New Study Sledgehammers Universal Basic Income Arguments

[Elderberry]

Zero Hedge by Tyler Durden 7/22/2022

The "experts" didn't expect it to turn out this way. An experiment conducted by Harvard University and University of Exeter social scientists found no-strings-attached handouts harmed low-income recipients rather than help them.

Funded by an anonymous nonprofit, the study centered on an experiment in which 2,073 low-income people were randomly selected to receive a single, unconditional cash transfer of either $500 or $2,000. Another 3,170 low-income study subjects received no money from the study.

The experiment was conducted from July 2020 to May 2021. On average, the subjects were earning roughly $950 a month while receiving another $530 in food stamps and other government benefits. A little over half were unemployed and 80% had children.

Over a 15-week period, participants were periodically surveyed about their financial, physical and mental health. Across a wide range of financial and non-financial attributes, researchers found no positive effects on those who received free money -- but plenty of negative ones.

For a few weeks, people who received the extra money spent more than the control group -- $182 a week for the people who received $500, and $574 a week for the ones given $2,000.

The additional spending didn't bolster their financial health. The handout recipients reported the same rate of overdraft fees, late-payment charges and cash advances as did those who didn't receive the extra money. And it was all downhill from there. The handout recipients reported:

•   Less earned income

•   Less job satisfaction

•   Lower work performance

•   More financial stress

•   Less liquidity

•   Worse sleep

•   Worse physical health

•   More anxiety

•   More loneliness

More: https://www.zerohedge.com/economics/new-study-sledgehammers-universal-basic-income-arguments

[The_Reader_David]

The study does not actually say anything about the arguments for a Hayekian UBI, which would be the only poverty alleviation program, replacing all means-tested programs, because the study only looked at the effects of overlaying an unconditional income source on existing means-tested program.

The point of a UBI is that there is a different dynamic between paying people not to work (means-tested programs, with an effectively confiscatory tax rate on the first earnings from work in the form of lost benefits) and pay people whether or not they work (UBI, with earnings from work topping up the UBI, which, like the earnings, is simply taxable income).

Of course topping up welfare with a test-UBI payment has no good effects, you're still paying people not to work (welfare), just paying them more (the test-UBI), thereby encouraging more sloth.  A real UBI as the only government-provided income has a different effect:  there is no bar to taking a job or picking up a gig to earn extra income because you don't lose benefits. 

Charles Murray ran the numbers and a proper UBI would be cheaper than what we do now by way of income distribution.

You can't test it unless your experimental group are made ineligible for any current poverty programs and instead get a UBI and probably reminders that they don't lose it if they get a job or earn money with a gig, while the control group stays in the current system, and you do it for long enough for the experimental group to have time to get jobs.

This "study" is completely illiterate about behavioral economics (as is the current welfare system).

[catfish1957]

Back when I was a SHE Manager at a plant, I commissioned a  very detailed and serious committees on employee behavioral drivers needed to create an injury free workplace.  This "Rewards and Recognition" committee (program) came up finally with the blend of blend (1/3,1/3,1/3) blend of particpation, recognition, and rewards. 

Having employees actively take part in (1) work safety observations/feedback,  (2) Recognition of safe performances (short and long term).  Awards  (suprised how much bang for the buck we got for departmental trophies), and of course (3) financial considerations.  And also surprising, we found that it was more effective to provide commerative gifts instead of the short term effect of gift cards.

And most telling of all, is that everyone is unique.....   What motivates one person does not another.   That is why we went with a blended program.

That same concept also applies to the employment/entitlement curve too. 

[sneakypete]

Back when I was a SHE Manager at a plant,

   

@catfish1957

Did you get a whip to help keep the bitches in line?

How much did you have to pay them to get that job?

Enquiring mines,and all dat.