on the details. How much does it pay? Who gets it? How’s it financed? How does it relate to the rest of the welfare state? But most of the real proposals that have made their way through the policy world share a noteworthy trait: When the dust settles, they just wouldn’t be that radical, in either direction.
Generally, most people at the bottom of the income ladder would be better off, those in the middle would break even as they pay about as much in higher taxes as they’d receive from the basic income, and those at the top would be a little worse off. Society would neither ascend into utopian communism nor collapse into bleak idleness. There would just be less poverty and higher taxes.”
https://www.vox.com/future-perfect/2023/10/13/23914745/basic-income-radical-economy-poverty-capitalism-taxes
“While this is the first experiment in giving unconditional cash transfers to formerly incarcerated people, numerous studies in the US and elsewhere have shown how guaranteed income can benefit vulnerable members of society.
Stockton, California, gave 125 people in neighborhoods at or below the median income $500 per month, which led to mental health improvements and increased likelihood of finding a job. The Eastern Band of Cherokee Indians Casino Dividend in North Carolina gives all tribal members a cut of gambling revenue that amounts to $4,000 to $6,000 per year; research has seen improvements in mental health and education and decreases in crime and addiction. Other studies around the world have shown benefits to health and food security, and reduction in crime.
Studies consistently show that recipients aren’t more likely to spend money on alcohol and drugs (as some have feared) — in fact, spending on “temptation goods” decreases in many cases. People also didn’t stop working in the vast majority of guaranteed income experiments (though there have been studies that tilted in the other direction).
The Florida experiment is especially intriguing because it will chart how guaranteed income can affect outcomes for a group that’s especially at risk of financial calamity.
A similar study shows promising results: Vancouver gave people experiencing homelessness $7,500 and found recipients moved into stable housing faster and were able to save money. The program was designed by formerly incarcerated people, and the team decided that the first month out of prison is particularly important because of the search for housing and a job, which is why it starts with an initial higher payment of $1,000 and then goes down to $600 in the following months. (Durham, North Carolina, is also running a similar guaranteed income pilot for formerly incarcerated people starting this March.)
There are also broader benefits of guaranteed income for families, communities, and society. A guaranteed income experiment in Kenya found benefits to the entire local economy as people spent money on neighboring businesses. While Alachua County in Florida is not Siaya County, Kenya, the researchers are hopeful that guaranteed income can help mitigate the negative effects incarceration has on communities.”
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““I think the question is,” says Couloute, “do we all deserve safer communities? If the answer is yes, then that means we want to do everything we can to ensure people with felony records live crime-free lives and don’t recidivate. If we can help folks leave our criminal justice system and get jobs, pay taxes, and become great tenants and homeowners, and so on and so forth, that only contributes to our society rather than detracting from it.”
These are lofty goals, and we won’t know the effects of this program for another couple of years. Scott hopes that this pilot can draw attention to the linkages between incarceration and poverty while Couloute discussed potential wide-ranging implications for anyone struggling with economic stability and social disadvantage.
The benefits are most obviously targeted at the 115 recipients. But if the results pan out, this experiment could bolster the case for a broader policy shift.”
“The city of Stockton, California, embarked on a bold experiment two years ago: It decided to distribute $500 a month to 125 people for 24 months — with no strings attached and no work requirements. The people were randomly chosen from neighborhoods at or below the city’s median household income, and they were free to spend the money any way they liked. Meanwhile, researchers studied what impact the cash had on their lives.
The results from the first year of the experiment, which spanned from February 2019 to February 2020, are now in.”
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“The most eye-popping finding is that the people who received the cash managed to secure full-time jobs at more than twice the rate of people in a control group, who did not receive cash. Within a year, the proportion of cash recipients who had full-time jobs jumped from 28 percent to 40 percent. The control group saw only a 5 percent jump over the same period.
The researchers wrote in their report that the money gave recipients the stability they needed to set goals, take risks, and find new jobs. One man in his 30s had been eligible for a real estate license for over a year but hadn’t gotten it because he just couldn’t afford to take time off work. Thanks to the freedom offered by the extra $500 per month, he said, his life was “converted 360 degrees … because I have more time and net worth to study … to achieve my goals.””
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“Cash recipients reported being less anxious and depressed than the control group. On average, the recipients “experienced clinically and statistically significant improvements in their mental health that the control group did not — moving from likely having a mild mental health disorder to likely mental wellness over the year-long intervention,” according to the researchers.
The cash also enabled recipients to help their family and friends. For example, one woman used the cash to help her siblings buy school clothes for their kids and to help her daughter-in-law pay for car insurance. Another bought diapers for her grandchildren.”
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“The Stockton experiment was a small study with only 125 cash recipients, so the findings should be seen as offering supporting evidence on the effectiveness of cash programs rather than as definitive standalone proof.”
Making Sense of the Minimum Wage: A Roadmap for Navigating Recent Research Jeffrey Clemens. 5 14 2019. CATO Institute. https://www.cato.org/publications/policy-analysis/making-sense-minimum-wage-roadmap-navigating-recent-research Gradually raising the minimum wage to $15 would be good for workers, good for businesses, and good for the economy Ben Zipperer. 2
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“The basic income suffers from a number of flaws it can’t get away from. The first is that it’s either too big, so it’s unaffordable, or it’s too small, so it doesn’t make a difference. In Europe, certainly in the UK, most of the basic income schemes that are advanced here, we’re talking about something equivalent to $85 a week. While that’s going to make a difference to some people, it’s not going to fundamentally change the life choices of the people it’s supposedly targeting.
If the objective is to emancipate people, then [a UBI] has to be close to $1,000, possibly $2,000 a month. At those levels, we’re talking about tripling the federal budget. No one’s really considering that a reasonable proposal. So it suffers from a sort of catch-22.”
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“There are lots of factors that cause people not to reach their potential that are not solvable through a reasonable individual cash distribution, because they are social infrastructure.
Social infrastructure services flow naturally to basic needs. If low-cost social housing is available, it flows to people who need it rather than people who can afford a larger house. We have a free national health care service here in the UK — people don’t just turn up at the doctor for fun, because it’s free. They go when they’re sick. People go into education programs when they need retraining. Basic social infrastructure is accessed by people at the time of need.”
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“We defined seven basic categories of essential services that meet three criteria. For someone to meet their full potential, they need safety, opportunity, and participation. So that is individual safety, opportunity to use their skills and abilities to improve their own lives, and ability to participate in the democracy.
What does that take, in a modern sense? They need somewhere safe to live, access to food, health care access, education, access to digital information and communication systems, and access to a transport system. Our seventh category we call legal, by which we mean access to the institutional mechanisms of democracy and society.”
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“The proposal for universal basic services is not a proposal for universal [public] provision. It is not that everybody will live in highly energy-efficient, low-cost, government-provided housing. It is that access to housing is available.
If you go on to the average university campus, you will see what looks very much like a universal basic services system. The university is providing a room in a shared environment, where you share a kitchen with someone. If you’ve got more money and you want to go and live in independent housing, then you move out into a house down the street.”
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“There’s still a private market and it would probably be the majority of consumption, but the expectation is that you’re creating a base floor within that market. And that would stimulate the quality of the market and enable more innovation in the rest of the marketplace.”
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“We modeled our original proposal. For the vast majority of the population, everybody earning median incomes and below, there’s a net positive. People right at the bottom are having something like 60 to 80 percent of their normal costs replaced by public services. That leaves them money in their pocket.
Around the median, there’s a small net benefit, and then at the higher end, we’re talking about net contributions that are in the dozens of dollars a month. But to put society on a sustainable path, we need to get to a higher level of responsibility and pay for the society we want. That means slightly higher levels of tax.”