Thread by @evavivalt on Thread Reader App – Thread Reader App - "We are happy to release the first results of a RCT of a US program that provided $1,000/month unconditionally for 3 years to 1,000 individuals in the treatment group, with a group of 2,000 people receiving $50/month serving as the control. These are sizable transfers. The program targeted individuals aged 21-40 living in low-income households. One might expect younger people to change their trajectories more in response to cash transfers because they have more life ahead of them and they are less likely to have savings at baseline. Before I get into the results, I want to highlight a few features of this study that make it unique:
1) There are many evaluations of cash transfers in low-income settings. This is in the US, in several counties in IL and TX.
2) We gathered incredibly detailed data with very high response rates over a long period of time from enumerated surveys, online surveys, administrative records, and a custom mobile phone app. Differential attrition was low.
3) The transfers are substantial, representing a ~40% increase from total household income at baseline, and they are sustained over a relatively long period of time. Further, the sample size was large enough to enable us to detect fairly small effects.
4) The transfers were gifts from non-profit organizations and not taxable. Participants remained eligible for almost all other benefits. Further, the program was targeted at low-income individuals but, once enrolled, participants could earn a high income and still receive $. This matters because many programs are means-tested, creating a disincentive to work. In our study, any impacts we observe are due to the pure income effect of having more money.
5) Finally, it’s hard to overstate just how comprehensive the data we gathered was. This was an expensive program, so it’s worth it to gather really good data...
I’ll tell you about the effects on labor supply - do people work a little less? - but also, if they do work less, what do they do with that time? In the eyes of a policymaker, not all activities are equal. Policymakers may care whether people are doing things that increase their future productivity, like going back to school or starting a business. They could also care whether participants spend time taking care of children or elders or volunteering in their communities, because these activities could have positive spillover effects. At the same time, what people choose to do with the transfers provides some indication of what they themselves value. If you are trying to improve well-being, and you see people prefer to have a bit more leisure rather than more consumption goods, that’s informative.
So, what do we find? First, we see a moderate labor supply effect. About 2 percentage points fewer people work in the treatment group than the control group as a result of the transfers. People in the treatment group work about 1.3-1.4 hrs/week less. This represents about a 4-5% decrease in income, excluding the transfers. Interestingly, participants’ partners appear to reduce their labor supply by a comparable amount. You can think of total household income, excluding the transfers, as falling by more than 20 cents for every $1 received. This is a pretty substantial effect. What did people do with their time instead? To answer this question, we measured time use in two ways... In the mobile time diaries, the main effects appear to be on leisure, especially pooling across social and solitary leisure. Time spent in transportation also goes up (people are doing more things), but overall people appear to use the transfers for a variety of different purposes. Not much else moves in the time use surveys, other than maybe a small increase in time spent on finances. Okay, if people are working less, does quality of employment at least go up? Maybe they keep the good jobs and ditch the bad jobs? And theoretically, participants receiving the transfers can afford to search longer for better-fitting jobs. Do the transfers help?... We can reject that wages changed by more than 73 cents and can reject changes in the overall index of quality of employment of more than 0.028 standard deviations. Job quality did not change. It doesn’t matter if you restrict attention to those who changed jobs over the study period. Nada. But, it’s not all bad news. One bright spot was entrepreneurship... We also see some signs that younger participants invest more in education... Overall, the negative effects on labor supply do not appear to be offset by other productive activities, and we do not observe people getting better jobs over the 3-year duration of the program."
The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States | NBER
On basic income
Noah Smith ๐๐บ๐ธ๐บ๐ฆ๐น๐ผ on X - "Another disappointing result for basic income. Unlike some earlier, smaller studies, this big RCT finds a significant disemployment effect. Even just $1000 per month causes some people to stop working, or to work less."
Shorter summary of the above
Thread by @Athan_K on Thread Reader App – Thread Reader App - "A lot happened in July. But, one event went quietly unnoticed. The result of largest American controlled experiment in Universal Basic Income (UBI) was released. You haven’t heard about it because the findings are terrifyingly bad. It was funded by the founders of ChatGPT, presumably to mitigate the potential job losses anticipated through AI and AGI.
1,100 randomized households making under $29,900 were given $1,000 per month for three years. Essentially, their income increased by 40%. The UBI participants lived in urban, suburban and rural towns in Texas and Illinois.
Result 1: UBI participants ended up earning $1,500 less despite being given $12,000 more annually. For every one dollar received, total household income dropped by at least 21 cents.
Result 2: UBI participants stayed unemployed for an extra month compared to those unemployed in the control group.
Result 3: UBI participants worked less and there were no substantive changes in quality of employment. UBI participants did little to improve their education or training to improve their income.
Result 4: UBI participants self-reported increased rates of disability to limit the work they can do.
Two ways to look at these results. The American Underclass is so worn down that when thrown a life preserver, they could only float rather than paddle to safety. UBI advocates will argue that $1,000 per month wasn’t enough. Or, Universal Basic Income and its collectivist derivatives are never enough. Work is intrinsically tied to human dignity, happiness and progress. In other words, according to Ronald Reagan when he accepted the 1980 GOP Nomination.
Work and family are at the center of our lives; the foundation of our dignity as a free people. When we deprive people of what they have earned, or take away their jobs, we destroy their dignity and undermine their families"
More commentary on the above
Weird. We keep being told that research shows that basic income is a good thing. And the research that's pointed to is not peer reviewed but government studies
No wonder left wingers hate Reagan so much
Thread by @Afinetheorem on Thread Reader App – Thread Reader App - "Massive OpenResearch basic income papers are out (@smilleralert @dbroockman @evavivalt @AlexBartik @elizabethrds). Very much worth reading - my view is that it is an incredible RCT and an incredible disappointment. RCT was USD11400/yr for 3 years, 1k treatment, 2k control. The study was crazy, by the way. Very low attrition, time diaries, *blood draws to measure health*(?!) My favorite: they got Ilinois to pass a law that this RCT income wasn't taxable & didn't change other-benefit eligibility... Better job? No - and can rule out even small effects on job quality. More human capital training? No. Better *health*? No. And that's even though experts the team surveyed thought there would be huge positive benefits! You have to squint to find *any* positive effects other than "people do more leisure when you give $". Treatment groups say they are more likely to consider entrepreneurship in the future. Some young folks in treatment report more education (though this doesn't survive MHT).This is *by far* the largest, low-income, developed country universal basic income trial, and by far the most rigorous. My posterior on how valuable UBI is compared to, say, expanded EITC and spending on early childhood has gone *way* down. A caveat is that broader UBI both has more deleterious negative consequence for labor (the $ have to come from other tax revenue) and more positive gen eq. spending multipliers driving labor demand (e.g., Jones and Marinescu )... massive up to authors & funders. 50 million $ and years of hard work on a topic authors care deeply about, & instead of p hacking or pretending things went well, they were rigorous & honest about null results. Journalists: this is very rare and should be highlighted!"
Besides the above, Does Income Affect Health? Evidence from a Randomized Controlled Trial of a Guaranteed Income, The Impact of Unconditional Cash Transfers on Consumption and Household Balance Sheets: Experimental Evidence from Two US States
Thread by @lymanstoneky on Thread Reader App – Thread Reader App - "Body blows keep coming for UBI fans. $1k/month transfers had no effect on net worth or credit access. All the money was ploughed straight into consumption, recipients actually went more into debt. For reference: most spending categories rose by similar percents: UBI recipients did NOT necessarily prioritize immediate needs. In fact, they disproportionately gave their UBI away. Now as an aside. The average UBI recipient here got $35,000 in total transfers. They spent $$11,000 of it on increased spending. They reduce work by $12,000. That accounts for $23,000. So their net worth SHOULD have gone up by $12,000!' Instead it fell $1,000. ???? Did they just.... light $13,000 on fire? Is the income decline underestimated? Is the spending increase underestimated? Did they invest money in terrible assets?"
On the third paper
Clearly, they needed even more money
Eric S. Raymond on X - "I got a stark reminder today that people with college degrees, in general, haven't got the faintest clue what the conceptual world of a person with an IQ below 90 is like. This was in reaction to a large, carefully designed study of the outcomes of universal basic income. Basically, what it found is that UBI doesn't work. Recipients simply increase their discretionary consumption, and end up deeper in debt than they were before with none of their problems solved. I won't identify the person who insisted that the problem is a lack of financial education - those people simply need to be taught better money-management practices! Because I don't want to embarrass the poor goof. Education would probably work fine if everybody in the UBI program had an IQ of 100 or up. The problem is that not too far below that level people start having cognitive deficits in their ability to handle hypotheticals and long-term planning. They can't handle "financial education"; they can barely even process the concept. I think there used to be more cultural wisdom about this than there is now, back when there was less social mobility and people with above average IQs didn't almost automatically segregate themselves away from the below-average. We used to understand that the not-very-bright can only stay out of poverty by having habitual thrift hammered into them so hard in childhood that the conditioning partly overrides their high time preference. Nowadays, it's too easy for the relatively bright to project their own low time preference on everybody else, and to assume that more education is an all-purpose fix for everything. Cluebat time: some people - quite a lot of people in fact - are just plain stupid. You can't fix their problems with interventions like UBI that might work if everybody had an IQ that is above average for a first-world country. We've put our society through a lot of unnecessary grief by pretending this isn't so."
Eric S. Raymond on X - "I shipped an essay yesterday about how relatively smart people are oblivious about what life on the low end of the IQ distribution is like. It mentioned UBI because what stimulated me to write it was somebody else's thread about a recent study of UBI. I should have expected what happened next. Lots of clever people tried to come up with clever ways to fix UBI's failure modes by time-structuring the payouts, or erecting restrictions on what the money can be used for. I was gobsmacked that only one person in the entire thread pointed out the obvious: if you try to trickle payments so that UBI recipients can't overspend, all you will do is create a market niche for shady characters peddling predatory payday loans. At which point your clients will revert to their careless high-velocity spending, after the shady characters have taken a rake off the top. I waited in vain for somebody to point out that we already know what happens when you try to put use restrictions on transfer payments. There's plenty of experience about this around EBT cards - people spin up informal markets in which they can sell the planner-approved goods they don't want for money to buy the disapproved goods they do want. They don't mind that they're usually taking a huge nominal loss on these transactions, because they want what they want and not what planners think they should want. All such proposals are doomed. They're technocratic wankery, perfect examples of what Nassim Taleb calls "fragilista thinking". They illustrate another chronic failure mode of smart people. This post may look like it's about UBI, but it's really about that failure mode. All you would-be social engineers continually trip over your own blindness about second-order consequences. Especially the second order consequences that come from the fact that the people you are trying to help, or nudge, don't want what you want. They want what *they* want, and they don't care about your clever planning except to the extent they can exploit it to pursue their own desires."
wanye on X - "I mean, I am all for waiting to see what the data show, but what I’ve been saying for a long time is that my experience with poor people is that this is exactly what will happen. I think this is kind of hard for people with even a little bit of ambition to understand, but multiple of my family members put significant effort in their 30s into figuring out how to get a disability check so that they would never have to work again. The idea that these people couldn’t have earned more money in the market is fairly risible. They were not stupid people. But they would (and do) happily stay home for the rest of their lives for the guarantee of like $1000 a month."
