The first results from the world’s biggest basic income experiment

“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.”

“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.”

“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.””

“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.””

“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

We’ve been fighting poverty all wrong

“Since 1975, politicians have built huge portions of the American safety net — like the child tax credit (CTC) — around the idea that excluding the poorest Americans from government assistance will motivate them to climb out of deep poverty on their own and get a job.
This long-standing bipartisan consensus is manifest in the twin ideas of work and income requirements. Work requirements are simple: You either have a job or you don’t, and that binary is what determines whether you’re eligible for a handful of welfare programs.

Income requirements are a little wonkier. They stipulate that anyone without any income will receive no benefits. Only after earned income surpasses a specified level do benefits begin kicking in — which is where we get another dry name: “phase-ins.””

“The consensus excluding the poorest Americans from some forms of government assistance through phase-ins held until President Joe Biden’s 2021 American Rescue Plan. Its anti-poverty centerpiece was to cut phase-ins from the existing CTC and crank up the payment, creating what’s known as the expanded CTC.
The results were historic. Over the course of 2021, child poverty was cut nearly in half, and the long-running fear at the heart of the American welfare system — that unconditional aid would discourage work — never came to pass.

Then, to the dismay of advocates and recipients alike, Sen. Joe Manchin (D-WV) blocked the Democratic Party’s effort to make the expansion permanent, fearing, among other familiar concerns like the cost, that recipients would just buy drugs (the data shows that recipients spent the money on food, clothes, utilities, rent, and education). Come 2022, phase-ins returned to the CTC, approximately 3.7 million children were immediately thrust back into poverty in January, and the rest of the year saw the sharpest rise in the history of recorded child poverty rates.”

“Now that we have real-world evidence from a nationwide, year-long experiment, the expanded CTC’s success should ignite efforts to roll back phase-ins across the board. That also means cutting them from the CTC’s sister program, the earned income tax credit (EITC), which phases in as a supplement to wages for low-income Americans and helps about 31 million Americans.
The expanded CTC is estimated to have reduced child poverty rates anywhere from 29 percent to 43 percent, with the vast majority of that drop attributable to removing phase-ins. Extending that success to include the EITC would cut child poverty by an estimated 64 percent.”

“Winship was unsurprised that his fears of parents choosing to work less didn’t show up during the expanded CTC. It only lasted for one year and was recognized all the while as a temporary program. “These kinds of behavioral effects take time to set in,” he writes. In the long-term, after a decade or a generation of the program being in place, that’s when he would expect to see, as Oren Cass, executive director of the conservative think-tank American Compass, put it, “communities in which labor-force dropout is widespread and widely accepted.””

“Long-term speculation, however, can go both ways. The generational impacts of unconditional transfers could just as well lead to long-term investments in education and skills training, support entrepreneurship, and actually raise productivity and economic activity in the long run, all of which would boost, instead of wipe out, poverty reduction.

In 2018, researchers from Washington University in St. Louis estimated that childhood poverty costs the US $1.03 trillion per year, or 5.4 percent of the GDP. They found that every dollar spent on reducing child poverty would save the public 7 dollars from the economic costs of poverty.

Results from basic income pilots across the US also stand in contrast to Winship’s concern. “Our moms get the guaranteed income and not only do they continue to work, they level up their work,” Nyandoro, who runs the nation’s longest-running guaranteed income program, told me. “They’re able to move from jobs to careers. They’re able to go back to school. They’re able to get out of debt.”

The most recent evidence in favor of phase-ins Winship cites is a 2021 paper by a group of economists from the University of Chicago, led by Kevin Corinth and Bruce Meyer. It predicted that making the CTC expansion permanent would spark a 1.5-million-person exodus from the labor force. As analysts were quick to point out, however, the paper is based on a model that already assumes unconditional cash reduces work. Predicting work disincentives using a model that already assumes them tells us nothing about whether the assumption itself is tethered to reality.

Corinth and Meyer have since responded to criticism of their work disincentive assumptions, arguing that they fall well within the range used in other studies. These academic debates will continue, but in the meantime, where should the burden of proof lie?

Eliminating phase-ins from the CTC was a massive anti-poverty success and had no short-term negative employment effects. Recipients spent the extra few hundred bucks on necessities, from food and clothing to shelter and utilities. Even small businesses voiced their support on the grounds that it would boost spending and entrepreneurship.

On the other hand, a minority of skeptics retain speculative concerns that a few generations down the line, newfound consequences might overshadow these benefits.”

https://www.vox.com/future-perfect/23965898/child-poverty-expanded-child-tax-credit-economy-welfare-phase-ins

One stat that could spur a compromise on the child tax credit

“Out of the $105 billion paid out in 2021 and 2022 as part of the temporary expansion of the child tax credit here in the US, only 5 percent went to families without any income at all.”

https://www.vox.com/future-perfect/23959612/child-tax-credit-compromise-bipartisan

Nearly 2 million kids have been kicked off Medicaid this year

“In the six months since states began double-checking the eligibility of people enrolled in their Medicaid programs for the first time in three years, more than 8.5 million Americans have lost their Medicaid benefits.
Based on enrollment numbers at the start of the year, that means roughly 1 in 10 people covered by Medicaid have lost their health insurance in a matter of months. After the US saw its uninsured rate hit historic lows during the pandemic, millions of the most vulnerable Americans are now falling off the rolls — with no assurance they will be able to find another form of coverage.

Worse, many of those losing coverage are losing it because of administrative hiccups and would otherwise be eligible — a problem that is disproportionately impacting children.

We won’t know until next year’s national insurance surveys how many people simply ended up uninsured and how many people successfully enrolled in another form of health coverage even as they lost their Medicaid benefits. But it is safe to expect that millions more Americans are now uninsured than were at the beginning of the year.

The health effects of this massive loss in health insurance will take years to be realized. But we know that having Medicaid means people are more likely to see a doctor and keep up with managing chronic conditions. The program helps people live longer. So losing coverage will make it even more difficult for a population that already struggles with its health to stay well.

Here’s why this is happening: During the pandemic, Congress approved an emergency provision that prevented almost anyone from losing their Medicaid coverage. Even if you had a change in income or life circumstances that in normal times would have led to you leaving the program, you were allowed to stay as long as that emergency policy was in place. But that provision expired earlier this year, part of the government standing down from its pandemic footing, and states were tasked with double-checking the eligibility of every person who was on their Medicaid rolls — a process referred to as unwinding. Starting in April, they could remove people who they found were no longer eligible.”

https://www.vox.com/policy/2023/10/13/23914264/medicaid-health-insurance-enrollment-data-unwinding-october

How states humiliate single parents who need government assistance

“To receive government assistance in the US is to submit yourself to a whole host of requirements, some reasonable, some harsh. Each state, and each program within it, has their own requirements, which might be a test of income, of assets, or even of behavior. Some are reasonable — a millionaire probably doesn’t need food stamps; others are more punitive. A disabled single man wanting to get Medicaid in Maryland, for instance, has to show he doesn’t have assets totaling over $2,500. To receive unemployment benefits in Texas, quitting a job to take care of a child makes you ineligible, unless that child has a medical illness.
One requirement is especially odious, and little-known and little-studied: In many states, for many aid programs, you must agree to cooperate with authorities on enforcing child support against the parent of your child.

Depending on the state where they live, a single parent may have to agree to help the government recoup child support in order to receive child care assistance, food stamps, cash welfare, or Medicaid. They may have to establish parenthood of their child, provide estimated dates and locations of conception, home or work addresses of the other parent, or even sign away their right to child support payments to the state.

Given that around 80 percent of custodial parents are women, this is a welfare restriction with a disproportionate effect on one gender — and one that explicitly punishes you for being a single parent.”

“As a country, we’ve operated under a perverse version of the maxim that it’s better to let 10 guilty men go free than one suffer: that it’s better that 10 deserving people receive nothing than a single undeserving one get health care or food. Small-government conservatives create bureaucracies to try to prevent it, and states micromanage peoples’ lives watching for it. But the government doesn’t need to operate that way”

https://www.vox.com/2023/9/20/23880723/child-support-parents-government-assistance-requirement

We cut child poverty to historic lows, then let it rebound faster than ever before

“In 2021, the child poverty rate — as measured by the supplemental poverty measure that incorporates the value of government benefits — took a sharp drop to its lowest point on record: 5.2 percent, so that 3.8 million American children were living below the federal poverty line. Then, as a report just released by the Census Bureau found, it experienced the steepest rise in its history in 2022: a hike of 139 percent, or more than double, to 12.4 percent. Five million kids fell back into poverty, pushing the number of kids whose parents were struggling to meet their basic needs up to 9 million.
To anyone following the politics of poverty in America, the jagged rebound was entirely unsurprising. The child poverty rate was like a loaded spring being held down by pandemic-era welfare programs. Chief among them: the child allowance, which expanded on the existing child tax credit (CTC) and sent monthly payments to all parents in poverty, helping to cut child poverty by 46 percent in 2021. Release the spring — or let the expanded CTC expire, as Congress did — and of course it will shoot right back up. The child poverty rates settled right back around pre-pandemic 2019 levels.”

“The concern is that giving out money to people in poverty without requiring them to work in exchange will ultimately create communities where dropping out of work is both widespread and accepted. Cash with no strings attached “gives up on work,” as one conservative analyst put it.

While there have always been disagreements about that view, increasingly, the evidence is against it. Unconditional cash transfers in low-income countries have been found to stimulate economic activity. In a pilot program for guaranteed income in Stockton, California, recipients of unconditional cash were quicker to find full-time employment than control groups.

Looking specifically at the impacts of the expanded CTC, there was no evidence that receiving the benefit reduced work, and economists at Columbia University estimated that making the program permanent would deliver a more than tenfold return on the investment of about $100 billion per year — a major boost to the economy. That means in addition to solidifying the massive drop in child poverty and giving millions of struggling American families continued support to pay for food, school supplies, utilities, and rent, taxpayers would also save money in the long run.”

https://www.vox.com/future-perfect/2023/9/21/23882353/child-poverty-expanded-child-tax-credit-census-welfare-inflation-economy-data

The biggest policy changes in the debt ceiling deal, explained

“The deal negotiated by the Biden White House and House Republicans cuts some domestic programs in 2024 and limits spending growth to 1 percent in fiscal year 2025. That will still amount to a cut, after accounting for inflation.

Almost two-thirds of the $6 trillion federal budget is mandatory spending on programs like Social Security, Medicare, and Medicaid that will happen without any action by Congress. The rest is determined by Congress, and that is the bucket that will be affected by the debt limit deal.

The cuts are going to land disproportionately on programs that help the poor and on administration, which also affects the people who rely on government programs. Some discretionary spending — on the military and for veterans — is actually going to increase. But the rest, including funding for child care, low-income housing, the national parks, and more, will be subject to a cut for the next two years.

The exact cuts are supposed to be set by legislation that Congress will pass later this year. Should lawmakers fail to pass those spending bills, automatic spending cuts of 1 percent across the board would occur instead. (The incentive for Congress to pass the spending bills is that these automatic cuts would include the military, which all parties involved want to exempt.)”

“while this cut is shallower than the automatic cuts of the last decade, it applies to programs that already have been feeling the squeeze: According to the Center on Budget and Policy Priorities, spending for discretionary domestic programs (excluding veterans’ health care) is 10 percent below 2010 levels when adjusted for inflation and increases in the US population.
The long-running neglect has led to shortages in the services they provide. Child care assistance has fallen for the better part of two decades. The primary grant program served 373,000 more children in 2006, even though now there are an additional 1 million American children living in poverty. Likewise, 3 out of 4 US families that should be eligible for federal housing assistance don’t actually receive any aid because there is no funding available. Cuts to the Social Security Administration have been going on for years, while wait times for assistance have been increasing. Investments in water infrastructure have been stagnant, even after clean water crises in Flint, Michigan, and Jackson, Mississippi.”

“TANF, meanwhile, was created by the 1996 welfare reform law, replacing a program that offered guaranteed cash for low-income parents with a block grant giving $16.5 billion annually to states to spend on anti-poverty programs (though in practice the money is used for all manner of things). Because its appropriation has never been adjusted for inflation over its 27 years of existence, the program has effectively been cut in half over time, and now only about 21 percent of poor families with children get help from it.”

“The biggest surprise of the deal might be its approval of the 300-mile Mountain Valley Pipeline, which will carry natural gas from West Virginia to southern Virginia.

The pipeline, held up for years by federal lawsuits, has long been a top priority for Sen. Joe Manchin. But the pipeline’s role in debt ceiling talks largely flew under the radar. The deal would give a green light to outstanding permits for the pipeline and shields its construction from court intervention, to the frustration of environmentalists worried about the pipeline’s impact on rural and low-income areas and the 1,000 streams and wetlands along its way.

There are a few other modest changes to permitting for energy projects in the deal, mostly affecting the bedrock 1970s-era environmental protection law, the National Environmental Policy Act. It sets a one-year deadline for agencies to complete an environmental assessment, and a two-year deadline for the more thorough environmental impact statement, an expensive review requiring community input. (Progressives argue that, rather than time limits, federal agencies need more staffing to complete reviews quickly.)”

Hundreds of thousands of Americans are losing Medicaid every month

“Hundreds of thousands of Americans lost their Medicaid benefits in April, as emergency pandemic provisions that kept people enrolled over the past few years began to end. The coverage losses are going to only grow.
In Florida, nearly 250,000 people lost Medicaid coverage in April, as states began a process to check whether everyone currently enrolled in Medicaid still meets the eligibility criteria. About 73,000 people were also deemed ineligible in Arkansas. Another 53,000 had their coverage terminated in Indiana and 40,000 were removed from Medicaid in Arizona.

Policy experts and advocates warned before the eligibility checks began that people who are still eligible for Medicaid could lose their insurance due to administrative problems, such as not receiving mail from the state or not returning documentation to confirm they are still eligible. Now the early evidence suggests that’s exactly what is happening.”