7 ms·

Stockton residents got $500/month basic income, spent on food, clothing, bills

42 points by starpilot 7y ago

chipperyman573 7y ago
I see a lot of similarities between this and YC's attempt at UBI[0], one thing that was pointed out a few times in the YC launch thread was that if you give a small subset of people $500/mo, then yeah of course they'll experience immediate relief, because nobody else they're competing with also got $500/mo. But if everyone gets $500/mo at the same time, we can't be sure the same will happen. The market might respond differently and suddenly rice will cost $50/lb (or it might not, I don't know, but this study doesn't prove it won't) Overall this is a cool idea, I'm glad that 125 people got the help they desperately (according to the article, anyway) needed, but I don't think this really indicates anything broader. [0]: https://basicincome.ycr.org/ https://basicincome.ycr.org/
- thrill 7y ago
  Do you think prices will increase if the overall money supply does not increase - i.e. the UBI is taken from the tax revenues?
  - ebg13 7y ago
    Yes, because people with more money than they need will easily absorb the higher prices even if they have slightly less more money than they need.
    - nicoburns 7y ago
      Surely that's only true in the short term while supply of the good stays constant. Long term you'd expect supply of the now in-demand good to increase, bringing prices back down.
      - ebg13 7y ago
        In the context of rice...We already produce more rice than people can eat, so there's no driving force for supply to increase. Increasing supply would only make more rice go unsold. It's not like just because you have more money now you biologically need to eat more volume too.
        nicoburns 7y ago
        Well if people already have enough rice, then presumably they would spend the extra money on other goods that they don't have enough of.
        ebg13 7y ago
        Unless the price of rice goes up. If they're buying rice now instead of something else with limited funds, that suggests that they need the rice more. Goods aren't all perfectly exchangeable. If you need shoes, a shirt won't protect your feet.
- nicoburns 7y ago
  You'd probably expect a short-term price shock if it was introduced all-at-once (probably a bad idea, it would be better to phase it in). But long-term, surely the expected outcome would be for the change in wealth distribution to affect supply, such that our economy actually moves to produce fewer luxury goods and more basic goods and services.
- zik 7y ago
  The idea that UBI would cause inflation seems intuitive but it's shown to be a small effect at most: https://www.vox.com/policy-and-politics/2017/9/20/16256240/mexico-cash-transfer-inflation-basic-income https://www.vox.com/policy-and-politics/2017/9/20/16256240/m...
  - prepend 7y ago
    That study does not show much at all. They gave a small amount, $20, and prices went up 0.2%. Even if prices went up or down, a small amount of a specific item, food, doesn’t really equate to what UBI is trying to accomplish. Giving a more significant amount of cash to large groups would drive up prices and increase inflation.
    - gremlinsinc 7y ago
      There's an easy solution to this. Integrate some sort of tax on rent increase. Have a threshold to allow competition but if someone is gouging then their entire tax bracket moves up a notch and they spend a lot more than the money they make via upping their prices. E.g. Say they sell rice at $3/lb, because of UBI they think they can sell it at $5/lb, gov't says 10% markup seems normal, but you've marked it up 200%, so you'll now pay 20% more taxes across the board --say the markup divided by 10. Of course that takes a large amount effort behind the scenes...maybe an easier method would be say to Walmart: If you forbid sales of products where they raise prices in relation to GBI we'll give you a 10% discount in taxes. Most small retailers and distributors do NOT want to lose good grace w/ walmart so they keep prices stable. Since walmart and other big retailers cover a lot of territory government only needs to make the deal with a few partners : Amazon, Walmart, Target, etc...
      - niij 7y ago
        Your solution to government overreach of UBI is.. government mandated price controls? Fixing one problem with a bigger one. I'm going to go out on a limb here and say that's never worked anywhere.
  - baddox 7y ago
- ohazi 7y ago
  The difference would all go to landlords. Competitive commodities like rice have downward price pressure, because all it takes is one supplier selling for a penny less than all the other $50/lb price gougers, and the market will be theirs until the next penny defector, until you reach the commodity price. With housing it's the opposite. Low teaser price to get you to sign a lease, and then you're guaranteed large rent increases until you move out because the landlord knows how much moving sucks.
  - zizee 7y ago
    UBI would increase people's mobility, allowing them to move to cheaper areas where employment opportunities are not quite as strong.
    - c0nducktr 7y ago
      People often are already able to do that but don't, because surprisingly to some, most people find the idea of leaving everything and everyone you know just to find a better job absolutely dreadful. We need to remember that we're talking about humans, and not some particle which can simply find a shorter path to wealth. Edit: To be clear I'm not necessarily opposed to UBI, but I find this 'people are but cogs in the machine' view of economics especially appalling.
      - zizee 7y ago
        > I find this 'people are but cogs in the machine' view of economics especially appalling I resent your implication that I think people are just cogs in a economic machine. People move location all the time for a variety of reasons. Sometimes economic, sometimes for lifestyle, sometimes for the weather. I suggested UBI would give people more options, more choice, more power in their lives and you suggest I hold an appalling view and think people are nothing more than wealth seeking particles? Thanks very much.
        c0nducktr 7y ago
        I wasn't trying to say you specifically feel that way, but when we're talking about predatory behavior of landlords, giving those who are being taken advantage of the ability to leave town seems like a second rate solution.
- dannypgh 7y ago
  The market should converge at the point where the supply and demand curves intersect. The only goods that we'd expect to see a change in price are those where suddenly there was more demand. It's hard to imagine this for products like rice. Trade is a thing, too. The local price of rice can't go up to $50/lb if you can import it for far less. There's a lot of scary speculation going around about UBI right now. It does not seem likely that the sky will fall.
noodlesUK 7y ago
I know it’s not ideal from the point of view of UBI proponents, but why wouldn’t they have blocked cash withdrawals from the cards? It would have provided much more useful data (if made it a little less convenient). I suppose it’s a useful datapoint in itself that the recipients did choose to withdraw large portions as cash. They’re probably largely unbanked segments of the population.
- TearsInTheRain 7y ago
  People definitely spend their money differently if they know their transactions are being monitored in a study such as this. Blocking cash withdrawals definitely biases the results
  - 4ntonius8lock 7y ago
    Sort of. I'd say it makes it more relevant to UBI implementations that restrict cash. UBI can be implemented in many different ways. In the end, people spend most of their income on rent, food and transportation. So it makes sense that UBI will be spent on that. The main thing is that this experiment is not UBI. UBI is for everyone. That avoids the poverty trap that exists in america right now: people getting government money due to poverty fearing doing things that might get them some temporary private money, but that would then make them ineligible to continue getting government support. Many poor families are very careful to stay within the income that allows them to keep getting assistance. And that's not bad of them. It's the logical conclusion if the potential to maybe continue to make better money means they are definitively going to stop getting that which allows them to survive.
dsfyu404ed 7y ago
>People in the program get $500 each month on a debit card, which helps researchers track their spending. But 40% of the money has been withdrawn as cash, making it harder for researchers to know how it was used. They fill in the gaps by asking people how they spent it. If they know they're being studied they're gonna tell the researchers they spend the money on "good" things. Wanting to please people who are helping you out is very much human nature.
- fortran77 7y ago
  Just like if you ask people what they watch on TV, they'll tell you PBS not "Keeping Up With The Kardashians".
- vortico 7y ago
  40% withdrawn as cash is a ton. Did the funders inform their test subjects that they can't/shouldn't do this? Virtually all expenses listed in this article accept debit cards, so there's no reason they should be withdrawing this much cash. If the purpose of this experiment is to show that people don't just buy vices like gambling and drugs, I'd say the experiment failed or was inconclusive. I would go further to say that test subjects should report proof of all expenses for this experiment, because they could just offload the "good" stuff onto the debit card which leaves more room for "bad" stuff to be paid with your existing income, which isn't reported.
junar 7y ago
Here is a description of the experiment design: https://www.stocktondemonstration.org/wp-content/uploads/2019/08/SEED-Pre-analysis-Plan.-8.6.19-1.pdf https://www.stocktondemonstration.org/wp-content/uploads/201... One detail I found interesting: > Participant recruitment began with a random sample of households within census tracts at or below Stockton’s household AMI of $46,033, providing a representative sample of Stockton residents within those census tracts.
- snurk 7y ago
  https://medium.com/@codergator/no-stockton-california-is-not-running-a-basic-income-pilot-20dae6534afa https://medium.com/@codergator/no-stockton-california-is-not...
mruts 7y ago
That sounds similar to what I would tell my parents I spent my money on when I used to ask them for money when I was addicted to heroin. This “study” is total garbage.
- daenz 7y ago
  At least the researchers don't seem to be hiding the fact that accounting for almost half of the money was done purely on the honor system: >But 40% of the money has been withdrawn as cash, making it harder for researchers to know how it was used. They fill in the gaps by asking people how they spent it.
edoo 7y ago
I was reading about one of these free money trials and realized it will never really work that well. If you don't earn your money you will not spend it wisely. In one of the trials a lady had a $150/month cell phone plan. I make my own money and have a $20/month unlimited plan. My cat was getting fat until I got him a puzzle feeder. The slightest amount of work for his resources means he uses massively less resources. I suspect if everyone were given free money the monthly nut of the average poor person would rapidly increase to consume all funds and leave them in effectively the exact same or worse position.
- s0rce 7y ago
  Many people experience significant lifestyle and spending creep as they earn more money, even when its still paid to them in exchange for work many still spend it all on subjectively frivolous things. I don't think giving people free money will be all that different. There are people who won't waste it regardless. Also, UBI doesn't mean no one will work and not understand the value of money.
- pishpash 7y ago
  Exactly this, along with rent seeking suppliers like landlords will doom this. You really need a free market and rational actors, which there are not. That's not to say the existing ways of redistribution are better.
- eloff 7y ago
  Yes, lifestyle inflation tends to follow income inflation and people end up better off, but no freer. I think that's fine, the money goes right back into the economy and creates jobs. Hopefully some percentage of people will forgo the lifestyle inflation and use their newfound freedom to start businesses. That's the really interesting untested hypothesis of UBI to me. It's what I would do with it personally.
Suncho 7y ago
The interesting questions surrounding UBI are macroeconomic in nature. How does it change the economy? We know that consumers need money in order for the economy to function. The question is whether basic income is an efficient way to provide it to them. Is it even possible to give everyone free money? These trials are just testing how individual people respond to unconditional direct cash transfers. We already know that people are better off if they have more money. Not super interesting. It's not changing the economy around them. Not that they would, but even if everybody just spent their basic income on booze and drugs, it wouldn't really be evidence against the effectiveness of basic income. The choices aren't UBI versus no UBI. The choices are UBI versus all the convoluted ways we currently try to push money to consumers through the labor market. To the extent that we're creating jobs to push money to workers, we're not creating those jobs because there's actually work that needs doing. If we calibrate the amount of the basic income to the economy's productive capacity, then we can allow the labor market to be efficient. In an efficient labor market, jobs only exist because there's actually work that needs doing and the only purpose of wages is to provide an incentive for people to do that work. http://www.greshm.org/blog/poverty-is-optional/ http://www.greshm.org/blog/poverty-is-optional/
- holy_city 7y ago
  (not an economist but I'm really interested in this) What's the difference in theory and practice between UBI and changing the standard deduction/marginal rate? Like if we give out $6k a year to everyone through a $500 check, what is the difference in how that money is spent versus if we increased the standard deduction to where people would pay $6k less in taxes? (assuming that people are in fact paying at least $6k) I get that this is partly an experiment to figure this out, but what does the current theory say?
  - derefr 7y ago
    > assuming that people are in fact paying at least $6k That's the big difference. UBI most helps the people who are paying the least tax right now, such that a pure deduction wouldn't do anything for them. It's a "negative regressive" tax, whereas an increase in deductions/decrease in marginal rates—or a tax credit—is a "negative progressive" tax.
dlphn___xyz 7y ago
is this $500 on top of welfare and other social programs?
softwaredoug 7y ago
I just got a $220 check in the mail from the state of Virginia related to the US Federal tax changes passed in 2017. I have $10s of thousands in the bank, and my wife and me have a combined > $200K income. I feel so selfish cashing this check, seriously, there are so many services/things the state needs this money for to serve people that haven't been as fortunate as me. I've been so lucky to be born in this country to middle-class parents. I would carelessly spend $220 on silly things over a weekend I probably don't need Just tax me more already!
- gedy 7y ago
  So give it away?
  - softwaredoug 7y ago
    Yes for sure, but for the many other upper middle class people like me most likely the $220 is gone to sit in a bank or spent frivolously.
    - prepend 7y ago
      I don’t think you can speak authoritatively about other people like you. Maybe they have kids in college and need a text book. Maybe they are getting hit with unexpected medical expenses. If I assume things about other people’s money, I’m very likely to be wrong. I once made $25k and my boss made $50. I thought ve was rich and couldn’t even imagine what to do with all that money. I could have said “for him most likely the $220 is gone to sit in a bank or spent frivolously.” I would have been super wrong. Finances are private and unique. Talking out my ass about what other people should spend their money on is boring and useless.
      - simplify 7y ago
        It's not "speaking authoratively", it's basic human nature. Whatever is the default option will be the majority behavior. If the default is not to help others, then most will not. That's the way the world works. That's why taxes work. This is not an argument about morality or judging others.
rinchik 7y ago
Ugh the whole idea of UBI scares me. It sends me shivers. The idea of shifting responsibility for a personal well being from a person to a governmental entity is really, really, really scary. It will cost us larger government apparatus, more tangled, deeper bureaucracy, black hole for taxes, and is definitely something I wouldn't wish upon us. IMHO, UBI teaches dependency, and is extremely politicized. And very, very easy to sell by corrupt politicians for votes (power). Once they have that power, how certain are you they wont use your dependency and wield this power against you?
- zizee 7y ago
  One of the arguments for UBI is a decreased bureaucracy because there is not a requirement to verify conditions on its recipients. > your dependency and wield this power against you? If there are conditions placed on the payment, it is not UBI. It is also laughable to think that citizens of a large modern country are not already heavily dependent on the services supplied/organized by theri governments.
- letsgoyeti 7y ago
  In a world where there were no existing welfare programs, I can see UBI discouraging work and increasing bureaucracy. But almost every UBI/Negative income tax proposal that's serious wants to _replace_ existing disparate welfare programs with UBI. The advantages of doing that replacement would be: 1. lower bureaucracy since we would just hand over checks to folks rather than doing all kinds of checks to see if they are eligible 2. every person would be treated the same way, we would get rid of welfare cliffs in benefits
  - rinchik 7y ago
    You are stating a very decent, theoretical proposition I can agree with. The problem is that this version/proposition works only in "isolated system" (https://en.wikipedia.org/wiki/Isolated_system https://en.wikipedia.org/wiki/Isolated_system) i.e. "ideal theoretical environment", green field project, if you will. Unfortunately, it can not happen in the real-world scenario. Existing welfare programs (80% of which, strictly in my personal opinion, is a politicized misgovernance), and dependency those have promoted are already deeply rooted in the brains of our population. 1000s of bureaucrats are employed with these programs that will not step down, people's minds and dynamics is a whole differen variable: In no way single Jessy with 5 children would agree to the same benefit as Susanne with only 2. Also when Government was any good at anything? What we will end up with is a whole new governmental branch sucking on taxes with a set of newly emerged corrupted bureaucrats.
daxterspeed 7y ago
For the people who are seeing the "Sorry, this content is not available in your region." message the article is available through the Internet Archive Wayback Machine (fetched today, Google's cache was giving me a 404) http://web.archive.org/web/20191004000016/https://ktla.com/2019/10/03/stockton-residents-who-received-500-a-month-in-basic-income-experiment-spent-money-on-food-clothing-and-bills/ http://web.archive.org/web/20191004000016/https://ktla.com/2...
realbarack 7y ago
How do UBI proponents propose to deal with rent-seekers? What's stopping every slumlord in the country from jacking everyone's rent up $1000 / month in response to a UBI subsidy of the same amount? It seems like you could deal with this via a Japanese-style de-zoning (which I like) or nationwide rent control (which I don't). But maybe I'm missing something—what do the UBI experts say?
- jumbopapa 7y ago
  I don't know how inflation doesn't happen. If you increase the money supply you increase demand for goods.
  - eloff 7y ago
    You would obviously get some inflation. How much is anyone's guess. It wouldn't eat up all the UBI, but some percentage of it, certainly.
  - djrobstep 7y ago
    Literally any redistributive policy increases demands for goods. That's the whole point!
- eloff 7y ago
  The same thing that stops them now. If you back the rent up people move to a competitor who's not doing that. Rent is not solely based on how much you can afford. It's supply and demand.
  - realbarack 7y ago
    Sure, I guess I worry that whatever mechanism caused rents to increase substantially faster than CPI [0] might be accelerated by UBI. [0] https://fredblog.stlouisfed.org/2019/04/the-climbing-cost-of-renting/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog https://fredblog.stlouisfed.org/2019/04/the-climbing-cost-of...
  - malandrew 7y ago
oppositelock 7y ago
UBI sounds nice, and I'm sure that the experiments will show that it's great, so long as the UBI funds come from an external source. Now, imagine how things would look in Stockton if everyone received UBI, but that it also had to be funded in a closed system. I'd wager real money that it would be a huge drain on the economy.
- snurk 7y ago
  It's not a real UBI experiment for many reasons: https://medium.com/@codergator/no-stockton-california-is-not-running-a-basic-income-pilot-20dae6534afa https://medium.com/@codergator/no-stockton-california-is-not...
willyg123 7y ago
Testing UBI on a small scale fails to address how inflation will impact the buying power of the recipients. Findings from experiments like this are worthless.
malandrew 7y ago
The only reasonable way to test UBI is at scale, starting small with stepwise increases. Give everyone $50. Wait one year. Increase it to $100. Wait another year. The only way to reliability figure out what is going to happen and then fix the problems is to start very small and perform a large scale experiments before we blow all that money on something unproven. There are way too many unintended consequences of starting at %500+ dollars.
ilaksh 7y ago
I think things like UBI will be much more practical if we can widely deploy decentralization technologies that will allow us to get a better handle on resource consumption and availability etc. And maybe you would even need to go further by switching to digital money that is fully integrated with resource tracking.
deleted 7y ago
[deleted]
JChase2 7y ago
You'd need a longer term study to see if the group's recieving it are better off than a control group after x years, assuming that's the specific thing you want out of this study.
snurk 7y ago
This "experiment" is a sham in many ways, both in design and the reporting: * The researchers call it "guaranteed income". That's somewhat accurate, because it's $500 extra payment, no questions asked. But it's not in any way "basic income", or "universal basic income" which is how it's being reported. * It's paid for by an organization (SEED) which claims the thing it's seeking to prove. (That no-questions-asked welfare improves peoples moods.) The result is pre-determined. * Just 120 low-income people are receiving an additional $500/month. This is far from Universal Basic Income: No income test, enough money to survive on, and no other gov support. * SEED is making unsupported claims about how the money is getting spent (only on wholesome, necessary items). They can't assert that, however, because they're not tracking the _rest_ of the subjects' spending. They also did not track the subjects' spending before the intervention. Thus, they cannot rule out "lifestyle inflation". * The study methods specifically allow for 25 subjects to be used for "political" purposes during the study, for interviews on TV, etc. Sources: 1. seed | Stockton Economic Empowerment Demonstration https://www.stocktondemonstration.org/ https://www.stocktondemonstration.org/ 2. SEED Pre-Analysis Plan https://www.stocktondemonstration.org/wp-content/uploads/2019/08/SEED-Pre-analysis-Plan.-8.6.19-1.pdf https://www.stocktondemonstration.org/wp-content/uploads/201...

42 points by starpilot 7y ago

I see a lot of similarities between this and YC's attempt at UBI[0], one thing that was pointed out a few times in the YC launch thread was that if you give a small subset of people $500/mo, then yeah of course they'll experience immediate relief, because nobody else they're competing with also got $500/mo. But if everyone gets $500/mo at the same time, we can't be sure the same will happen. The market might respond differently and suddenly rice will cost $50/lb (or it might not, I don't know, but this study doesn't prove it won't) Overall this is a cool idea, I'm glad that 125 people got the help they desperately (according to the article, anyway) needed, but I don't think this really indicates anything broader. [0]: https://basicincome.ycr.org/ https://basicincome.ycr.org/

thrill 7y ago
Do you think prices will increase if the overall money supply does not increase - i.e. the UBI is taken from the tax revenues?
- ebg13 7y ago
  Yes, because people with more money than they need will easily absorb the higher prices even if they have slightly less more money than they need.
  - nicoburns 7y ago
    Surely that's only true in the short term while supply of the good stays constant. Long term you'd expect supply of the now in-demand good to increase, bringing prices back down.
    - ebg13 7y ago
      In the context of rice...We already produce more rice than people can eat, so there's no driving force for supply to increase. Increasing supply would only make more rice go unsold. It's not like just because you have more money now you biologically need to eat more volume too.
      - nicoburns 7y ago
        Well if people already have enough rice, then presumably they would spend the extra money on other goods that they don't have enough of.
        ebg13 7y ago
        Unless the price of rice goes up. If they're buying rice now instead of something else with limited funds, that suggests that they need the rice more. Goods aren't all perfectly exchangeable. If you need shoes, a shirt won't protect your feet.
nicoburns 7y ago
You'd probably expect a short-term price shock if it was introduced all-at-once (probably a bad idea, it would be better to phase it in). But long-term, surely the expected outcome would be for the change in wealth distribution to affect supply, such that our economy actually moves to produce fewer luxury goods and more basic goods and services.
zik 7y ago
The idea that UBI would cause inflation seems intuitive but it's shown to be a small effect at most: https://www.vox.com/policy-and-politics/2017/9/20/16256240/mexico-cash-transfer-inflation-basic-income https://www.vox.com/policy-and-politics/2017/9/20/16256240/m...
- prepend 7y ago
  That study does not show much at all. They gave a small amount, $20, and prices went up 0.2%. Even if prices went up or down, a small amount of a specific item, food, doesn’t really equate to what UBI is trying to accomplish. Giving a more significant amount of cash to large groups would drive up prices and increase inflation.
  - gremlinsinc 7y ago
    There's an easy solution to this. Integrate some sort of tax on rent increase. Have a threshold to allow competition but if someone is gouging then their entire tax bracket moves up a notch and they spend a lot more than the money they make via upping their prices. E.g. Say they sell rice at $3/lb, because of UBI they think they can sell it at $5/lb, gov't says 10% markup seems normal, but you've marked it up 200%, so you'll now pay 20% more taxes across the board --say the markup divided by 10. Of course that takes a large amount effort behind the scenes...maybe an easier method would be say to Walmart: If you forbid sales of products where they raise prices in relation to GBI we'll give you a 10% discount in taxes. Most small retailers and distributors do NOT want to lose good grace w/ walmart so they keep prices stable. Since walmart and other big retailers cover a lot of territory government only needs to make the deal with a few partners : Amazon, Walmart, Target, etc...
    - niij 7y ago
      Your solution to government overreach of UBI is.. government mandated price controls? Fixing one problem with a bigger one. I'm going to go out on a limb here and say that's never worked anywhere.
- baddox 7y ago
ohazi 7y ago
The difference would all go to landlords. Competitive commodities like rice have downward price pressure, because all it takes is one supplier selling for a penny less than all the other $50/lb price gougers, and the market will be theirs until the next penny defector, until you reach the commodity price. With housing it's the opposite. Low teaser price to get you to sign a lease, and then you're guaranteed large rent increases until you move out because the landlord knows how much moving sucks.
- zizee 7y ago
  UBI would increase people's mobility, allowing them to move to cheaper areas where employment opportunities are not quite as strong.
  - c0nducktr 7y ago
    People often are already able to do that but don't, because surprisingly to some, most people find the idea of leaving everything and everyone you know just to find a better job absolutely dreadful. We need to remember that we're talking about humans, and not some particle which can simply find a shorter path to wealth. Edit: To be clear I'm not necessarily opposed to UBI, but I find this 'people are but cogs in the machine' view of economics especially appalling.
    - zizee 7y ago
      > I find this 'people are but cogs in the machine' view of economics especially appalling I resent your implication that I think people are just cogs in a economic machine. People move location all the time for a variety of reasons. Sometimes economic, sometimes for lifestyle, sometimes for the weather. I suggested UBI would give people more options, more choice, more power in their lives and you suggest I hold an appalling view and think people are nothing more than wealth seeking particles? Thanks very much.
      - c0nducktr 7y ago
        I wasn't trying to say you specifically feel that way, but when we're talking about predatory behavior of landlords, giving those who are being taken advantage of the ability to leave town seems like a second rate solution.
dannypgh 7y ago
The market should converge at the point where the supply and demand curves intersect. The only goods that we'd expect to see a change in price are those where suddenly there was more demand. It's hard to imagine this for products like rice. Trade is a thing, too. The local price of rice can't go up to $50/lb if you can import it for far less. There's a lot of scary speculation going around about UBI right now. It does not seem likely that the sky will fall.

noodlesUK 7y ago

I know it’s not ideal from the point of view of UBI proponents, but why wouldn’t they have blocked cash withdrawals from the cards? It would have provided much more useful data (if made it a little less convenient). I suppose it’s a useful datapoint in itself that the recipients did choose to withdraw large portions as cash. They’re probably largely unbanked segments of the population.

TearsInTheRain 7y ago
People definitely spend their money differently if they know their transactions are being monitored in a study such as this. Blocking cash withdrawals definitely biases the results
- 4ntonius8lock 7y ago
  Sort of. I'd say it makes it more relevant to UBI implementations that restrict cash. UBI can be implemented in many different ways. In the end, people spend most of their income on rent, food and transportation. So it makes sense that UBI will be spent on that. The main thing is that this experiment is not UBI. UBI is for everyone. That avoids the poverty trap that exists in america right now: people getting government money due to poverty fearing doing things that might get them some temporary private money, but that would then make them ineligible to continue getting government support. Many poor families are very careful to stay within the income that allows them to keep getting assistance. And that's not bad of them. It's the logical conclusion if the potential to maybe continue to make better money means they are definitively going to stop getting that which allows them to survive.

dsfyu404ed 7y ago

>People in the program get $500 each month on a debit card, which helps researchers track their spending. But 40% of the money has been withdrawn as cash, making it harder for researchers to know how it was used. They fill in the gaps by asking people how they spent it. If they know they're being studied they're gonna tell the researchers they spend the money on "good" things. Wanting to please people who are helping you out is very much human nature.

fortran77 7y ago
Just like if you ask people what they watch on TV, they'll tell you PBS not "Keeping Up With The Kardashians".
vortico 7y ago
40% withdrawn as cash is a ton. Did the funders inform their test subjects that they can't/shouldn't do this? Virtually all expenses listed in this article accept debit cards, so there's no reason they should be withdrawing this much cash. If the purpose of this experiment is to show that people don't just buy vices like gambling and drugs, I'd say the experiment failed or was inconclusive. I would go further to say that test subjects should report proof of all expenses for this experiment, because they could just offload the "good" stuff onto the debit card which leaves more room for "bad" stuff to be paid with your existing income, which isn't reported.

junar 7y ago

Here is a description of the experiment design: https://www.stocktondemonstration.org/wp-content/uploads/2019/08/SEED-Pre-analysis-Plan.-8.6.19-1.pdf https://www.stocktondemonstration.org/wp-content/uploads/201... One detail I found interesting: > Participant recruitment began with a random sample of households within census tracts at or below Stockton’s household AMI of $46,033, providing a representative sample of Stockton residents within those census tracts.

snurk 7y ago
https://medium.com/@codergator/no-stockton-california-is-not-running-a-basic-income-pilot-20dae6534afa https://medium.com/@codergator/no-stockton-california-is-not...

mruts 7y ago

That sounds similar to what I would tell my parents I spent my money on when I used to ask them for money when I was addicted to heroin. This “study” is total garbage.

daenz 7y ago
At least the researchers don't seem to be hiding the fact that accounting for almost half of the money was done purely on the honor system: >But 40% of the money has been withdrawn as cash, making it harder for researchers to know how it was used. They fill in the gaps by asking people how they spent it.

edoo 7y ago

I was reading about one of these free money trials and realized it will never really work that well. If you don't earn your money you will not spend it wisely. In one of the trials a lady had a $150/month cell phone plan. I make my own money and have a $20/month unlimited plan. My cat was getting fat until I got him a puzzle feeder. The slightest amount of work for his resources means he uses massively less resources. I suspect if everyone were given free money the monthly nut of the average poor person would rapidly increase to consume all funds and leave them in effectively the exact same or worse position.

s0rce 7y ago
Many people experience significant lifestyle and spending creep as they earn more money, even when its still paid to them in exchange for work many still spend it all on subjectively frivolous things. I don't think giving people free money will be all that different. There are people who won't waste it regardless. Also, UBI doesn't mean no one will work and not understand the value of money.
pishpash 7y ago
Exactly this, along with rent seeking suppliers like landlords will doom this. You really need a free market and rational actors, which there are not. That's not to say the existing ways of redistribution are better.
eloff 7y ago
Yes, lifestyle inflation tends to follow income inflation and people end up better off, but no freer. I think that's fine, the money goes right back into the economy and creates jobs. Hopefully some percentage of people will forgo the lifestyle inflation and use their newfound freedom to start businesses. That's the really interesting untested hypothesis of UBI to me. It's what I would do with it personally.

Suncho 7y ago

The interesting questions surrounding UBI are macroeconomic in nature. How does it change the economy? We know that consumers need money in order for the economy to function. The question is whether basic income is an efficient way to provide it to them. Is it even possible to give everyone free money? These trials are just testing how individual people respond to unconditional direct cash transfers. We already know that people are better off if they have more money. Not super interesting. It's not changing the economy around them. Not that they would, but even if everybody just spent their basic income on booze and drugs, it wouldn't really be evidence against the effectiveness of basic income. The choices aren't UBI versus no UBI. The choices are UBI versus all the convoluted ways we currently try to push money to consumers through the labor market. To the extent that we're creating jobs to push money to workers, we're not creating those jobs because there's actually work that needs doing. If we calibrate the amount of the basic income to the economy's productive capacity, then we can allow the labor market to be efficient. In an efficient labor market, jobs only exist because there's actually work that needs doing and the only purpose of wages is to provide an incentive for people to do that work. http://www.greshm.org/blog/poverty-is-optional/ http://www.greshm.org/blog/poverty-is-optional/

holy_city 7y ago
(not an economist but I'm really interested in this) What's the difference in theory and practice between UBI and changing the standard deduction/marginal rate? Like if we give out $6k a year to everyone through a $500 check, what is the difference in how that money is spent versus if we increased the standard deduction to where people would pay $6k less in taxes? (assuming that people are in fact paying at least $6k) I get that this is partly an experiment to figure this out, but what does the current theory say?
- derefr 7y ago
  > assuming that people are in fact paying at least $6k That's the big difference. UBI most helps the people who are paying the least tax right now, such that a pure deduction wouldn't do anything for them. It's a "negative regressive" tax, whereas an increase in deductions/decrease in marginal rates—or a tax credit—is a "negative progressive" tax.

dlphn___xyz 7y ago

is this $500 on top of welfare and other social programs?

softwaredoug 7y ago

I just got a $220 check in the mail from the state of Virginia related to the US Federal tax changes passed in 2017. I have $10s of thousands in the bank, and my wife and me have a combined > $200K income. I feel so selfish cashing this check, seriously, there are so many services/things the state needs this money for to serve people that haven't been as fortunate as me. I've been so lucky to be born in this country to middle-class parents. I would carelessly spend $220 on silly things over a weekend I probably don't need Just tax me more already!

gedy 7y ago
So give it away?
- softwaredoug 7y ago
  Yes for sure, but for the many other upper middle class people like me most likely the $220 is gone to sit in a bank or spent frivolously.
  - prepend 7y ago
    I don’t think you can speak authoritatively about other people like you. Maybe they have kids in college and need a text book. Maybe they are getting hit with unexpected medical expenses. If I assume things about other people’s money, I’m very likely to be wrong. I once made $25k and my boss made $50. I thought ve was rich and couldn’t even imagine what to do with all that money. I could have said “for him most likely the $220 is gone to sit in a bank or spent frivolously.” I would have been super wrong. Finances are private and unique. Talking out my ass about what other people should spend their money on is boring and useless.
    - simplify 7y ago
      It's not "speaking authoratively", it's basic human nature. Whatever is the default option will be the majority behavior. If the default is not to help others, then most will not. That's the way the world works. That's why taxes work. This is not an argument about morality or judging others.

rinchik 7y ago

Ugh the whole idea of UBI scares me. It sends me shivers. The idea of shifting responsibility for a personal well being from a person to a governmental entity is really, really, really scary. It will cost us larger government apparatus, more tangled, deeper bureaucracy, black hole for taxes, and is definitely something I wouldn't wish upon us. IMHO, UBI teaches dependency, and is extremely politicized. And very, very easy to sell by corrupt politicians for votes (power). Once they have that power, how certain are you they wont use your dependency and wield this power against you?

zizee 7y ago
One of the arguments for UBI is a decreased bureaucracy because there is not a requirement to verify conditions on its recipients. > your dependency and wield this power against you? If there are conditions placed on the payment, it is not UBI. It is also laughable to think that citizens of a large modern country are not already heavily dependent on the services supplied/organized by theri governments.
letsgoyeti 7y ago
In a world where there were no existing welfare programs, I can see UBI discouraging work and increasing bureaucracy. But almost every UBI/Negative income tax proposal that's serious wants to _replace_ existing disparate welfare programs with UBI. The advantages of doing that replacement would be: 1. lower bureaucracy since we would just hand over checks to folks rather than doing all kinds of checks to see if they are eligible 2. every person would be treated the same way, we would get rid of welfare cliffs in benefits
- rinchik 7y ago
  You are stating a very decent, theoretical proposition I can agree with. The problem is that this version/proposition works only in "isolated system" (https://en.wikipedia.org/wiki/Isolated_system https://en.wikipedia.org/wiki/Isolated_system) i.e. "ideal theoretical environment", green field project, if you will. Unfortunately, it can not happen in the real-world scenario. Existing welfare programs (80% of which, strictly in my personal opinion, is a politicized misgovernance), and dependency those have promoted are already deeply rooted in the brains of our population. 1000s of bureaucrats are employed with these programs that will not step down, people's minds and dynamics is a whole differen variable: In no way single Jessy with 5 children would agree to the same benefit as Susanne with only 2. Also when Government was any good at anything? What we will end up with is a whole new governmental branch sucking on taxes with a set of newly emerged corrupted bureaucrats.

daxterspeed 7y ago

For the people who are seeing the "Sorry, this content is not available in your region." message the article is available through the Internet Archive Wayback Machine (fetched today, Google's cache was giving me a 404) http://web.archive.org/web/20191004000016/https://ktla.com/2019/10/03/stockton-residents-who-received-500-a-month-in-basic-income-experiment-spent-money-on-food-clothing-and-bills/ http://web.archive.org/web/20191004000016/https://ktla.com/2...

realbarack 7y ago

How do UBI proponents propose to deal with rent-seekers? What's stopping every slumlord in the country from jacking everyone's rent up $1000 / month in response to a UBI subsidy of the same amount? It seems like you could deal with this via a Japanese-style de-zoning (which I like) or nationwide rent control (which I don't). But maybe I'm missing something—what do the UBI experts say?

jumbopapa 7y ago
I don't know how inflation doesn't happen. If you increase the money supply you increase demand for goods.
- eloff 7y ago
  You would obviously get some inflation. How much is anyone's guess. It wouldn't eat up all the UBI, but some percentage of it, certainly.
- djrobstep 7y ago
  Literally any redistributive policy increases demands for goods. That's the whole point!
eloff 7y ago
The same thing that stops them now. If you back the rent up people move to a competitor who's not doing that. Rent is not solely based on how much you can afford. It's supply and demand.
- realbarack 7y ago
  Sure, I guess I worry that whatever mechanism caused rents to increase substantially faster than CPI [0] might be accelerated by UBI. [0] https://fredblog.stlouisfed.org/2019/04/the-climbing-cost-of-renting/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog https://fredblog.stlouisfed.org/2019/04/the-climbing-cost-of...
- malandrew 7y ago

oppositelock 7y ago

UBI sounds nice, and I'm sure that the experiments will show that it's great, so long as the UBI funds come from an external source. Now, imagine how things would look in Stockton if everyone received UBI, but that it also had to be funded in a closed system. I'd wager real money that it would be a huge drain on the economy.

snurk 7y ago
It's not a real UBI experiment for many reasons: https://medium.com/@codergator/no-stockton-california-is-not-running-a-basic-income-pilot-20dae6534afa https://medium.com/@codergator/no-stockton-california-is-not...

willyg123 7y ago

Testing UBI on a small scale fails to address how inflation will impact the buying power of the recipients. Findings from experiments like this are worthless.

malandrew 7y ago

The only reasonable way to test UBI is at scale, starting small with stepwise increases. Give everyone $50. Wait one year. Increase it to $100. Wait another year. The only way to reliability figure out what is going to happen and then fix the problems is to start very small and perform a large scale experiments before we blow all that money on something unproven. There are way too many unintended consequences of starting at %500+ dollars.

ilaksh 7y ago

I think things like UBI will be much more practical if we can widely deploy decentralization technologies that will allow us to get a better handle on resource consumption and availability etc. And maybe you would even need to go further by switching to digital money that is fully integrated with resource tracking.

deleted 7y ago

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JChase2 7y ago

You'd need a longer term study to see if the group's recieving it are better off than a control group after x years, assuming that's the specific thing you want out of this study.

snurk 7y ago

This "experiment" is a sham in many ways, both in design and the reporting: * The researchers call it "guaranteed income". That's somewhat accurate, because it's $500 extra payment, no questions asked. But it's not in any way "basic income", or "universal basic income" which is how it's being reported. * It's paid for by an organization (SEED) which claims the thing it's seeking to prove. (That no-questions-asked welfare improves peoples moods.) The result is pre-determined. * Just 120 low-income people are receiving an additional $500/month. This is far from Universal Basic Income: No income test, enough money to survive on, and no other gov support. * SEED is making unsupported claims about how the money is getting spent (only on wholesome, necessary items). They can't assert that, however, because they're not tracking the _rest_ of the subjects' spending. They also did not track the subjects' spending before the intervention. Thus, they cannot rule out "lifestyle inflation". * The study methods specifically allow for 25 subjects to be used for "political" purposes during the study, for interviews on TV, etc. Sources: 1. seed | Stockton Economic Empowerment Demonstration https://www.stocktondemonstration.org/ https://www.stocktondemonstration.org/ 2. SEED Pre-Analysis Plan https://www.stocktondemonstration.org/wp-content/uploads/2019/08/SEED-Pre-analysis-Plan.-8.6.19-1.pdf https://www.stocktondemonstration.org/wp-content/uploads/201...