Stockton’s Basic-Income Experiment Pays Off

[essentialsaltes]

The researchers Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania collected and analyzed data from individuals who received $500 a month and from individuals who did not. Some of their findings are obvious. The cash transfer reduced income volatility, for one: Households getting the cash saw their month-to-month earnings fluctuate 46 percent, versus the control group’s 68 percent. The families receiving the $500 a month tended to spend the money on essentials, including food, home goods, utilities, and gas. (Less than 1 percent went to cigarettes and alcohol.) The cash also doubled the households’ capacity to pay unexpected bills, and allowed recipient families to pay down their debts. Individuals getting the cash were also better able to help their families and friends, providing financial stability to the broader community.

The researchers also found that the guaranteed income did not dissuade participants from working—adding to a large body of evidence showing that cash benefits do not dramatically shrink the labor force and in some cases help people work by giving them the stability they need to find and take a new job. In the Stockton study, the share of participants with a full-time job rose 12 percentage points, versus five percentage points in the control group.

Finally, the cash recipients were healthier, happier, and less anxious than their counterparts in the control group. “Cash is a better way to cure some forms of depression and anxiety than Prozac,” says Michael Tubbs, a former mayor of Stockton, who spearheaded the project.

 

[Nithavela]

No! Don't make the commoners happy! Stop! Stop! The misery must flow!

 

[iluvatar5150]

The researchers Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania collected and analyzed data from individuals who received $500 a month and from individuals who did not. Some of their findings are obvious. The cash transfer reduced income volatility, for one: Households getting the cash saw their month-to-month earnings fluctuate 46 percent, versus the control group’s 68 percent. The families receiving the $500 a month tended to spend the money on essentials, including food, home goods, utilities, and gas. (Less than 1 percent went to cigarettes and alcohol.) The cash also doubled the households’ capacity to pay unexpected bills, and allowed recipient families to pay down their debts. Individuals getting the cash were also better able to help their families and friends, providing financial stability to the broader community.

The researchers also found that the guaranteed income did not dissuade participants from working—adding to a large body of evidence showing that cash benefits do not dramatically shrink the labor force and in some cases help people work by giving them the stability they need to find and take a new job. In the Stockton study, the share of participants with a full-time job rose 12 percentage points, versus five percentage points in the control group.

Finally, the cash recipients were healthier, happier, and less anxious than their counterparts in the control group. “Cash is a better way to cure some forms of depression and anxiety than Prozac,” says Michael Tubbs, a former mayor of Stockton, who spearheaded the project.

But if we just blindly give people cash, what will feed our need to exercise paternalist control and self-righteousness?

 

[essentialsaltes]

But if we just blindly give people cash, what will feed our need to exercise paternalist control and self-righteousness?

Maybe the recipients can be required to wear sackcloth and ashes one day a month.

 

[iluvatar5150]

Maybe the recipients can be required to wear sackcloth and ashes one day a month.

...and maybe a scarlet 'P' for 'Parasite'.

 

[cow451]

Maybe the recipients can be required to wear sackcloth and ashes one day a month.

Or maybe they could wear a special wristband so everyone would know they are (whatever term gets invented to demean them).

 

[SummerMadness]

Being poor should be a punishment, that's what Supply Side Jesus would want.

 

[Nithavela]

I see that our conservative friends are still waiting for fox news, breitbart and oan to tell them why this is bad.

 

[rambot]

Middle and lower class families toss ALL their money DIRECTLY into the economy. Of COURSE giving them money is going to benefit America.


It's giving the millions and billions to companies that is utterly useless.

 

[ThatRobGuy]

To play devil's advocate a bit here...

There's a couple of aspects that would factor into a real-world implementation of this that don't exist in a controlled experiment.

1) In the very first few sentences of the article "Using donated funds" - meaning, someone voluntarily gave money to support the experiment. In other words, just because Bill Gates is cool with throwing massive amounts of money at vaccine research and AIDS relief efforts...don't expect every other rich guy to be so cool about it.

2) "125 randomly selected individuals" - conducting this experiment with 125 people, with a whole research team dedicated to tracking them (and they presumably know they're being tracked) are going to behave rather differently with their money than a person who knows they're not being tracked.

3) A small isolated group, in a small isolated region isn't reflective of the macroeconomic impacts that would occur if implemented on a wider scale with regards to the pricing of goods and services.

The pricing impacts of a guaranteed income (isolated to 125 people in one isolated area) isn't going to be a great indicator. Since, in that scenario, the number of people receiving it is so few, that it's unlikely to impact pricing (as 99.99999% of people are still getting their regular monthly income), and people who are getting it could easily drive 10 mins away to an area where it's not implemented, and take advantage of their lower pricing.

4) The duration of the experiment was only 2 years...which isn't long enough to fully track changing attitudes towards work (on a larger scale, once 125 people know they're no longer being watched by a team of researchers)


Now, there are short-term pros (but long-term cons) to a guaranteed payment.

Alaska has had a form of it in place for quite some time.

Vox did an article about it:
Alaska’s universal basic income problem

 

[Ringo84]

I'd be cool with billionaires like Bezos, Zuck and Gates "donating" a portion of their incomes to help pay the cost of things like universal health care and a UBI. In fact, I think that would be something we should seriously look into.

Bezos in particular could very likely pay off everyone's college debt and provide funds so that his ̶s̶l̶a̶v̶e̶s̶ sorry.... Valued Amazon Workers (tm) could receive a livable wage and still have more than enough money to live extremely comfortably.
Ringo

 

[ThatRobGuy]

Bezos in particular could very likely pay off everyone's college debt

Provided that there were limitations put on which kinds of degrees would get paid off.

Otherwise that would open up a can of worms with regards to people pursuing frivolous degrees that have little to no chance of job placement after graduation.

I'm a fan of the Nordic model for post-secondary education. Strict entrance requirements, and strict quota-based systems for the "very selective" fields of study.

Meaning, if there's only 4,600 job openings a year in the field of journalism, it doesn't make sense to pay for 90,000 kids a year to get a journalism degree. (those are the actual jobs and degree conferment stats for the US btw per Bureau of Labor Statistics and the Department of Education btw)

 

[Ringo84]

Provided that there were limitations put on which kinds of degrees would get paid off.

Otherwise that would open up a can of worms with regards to people pursuing frivolous degrees that have little to no chance of job placement after graduation.

I'm a fan of the Nordic model for post-secondary education. Strict entrance requirements, and strict quota-based systems for the "very selective" fields of study.

Meaning, if there's only 4,600 job openings a year in the field of journalism, it doesn't make sense to pay for 90,000 kids a year to get a journalism degree. (those are the actual jobs and degree conferment stats for the US btw per Bureau of Labor Statistics and the Department of Education btw)

I see where you're coming from, and there are advantages to that but I'm not a big fan. I don't think people pursue college simply to chase "marketable" degrees. The point of college should be to learn, and there can be equal validity from a BFA in art as there can be from a BS in electrical engineering.
Ringo

 

[ThatRobGuy]

I see where you're coming from, and there are advantages to that but I'm not a big fan. I don't think people pursue college simply to chase "marketable" degrees. The point of college should be to learn, and there can be equal validity from a BFA in art as there can be from a BS in electrical engineering.
Ringo

There's certainly "value" in any type of education. Learning something is always better than not learning something. But when it's other peoples' non-voluntary money involved, it should be a societal investment. Whatever people want to study on their own dime, I'm in full support of. My degree is in computer science (which coincides with my profession), but I have paid out-of-pocket to take classes in other things I was interested in learning more about.

It's nearly impossible to do "all things well at once" with regards to education. There's a trade-off between "tuition-free" and "universal" and "everyone gets to study their passion". If we let every single person pursue a no-strings-attached degree in whatever their passion was, we could tax Jeff Bezos's and Bill Gates's of the country 70%, and there still wouldn't be enough to cover the cost.

The Scandinavian countries are far more generous than we are in terms of social welfare, but they still have a pointed sense of pragmatism incorporated within that generosity.

 

[Ringo84]

My major was computer science also.

Frankly, I think this is a problem that could be easily solved by making college free across the board.
Ringo

 

[Pommer]

My major was computer science also.

Frankly, I think this is a problem that could be easily solved by making college free across the board.
Ringo

But this is America!
K-12 A-Okay
K-16+ SOCIALISM!

 

[rambot]

.
The Scandinavian countries are far more generous than we are in terms of social welfare, but they still have a pointed sense of pragmatism incorporated within that generosity.

what suggests that pragmatism?

 

[Nithavela]

I'd be cool with billionaires like Bezos, Zuck and Gates "donating" a portion of their incomes to help pay the cost of things like universal health care and a UBI. In fact, I think that would be something we should seriously look into.

So, taxes.

 

[Ringo84]

So, taxes.

On billionaires, yep.
Ringo

 

[Kalevalatar]

The Finnish Basic Income Experiment -- two years, 2,000 random persons, a monthly tax-exempt basic income of 560 euros / 667 USD -- yielded rather similar results:
small employment effects, but definitely did no make people more averse to accept paid employment, significantly improved economic and mental security and well-being -- that elusive pursuit of happiness.

That seems to be universal: no one, absolutely no one, wants to revel in poverty and misery.

But also huge differences to begin with: Finland is not a country that leaves its citizens and residents behind, with or without UBI:
Finland crowned world's happiest country for third year running

Finnish taxpayers are already paying for themselves and for their neighbours, too, a lot of well-being and first class services, some universal, some need-based, a lot of which are not called UBI but which do serve the same purpose: universal monthly child benefits for every child, universal health care, universal tuition free education, universal parental benefits, universal student benefits, universal unemployment allowances, universal pensions, housing benefits, sickness allowances, disability allowances, social assistance, survivor/orphan benefits...