Post Mortem On The Ontario Basic Income Experiment

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Andrew Donaldson

Born and raised in West Virginia, Andrew has since lived and traveled around the world several times over. Though frequently writing about politics out of a sense of duty and love of country, most of the time he would prefer discussions on history, culture, occasionally nerding on aviation, and his amateur foodie tendencies. He can usually be found misspelling/misusing words on Twitter @four4thefire and his writing website Yonderandhome.com

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56 Responses

  1. Avatar Doctor Jay
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    says:

    There’s some sort of doubling up going on in your pull quote.

    One of the fundamental pillars of UBI is that everyone gets it. No means testing, not to the unemployed, etc. What part of “universal” didn’t they understand. I think this is, in fact, really important. It avoids stigma and it doesn’t make or create distinctions. People’s situations may change, and change dramatically, and UBI still keeps plugging along.

    Also, it reduces the bureaucratic load, and overhead costs. Nobody needs to make complicated decisions about whether this or that person “deserves” it.

    Seriously. This is important.Report

    • Avatar Brandon Berg in reply to Doctor Jay
      Ignored
      says:

      It really isn’t that important. After taxes, it still nets out so that some people are makers and others are takers.

      There’d still be a stigma on fishing oobies who just live off the UBI without trying to find a job. If you never go to work and have a lifestyle consistent with a UBI-level income, people are going to know, and resent being forced to support you.Report

      • Avatar Oscar Gordon in reply to Brandon Berg
        Ignored
        says:

        That would depend a lot on how the labor market is doing. If we are near full employment, and jobs are going unfilled, then yea, I could see ‘freeloaders’ having a stigma. But in a recession, or in an area with a poor labor market…

        Related to this point, if we did a UBI, you would have less of an issue with people gaming the system by working every welfare angle. The only angle you’d really have is increasing housing density (e.g. 10 people living in a 2 bedroom apartment). There would not be a web of overlapping welfare programs that people could game.

        But one of the net goods is mentioned in the report, that people would be more free to get training to get that better job, or more able to take time to find that better job. Right now, for instance, I am looking to switch jobs (long past time for me to move on), and I enjoy being able to take my time for the search and to know that if I need a day off for an interview, I can request a day of PTO on short notice and it will be granted. A UBI would mean that people could take their time finding a good/the right job, rather than scrambling for anything, then spending time looking for something better in the odd hours off and job hopping, etc.

        I mean, if we could live in a world where we never have to read the clickbaity headline* for another article on the latest Wannabe-Slate from a MFA grad who had to endure the horrors of working in an Amazon warehouse for 6 months while they tried to get a writing gig, that alone would be worth it.

        *I don’t actually read those articlesReport

        • Avatar InMD in reply to Oscar Gordon
          Ignored
          says:

          Going a step beyond this, one of the things defenders of the current system never seem to address are the huge inefficiencies created by attaching all income and benefits to the vagaries of the job market on one end and a morass of overlapping federal, state, and local bureaucracies on the other. I think the benefits of fixing that should outweigh people being sad about freeloaders (which any system will have). With luck something easier and more transparent might even result in fewer of these welfare queen moral outrages to begin with.Report

  2. Avatar Rufus F.
    Ignored
    says:

    Yeah, Hamilton had a good chunk of the participants because it’s still a very low income city, in spite of gentrification. Once the party in power changed, it was thrown out as not working, in spite of the fact it was by most accounts working. I’ve heard from people that it was absolutely devastating to see a way out of their circumstances and then have it removed. Honestly, I don’t think it would have made a difference if everyone gets it. Ford is cutting funding to libraries, schools, and all sorts of services that everyone uses. His party is full of privatization zealots.Report

  3. Avatar Marchmaine
    Ignored
    says:

    I remain UBI curious and could be persuaded that it might be good policy on a couple of fronts…

    But, I remain skeptical that it would do much other than reduce the overhead of providing some basic poverty services; which might be a good thing in itself, but really its just an overhaul not a go-forward plan.

    For example, the Ontario experiment was illustrative:

    “The design of the experiment presented a model where participants were guaranteed either 16,989 CAD (US$12,180) per year if they were single, or 24,027 CAD (US$17,230) per year for a couple. For every dollar a participant earns through employment they lose 50 cents from their basic income payment. This means the basic income proposal would only apply to individuals earning less than 34,000 CAD (US$24,380) a year, or couples earning less than 48,000 CAD (US$34,420)”

    First, notice that there’s now a built-in incentive against forming couples… that’s bad policy right out of the gate. But, even if we assume that the de facto $12k/person is ultimately remedied to de jure $12k/person regardless of status… we’ll see some strange (or predictable, depending on how you view these things) behavior in the labor market.

    For example, a position that pays $24k/yr ($12/hr) would net the UBI worker $24k or $0 UBI. That’s ok, that’s just what we call a job. But there’s no “benefit” of having a UBI.

    At Minimum Wage: $15k/yr ($7.25/hr) would net the UBI worker $19.5k or $4.5k UBI

    On the plus side, this is a supplement to low income workers… on the negative side, it is govt mandated downward pressure on jobs below $24k… effectively a subsidy to corporations. Which isn’t necessarily bad… it may make a lot more jobs that currently pay $19.5k/yr available on the market at a cost of $15k/yr to the company. So, that may help some number of folks earn $19.5k/yr with what is basically an earned Income Credit from the GOVT.

    But, once it goes universal, I think it is incorrect to assume that the $19.5k job will remain $19.5k plus a $2.25k UBI supplement… it will likely float down to $15k plus $4.5k UBI supplement. Not necessarily on Day 1… but that will be the replacement rate. Which, to reiterate, just becomes a stimulus package to business in general… but not in anyway a transformative distribution of wealth.

    Plus, I agree with Dr. Jay at the top, that there’s no real way to “test” a Universal program in a targeted way… other than, perhaps, testing whether people prefer simple cash vs. a myriad of Govt. services. So we could test replacement of the safety-net (but do we really need to? Is there any doubt about that?), but not the “transformative” aspects of UBI.Report

    • Avatar Road Scholar in reply to Marchmaine
      Ignored
      says:

      For every dollar a participant earns through employment they lose 50 cents from their basic income payment.

      That’s some piss-poor design right there. You’re effectively imposing a 50% marginal tax rate to wage-earners below $24,000. I suppose to be fair, FSVO “fair”, a lot of means-tested welfare programs have an equivalent structure or even worse, cutoffs where earning a single dollar above some threshold costs you thousands in some benefit.

      Just send everybody a check for $X every month and count it as taxable income. Normal progressive taxation will diminish the total cost to well below the naive P X UBI calculation as well as raise a significant number of incomes above the qualification thresholds for other welfare programs. At the same time it would have much less effect on wage pressures at the lower levels. Really, you’re just translating the x-axis so as to redefine what “zero income” actually means.Report

      • Avatar Marchmaine in reply to Road Scholar
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        says:

        I’m not an economist, so I often get my technical terms confused… but is it really a 50% marginal tax or is it marginal subsidy to employers? I think the most likely scenario is that the job pays the same to the employee, but costs the employer less.

        That’s a theoretical gain for the economy if it creates more (low paying) jobs.

        A secondary question is whether an additional $3k-$6k per year is worth 2000 hrs of work… esp. if that work isn’t in any way “meaningful.” Unintended consequences may require paying a lot more to overcome the reserve price of not working… which is part of the general inflation that hits everyone else making the positional gain $0.Report

        • Avatar Road Scholar in reply to Marchmaine
          Ignored
          says:

          I’m not an economist, so I often get my technical terms confused… but is it really a 50% marginal tax or is it marginal subsidy to employers?

          I’m not either, although I studied it more than most in college (not officially a minor but effectively so). From the employee’s pov, if the job pays $12,000/yr but cuts your UBI by $6,000 that’s the same as a 50% payroll tax (on top of SS and MC). This wouldn’t directly affect the employer’s cost AFAICT.

          A secondary question is whether an additional $3k-$6k per year is worth 2000 hrs of work… esp. if that work isn’t in any way “meaningful.” Unintended consequences may require paying a lot more to overcome the reserve price of not working… which is part of the general inflation that hits everyone else making the positional gain $0.

          Sure. If you stick with the Ontario plan of reducing UBI by 50% of earned income, which is why it’s a piss-poor design. But I can see a lot of really lower-end earners forgoing that 2nd or 3rd minimum wage job if they’re starting out at a “zero” of $12k. And, yes, that would place an upward pressure on low-end wages to get those workers. I’m having a hard time seeing that as being a really bad thing, a priori, but I admit I’m uncertain how the feedback effects of possible inflation would play out.

          Politically, you might get better buy-in from the rightward side of the aisle if UBI is attached to elimination of the minimum wage. Add in UHC (which this COVID-19 thing is almost certainly going to make marginally more attractive) and you may end up with a situation where the labor market actually functions in the way the neo-classical economists have been erroneously saying it has been working all along.Report

          • Avatar Marchmaine in reply to Road Scholar
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            says:

            Certainly it is a 50% tax on the UBI, but I’m not seeing how it’s a tax on labor.

            In the scenarios I specifically outlined, one of four things happen:
            1. Worker takes home 100% of pay $0 UBI (No Gain)
            2. Worker takes home 100% of pay plus a lesser subsidy of UBI (Net Gain)
            3. Worker takes home 100% of pay, but Employer harvests the UBI (No Gain)
            4. Worker decides $12k is worth more than 2000 hrs of work. (Net Gain)

            I think everyone assumes #2, but my main point is that the reality will be #3.

            In fact, I think the assumption of #2 only works in a “targetted” test because in that test the position pays, say, $20k per year and the employer has no idea that the employee has the extra income. Once UBI is ubiquitous, that assumption goes away, and the employer can (potentially, we can’t know for certain) pay $20k by paying $16k… so the worker still sees $20k. Where’s the employee leverage to hold out for $20k PLUS UBI?

            So, I’m just not seeing it as a marginal tax on Employees, but rather a shifting of costs from Employer to Govt. A stimulus.

            But I take your point that a sliding-scale UBI isn’t really what most folks are calling for when we say UBI.Report

            • Avatar Marchmaine in reply to Marchmaine
              Ignored
              says:

              Plus, there’s a pretty obvious #5

              $20k position:
              Employer hires for $18k
              UBI Pays $3k
              Employee gets $21k

              Win/Win… best case scenario.

              Now we just have to weigh the relative negotiating strengths, the value of labor vs. the value of not laboring at the low end, etc. etc.Report

            • Avatar Brandon Berg in reply to Marchmaine
              Ignored
              says:

              That’s just not how labor economics works. Wages are subject to the law of supply and demand. Employers aren’t targeting some particular income level for their employees, and workers aren’t targeting some particular income level beyond which they stop caring about wages. Employers are trying to hire the workers they need for the lowest price they can, and workers are trying to get the highest wages they can.

              Employers still need to hire X people, and if they all cut wages dramatically to try to compensate for the UBI, they just don’t get the workers they need. Especially when those would-be workers have a $12,000 per year fallback plan.

              Think in terms of supply and demand, not subsistence wages.Report

              • Avatar Jaybird in reply to Brandon Berg
                Ignored
                says:

                One of the old rules about how labor economics works involved the whole “global supply chain” thing.

                I imagine that that will see a bit of a shock.

                There were a whole bunch of release valves that are going to see a bit of a shock.Report

              • Avatar Marchmaine in reply to Brandon Berg
                Ignored
                says:

                A story:

                A harbormaster, sailing master and ship’s captain are looking over the charts, ebb-tide calculations and discussing the best time to catch the land breeze to avoid the shoals. Something they’ve all done thousands of times in thousands of places… but each time unique to local factors and timing conditions.

                Ever helpful, a Libertarian sailor chimes in: Did you all know the moon causes the tides?Report

              • Avatar Mike Schilling in reply to Marchmaine
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                says:

                “Just cut mooring fees.”Report

        • Avatar Road Scholar in reply to Marchmaine
          Ignored
          says:

          After I pressed send on the previous reply, I realize what you’re really asking with:
          I’m not an economist, so I often get my technical terms confused… but is it really a 50% marginal tax or is it marginal subsidy to employers? I think the most likely scenario is that the job pays the same to the employee, but costs the employer less.

          I confess I didn’t read the linked report. If the money for the UBI is going to the employer to “top off” the employee’s wages then yes, it would effectively be a subsidy to the employer. But that would make the UBI… not really a UBI at all. More like a subsidized minimum wage for employed adults or maybe Milton Friedman’s negative income tax. All interesting ideas but not the same things. I’m assuming a UBI is just a check from the government to every adult, working or not.Report

          • Avatar Marchmaine in reply to Road Scholar
            Ignored
            says:

            Yeah, we cross-posted.

            I don’t think the $$ are going directly to the employer, I’m just looking at the difference between having a wage scale set by current pricing metrics altered by what becomes a Govt. subsidy to low-end wages.

            I’m just not seeing the transformational goals that UBI suggests. But I do see a case for more-efficient safety-net spending… until we all swing back to realize that people are killing themselves with SOMA as an unintended consequence of having a more efficient social safety-net that isn’t social at all.Report

      • Avatar Brandon Berg in reply to Road Scholar
        Ignored
        says:

        There’s an important trade-off here that you may be missing. The point of the 50% phase-out is to avoid narrowing the tax base too much. If they just add a refundable $12,000 credit to the existing tax system, that dramatically narrows the base. Presumably we junk the standard deduction, so that helps. But with a 25% tax rate, a single person needs to earn $48,000 to have a net $0 income tax bill. And it’s twice that for a couple.

        Currently the rate is 10-12% up to $40,000 for a single filer, so it’s even worse. Just estimating in my head, but I think you’d need an income in the neighborhood of $70,000 to fully phase out the UBI. For a single person! Twice that for a couple. Even higher if you have deductions.

        So to make up for this, you need very high marginal rates on the top quintile of earners. One way to avoid this is to increase the phase-out rate and then drop the marginal rate after it’s phased out.

        The trade-offs between UBI amount, phase-out, and marginal rates after the phase-out are unavoidable.Report

    • Avatar Jaybird in reply to Marchmaine
      Ignored
      says:

      Yeah. There’s this weird phenomenon that I don’t know how to name…

      Every single person I know, without exception, would benefit from an additional $1000 a month.

      But if we gave everybody an additional $1000 a month, it would mostly help me because I have a fixed mortgage.Report

      • Avatar Marchmaine in reply to Jaybird
        Ignored
        says:

        Its hoping that the theoretical economic model that “shows” no inflation with UBI is correct.

        Smart people tell me there’s no inflation with UBI… I don’t believe them. But we won’t know until we jump in with UBI and see all the unintended effects… the least of which might be simple inflation.

        On the one hand, the $1000 might (let’s say) cover your mortgage… so an immediate net gain… until such time that apples, hamburgers, netflix, rock-climbing subscriptions, the price of durable goods, and everything else rises to hover up the excess cash in the system.

        At which point you are positionally at $0 net gain… but maybe with a social safety net that costs almost $0 to administer.

        That might not be a terrible trade… but as of now, I only see UBI as a libertarian Social Saftey Net cash-option – which will have the inevitable follow-on issues of Johnny using 100% of his UBI on Fortnite and Mountain Dew (or heroin) and committing suicide at 31. Which will encourage President Gillibrand to spearhead the Health not Heroin act of 2040 which creates vouchers for specific things… like food and housing [and, strangely, cheese for children].

        It won’t do any of the other things people trying to “sell” it say it will do. For that we need to distribute stakeholder equity to a broad base of people who work.Report

    • Avatar Brandon Berg in reply to Marchmaine
      Ignored
      says:

      The idea that it would be a subsidy to employers is wrong in a couple of different ways. First, a subsidy to employment isn’t really a subsidy to employers. Yes, it cuts the cost of hiring a worker, but it cuts that cost for all your competitors, too. In a competitive market, a subsidy to employment shows up in the form of increased aggregate supply and lower prices, not higher profit margins.

      The other issue is that a UBI isn’t a subsidy to employment. It’s basically the opposite of that. It’s a subsidy to non-employment. A UBI affects the incentive to work in two ways, both of which are negative.

      First there’s the income effect. The higher your income, the lower the value of an additional dollar of income. So that reduces the incentive to work. Think about your alternatives to working with or without welfare. If you don’t have welfare, your alternative to working is to become homeless, or move in with mom and/or dad with no spending money. If you get $1000 per month for maintaining a pulse, you can live on your own in some cities, or with a roommate in others. Or you can go live with mom and/or dad and have a lot of spending money, even after they charge you room and board. This is much more attractive.

      The other effect is the substitution effect. If you’re only earning $5 per hour after UBI phase-out instead of $10 per hour, that’s less incentive to work.

      There are two clear mechanisms by which a UBI can be expected to reduce labor supply, and no plausible mechanism by which it can be expected to increase labor supply.

      Lower labor supply means higher costs for employers and higher prices for consumers.Report

      • Avatar Chip Daniels in reply to Brandon Berg
        Ignored
        says:

        “The higher your income, the lower the value of an additional dollar of income. So that reduces the incentive to work.”

        Does this actually happen in the wild?

        Do we see wealthy people work fewer hours, or stop working altogether?Report

        • Avatar Jaybird in reply to Chip Daniels
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          says:

          Do we see Middle Class people work fewer hours or stop working altogether when they come into a windfall? (For example, when their pensions finally become available?)

          Hells, yeah we do!

          When it comes to “wealthy people”, what do you mean? You mean like Paris Hilton or Daniel Day-Lewis or do you mean like the sociopathic types who make the best CEOs?Report

          • Avatar Chip Daniels in reply to Jaybird
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            says:

            Aren’t pensioners supposed to stop working?

            And I’m looking not for the anomalous individual here or there, but a pattern that justifies the claim that as people grow materially satisfied they work less.Report

            • Avatar Jaybird in reply to Chip Daniels
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              says:

              Aren’t pensioners supposed to stop working?

              I’m not understanding “supposed to”, here. You mean, morally? Legally?

              And, if my experience is worth anything, the people I know who work in the public school system here in town are reaching the age where they’ve put in 20 years and, yep, they’re ready to get their pensions.

              When I go over to their house and talk about future plans, they all talk about quitting and doing something else when they get their pensions.

              Now, when it comes to “stop working altogether”, I don’t know that they’re planning on stopping working altogether. But they’re talking about switching to do jobs that are “fun” (and less remunerative).

              But I don’t know if they’re representative of anything.

              That said, if you were wondering what the answer to your question “Does this actually happen in the wild?” is, it seems to be “Yes.”Report

              • Avatar Chip Daniels in reply to Jaybird
                Ignored
                says:

                So people retiring is your example of how people stop working when they become materially sufficient?

                What do we make of wealthy or even modestly well to do people who continue to work?
                Are they anomalous, freakish aberrations?

                Aren’t there such things as welfare cheats, people who are given benefits and yet go out and work under the table?

                Why would they do such a thing, since your theory is that they would stop working once they get their minimum sustenance satisfied?

                Or take the converse;
                If people stop working when they become comfortable, maybe this justifies a confiscatory tax on rich people since, by God, we don’t want to give them incentive to stop working!Report

              • Avatar Aaron David in reply to Chip Daniels
                Ignored
                says:

                I depends on someones relation to work, their families, health, outside interests and so on.

                My mother, who started and ran a very sucessful business, totally changed her perception on work (which she loved) as soon as she remarried. At that point it was all about building up the business in order to sell it and retire early.

                But, her money is still working, funding retirements, pensions, along with paying her dividends. So, I guess you could say she never retired, just worked smarter, not harder.Report

              • Avatar Jaybird in reply to Chip Daniels
                Ignored
                says:

                So people retiring is your example of how people stop working when they become materially sufficient?

                No, my example was people changing jobs to “fun” ones when they became materially sufficient instead of the better paying “less fun” jobs.

                What do we make of wealthy or even modestly well to do people who continue to work?

                Depends on the nature of their work. I understand why Leo DiCaprio is still making movies. I understand why Warren Buffet is still doing his thing.

                But they are outliers, surely. The people that *I* know that worked jobs that were just jobs (that paid well) that got the opportunity to switch to “fun” jobs that paid less well did so.

                Are they anomalous, freakish aberrations?

                The people themselves? Probably not. The careers they have? They probably are.

                I mean, if a slot opened up for Leo’s job, wouldn’t you apply for it?

                Aren’t there such things as welfare cheats, people who are given benefits and yet go out and work under the table?

                Yes. There are.

                Why would they do such a thing, since your theory is that they would stop working once they get their minimum sustenance satisfied?

                Different people have different minimums. And they’re not particularly good at figuring out what their minimum is.

                I’ll be able to get you evidence for that over the next month or so.Report

              • Avatar Jaybird in reply to Jaybird
                Ignored
                says:

                Related:

                Jeez Louise! *I* want that job! I WOULD WORK THAT JOB UNTIL I WAS DEAD!Report

              • Avatar Chip Daniels in reply to Jaybird
                Ignored
                says:

                But these examples only falsify the theory, not confirm it.

                Some people stop working, but others keep working, just maybe at different things.

                Different people have different limits; Give one person a million and he stops working, but give another person a million and he works twice as hard hoping to get another.

                Wouldn’t this suggest that our attitudes towards work are complex, and don’t respond to in simple dynamics?

                And doesn’t the entire history of humanity- that is, all our histories, literature, poetry and mythology- suggest that since human desires are infinite and insatiable, there is almost no amount of money which would cause people to stop wanting to acquire more?Report

              • Avatar Jaybird in reply to Chip Daniels
                Ignored
                says:

                Yeah.

                It’s why some of us jump to the conclusion that centralized control of this sort of thing is doomed, doomed, doomed.Report

              • Avatar Brandon Berg in reply to Chip Daniels
                Ignored
                says:

                Go back and read my original comment. Nobody’s saying that everyone who gets a UBI will stop working. I said that it will reduce the incentive to work, resulting in a reduction of the labor supply. Obviously that reduction will not be 100%. But it will be more than 0%.

                You really need to take some online courses on economics, or read some textbooks or something. You can’t have an intelligent position on these issues until you’ve put in the work to actually understand them.Report

              • Avatar Oscar Gordon in reply to Brandon Berg
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                says:

                …reduce the incentive to work…

                The question we have to ask is, is this necessarily a bad thing? A UBI is meant to be a safety net, not a hammock. The kind of people who would be perfectly fine hanging out in the safety net are not generally the kind of people who make good employees.

                It seems like opposition to the idea of a UBI has more to do with being offended at freeloaders than it does fiscal policy.Report

              • Avatar Stillwater in reply to Oscar Gordon
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                says:

                {{Good comment!}}Report

              • Avatar Urusigh in reply to Oscar Gordon
                Ignored
                says:

                “It seems like opposition to the idea of a UBI has more to do with being offended at freeloaders than it does fiscal policy.”

                I suspect that you’ve noted a distinction without a difference. Freeloading is pretty much a universal negative on fiscal anything, so it’s hard to imagine a theoretical case where any policy that encourages freeloading would nonetheless be good fiscal policy as compared to alternatives that discourage freeloading.Report

              • Avatar Oscar Gordon in reply to Urusigh
                Ignored
                says:

                It’s more that I accept that some percentage of the population is always going to be as useless as a football bat, such that asking them to participate in the workforce is a net drain on productivity. If we can get those folks to voluntarily exit the workforce for a nominal cost, and reduce their opportunities to scam more cash out of the system, I call that a net win.Report

              • Avatar Urusigh in reply to Oscar Gordon
                Ignored
                says:

                Shrug, I don’t disagree that there’s always going to be a percentage of people that are unemployable, but they aren’t in the workforce in the first place, they’re on disability (or should be). “Freeloader” is a term for those who could work productively, but don’t out of laziness. Allowing those who could be net producers (even if only marginally) to instead be net consumers, is by definition a net loss.Report

              • Avatar DensityDuck in reply to Chip Daniels
                Ignored
                says:

                “So people retiring is your example of how people stop working when they become materially sufficient?”

                …you do realize that retirement is a choice and not a legal mandate, right?Report

        • Avatar Brandon Berg in reply to Chip Daniels
          Ignored
          says:

          Note that I described two ways money affects incentive to work. The more wealth you have, and the higher your income, the lower the marginal utility from each extra dollar of income. This reduces the incentive to work. However, the higher your income, the more dollars you get for each hour you work. This increases the incentive to work.

          With people who earn high wages, like doctors and lawyers, these two effects are in opposition. Their high incomes reduce the marginal utility of extra income, but their high wages mean they get a lot of money for working. Since the income and substitution effects are acting in opposition, the effect of an increase in income is ambiguous. If the income effect dominates, they work less or retire sooner. If the substitution effect dominates, they work harder.

          With the UBI, there’s no ambiguity. The income effect and substitution effect both reduce incentive to work.

          To see this effect in the real world, we’d want to look at people with exogenous wealth shocks, or income not dependent on working. For example, a bunch of people delayed their retirement when the stock market crashed. Reducing their wealth caused them to work longer. Sometimes people retire early when they win the lottery. Why? The income effect. If you have $10 million, an extra $20 an hour isn’t much of an incentive to give up your free time. What do wastrels do when their parents cut them off? Get a job! Income effect. When do most people start to claim Social Security? Age 62, as soon as they get a guaranteed income stream that doesn’t depend on working. Income effect again.

          This effect is quite regularly observed in the wild.Report

          • Avatar Chip Daniels in reply to Brandon Berg
            Ignored
            says:

            Its very true that an income shock of a sudden windfall makes people content, and they indulge in non work.
            But its also true isn’t it, that this only lasts a short time?

            Like that age old tale of a guy who discovers a magic fish that grants him wishes, and his wishes start out modest, but then as he gets tired of each one, his wishes grow more and more extreme.

            The moral is that no matter how much you give someone, they always want more.

            Maybe we could agree that the incentive to work is reduced but not eliminated. And people are naturally inventive and ambitious, and constantly looking for ways to acquire more wealth.

            Which means that fears of a large number of people slacking is probably exaggerated.Report

            • Avatar DensityDuck in reply to Chip Daniels
              Ignored
              says:

              Chip, what does “not working” look like to you?

              If I live off a trust fund but also raise chickens in the backyard, and feed them and clean out the coop, and I have a cooler out front that I put eggs in with a sign saying “eggs $4/doz”, am I working as a farmer or is this just a hobby that attempts to pay for itself?Report

              • Avatar Chip Daniels in reply to DensityDuck
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                says:

                “Not working” is a lot of things.

                One is laying on the couch smoking weed.

                Another form of “not working” is a young J.K. Rowling writing a children’s story while living off unemployment benefits.

                What’s interesting is these trust fund people. That is, young people who are given wealth sufficient so they never have to work.

                And some do in fact loaf. But a lot don’t.
                Again, it is that innate human need for more that spurs people to work. That need is insatiable.

                Another interesting phenomenon is how fast the wealth is acquired.
                Give a young Bill Gates a billion, he might quit his job and sail around the world.

                But twenty years later, a billion is just another number, and he continues to work diligently.

                So my prediction is that after the first month of a UBI, some people will loaf, but as time goes on, more and more people find inventive and creative ways to keep themselves busy and productive.

                Again, I would point to human nature as the evidence.Report

              • Avatar DensityDuck in reply to Chip Daniels
                Ignored
                says:

                “So my prediction is that after the first month of a UBI, some people will loaf, but as time goes on, more and more people find inventive and creative ways to keep themselves busy and productive.”

                So your view is that if I’m not lying on the couch not moving then I’m working?Report

              • Avatar Chip Daniels in reply to DensityDuck
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                says:

                “Working” and “nonworking” are terms that cover a lot of territory;

                An entrepreneur who is at home building a business plan can be said to be in either category. Actually, a investor or real estate developer “In between projects” could be said to be either category as well.

                There is a line from a movie :
                “What do you do?”
                “I’m a writer”
                “What have you published?”
                “Nothing, yet.”
                “Oh, so you’re just a guy looking for work.”

                In fact, the government definition of “unemployed” is literally a self-defined category, as in “Are you currently looking for work”?Report

              • Avatar Urusigh in reply to Chip Daniels
                Ignored
                says:

                “What’s interesting is these trust fund people. That is, young people who are given wealth sufficient so they never have to work.

                And some do in fact loaf. But a lot don’t.
                Again, it is that innate human need for more that spurs people to work. That need is insatiable.”

                I think you’re missing half the picture, specifically social status. There’s currently a lot of social derision for “trust fund babies” who don’t work. That offsets a lot of money in terms of social status and mating value. Likewise, peer groups, aside from “more everything” people also crave social contact and for most of the populace the workplace is where we find a peer group. Being rich enough to lay around on beaches all day every day isn’t as attractive without enough equally rich friends doing the same with you. Both of those social pressures disappear with a UBI: no/reduced social stigma to non-working and correspondingly larger population of other non-workers to spend non-work time socializing with. I.E. Staying home alone all the time binging netflix or an MMO is a sad, lonely existence that is affordable on UBI but won’t get you a dating life, but doing the same with 4-5 of your best friends splitting rent on a house is more like a sitcom

                As to “people always want more” you seem to have missed the existence of streaming content. I.E. Everyone wants their food to taste good and not make them fat. A home cooked meal usually tastes better than a frozen dinner and is healthier too. Yet far more people live on microwave meals than bother learning to cook well and do it regularly. Why? Because although people “want” infinitely, the actual effort they’re willing to invest in getting that “more” is quite sensitive to the ratio of effort to reward. With literally more entertainment content than a person can ever consume available for ~$10/month, there’s going to be a LOT of people who don’t have the skills for high paying work or anything that could be bought by low wage work that they value more than the leisure time gained by not working. For an example of this in the real world look at disability fraud and unemployment; many people who become even temporarily disconnected from the workforce become LESS likely to rejoin it the longer they are out, regardless of their actual skills. Work is as much a habit and social context as it is a means of acquiring wealth. Make those aspects more available outside of work and fewer people will work.

                “So my prediction is that after the first month of a UBI, some people will loaf, but as time goes on, more and more people find inventive and creative ways to keep themselves busy and productive.”

                Counter argument: We’re all clearly reasonably well off and have some free time, but we’re here killing time reading articles and writing comments, not “learning to code” or otherwise using this time to upskill or earn more. If we, who presumably all have jobs already, are more prone to spending our leisure time on ways that are not inventive/creative/productive, what on earth makes you think that people less embedded in the social context of work will be any more self-motivated to produce than we are? People always want more, but they are also quite willing to settle for whatever is easiest. Our desire to always gain more for the same effort is counterbalanced by our desire to obtain the same gain for less effort.

                So my prediction is that after the first month of a UBI, some people will loaf, but as time goes on, more and more people join them in loafing, they’ll merely be more social and creative and inventive in ways to loaf. Any economically valuable productivity will be rare and largely accidental (e.g. for every Rowling writing Harry Potter, there will be hundreds of thousands spending their days shitposting in 4chan or writing Harry Potter slashfic)Report

              • Avatar Chip Daniels in reply to Urusigh
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                says:

                I remember in the mid seventies, as the Sexual Revolution was cresting, there were all sorts of predictions about what a world without the social structures of sexual mores would look llike.

                What would it look like, people wondered, if young people could just live together before marriage without shame?

                What sort of world would it be, if your child’s kindergarten teacher could be openly gay?

                What if pornography was not suppressed, but became widely available?

                For a lot of people, this was a nightmare scenario of people driven only by their animal lust and where marriage and family formation was forgotten.

                Yet, we today live in that world.
                Gay people live sedate bourgeoisie lives as PTA leaders and ministers.
                People live together, but eventually find a lifetime mate, just as they always have. Young people in high school and college have a few partners, but not mass orgies as was predicted.

                And porn is the most surprising thing. Every horny teenager carries a device in their back pocket that provides them with nonstop 24/7 free hard core pornography.

                I would have imagined that teenage boys (ok, me) would have just become transfixed and spent every waking moment watching porn.

                But as the saying goes…
                Dear Penthouse Letters:
                I never thought this would happen to me, but even with pornography being freely available, I was shocked to discover that most people just consume a little bit, then go on with their lives as normal.

                In other words, even when left to their own devices without the hand of church and state, people invent their own social mores of good and bad.

                Teenagers write their own codes of conduct of what sort of sexual behavior is acceptable and what is shameful. And they enforce them the way people have always done, with shunning and shaming.

                I don’t think the current mores and attitudes towards work are applied to us, and they aren’t in danger of going away.Report

              • Avatar Urusigh in reply to Chip Daniels
                Ignored
                says:

                “Yet, we today live in that world.”…”In other words, even when left to their own devices without the hand of church and state, people invent their own social mores of good and bad. Teenagers write their own codes of conduct of what sort of sexual behavior is acceptable and what is shameful. And they enforce them the way people have always done, with shunning and shaming.

                No, we really don’t live in that world. Those statements are quite contradictory. I don’t need to go back to the 70’s to point at the “Campus rape” panic that resulted in Obama’s Ed Dept “guidance letter” changing Title IX standards to remove essentially all due process protections for accused students (oh look, there’s that “hand of the state” you thought we didn’t have) or the still fresh wave of #MeToo accusations demonstrating that “a world without the social structures of sexual mores” is equally undesired by both sides of the aisle, the result there wasn’t any long-term loosening of sexual mores, only a shift in which side of the aisle has the power to create and enforce them. Aziz Anzari is case study A in how a “bad date” will get you in a hell of a lot MORE trouble now than it would in the early 70’s, it’s just which of the partners will be blamed that has changed. We’ve gone from a world where women need chaperones to avoid being accused of being a slut to a world where men need chaperones to avoid being accused of being a predator, and the only things we got out of a short period of history between them with no chaperones was a lot of STDs and fatherless children.

                “What would it look like, people wondered, if young people could just live together before marriage without shame?”

                Precisely as predicted: a world with more frequent breakups, fewer marriages, and a LOT more unwed single mothers and fatherless children. Not exactly a win for society and certainly a loss for the children.

                “What sort of world would it be, if your child’s kindergarten teacher could be openly gay?”

                One with a serious issue with pedophilia. I don’t much care which gender a teacher swings toward in their PRIVATE life, but “openly sexual” and “kindergarten teacher” REALLY don’t belong in the same social context.

                “What if pornography was not suppressed, but became widely available?”

                The fact that there are currently alliances between hard-right conservative Christians and hard-left progressive feminists on this issue strongly suggest that it hasn’t gone well. They have a point when it’s become sadly common for inexperienced boys having their first sexual encounter with a girl trying for choking her and “surprise buttsx”. Porn is a shitty form of “Sex Ed”, but it’s prevalence has “normalized” a lot of things most girls don’t actually enjoy doing but are coerced into “because that’s what all the guys expect now”. When the expectations of “first base” on the first date have gone from “kiss on the lips” to “kiss on the c*ck”, exactly who is “liberated” and is that really a “good” thing?

                Which brings us full circle to “And they enforce them the way people have always done, with shunning and shaming.” In the comments on various articles here and elsewhere regarding UBI the LACK of stigma towards non-workers is presented as a positive argument, but that explicitly removes the “shun and shame” means of enforcing the social more of work and productivity in general. The current mores and attitudes towards work aren’t merely in danger of going away, forcing their end is a stated goal of numerous UBI advocates. That’s not just my argument of what “might” happen, that’s their argument of what they INTEND to happen.

                “I don’t think the current mores and attitudes towards work are applied to us, ”
                Honestly not sure what you mean by that. We’re people greedy enough to work hard enough to have paying jobs and yet not so greedy as to spend our leisure time earning more or preparing to earn more. We’re living examples that people’s greed can and will plateau in the face of sufficiently entertaining alternatives.Report

              • Avatar Chip Daniels in reply to Urusigh
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                says:

                Saul and I joke about how I have these barely suppressed desires for a Shire type eco-topia where people voluntarily shun consumerism and acquisitiveness, and live lives of simplicity.

                And to be sure, I do!
                Wouldn’t it be a sweet world where we just work 30 hours a week, until our basic needs are met and then we enjoy the free time to pursue hobbies and recreation?

                And greed and inequality is unknown since we all share equally in the bounty that modern technology provides?

                Ahh, such a life!

                But of course, this is silly. Most people don’t really want to live like that.

                Ironically it was the experiments in socialist countries that proved that.

                Those people DID get all their basic needs met, and DIDN’T need to work hard, and couldn’t even get fired.
                And yet, most of them worked hard, either at their job or on the side in the black market economy.

                And wasn’t it a staple criticism of welfare, that people who were receiving benefits were secretly going out and getting jobs on the side?
                Why would they do that, if they could just loaf instead?

                I guess we just have different experiences and viewpoints on human nature.

                I think often of that show Dirty Jobs with Mike Rowe, and how he showed that even people who had jobs we find awful, like mucking out some fetid swamp, actually took a lot of pride in their work and did it diligently. Not just for a paycheck, but because they found meaning and worth in being productive.

                That seems to me to be something very intrinsic to our nature, and not something that really needs to be imposed from without.Report

              • Avatar Urusigh in reply to Chip Daniels
                Ignored
                says:

                If you ever find that Shire, do pass the word. I’d like to retire there, at least for a little while. 🙂

                “And yet, most of them worked hard, either at their job or on the side in the black market economy.”

                I’d like your source that “most” of them worked hard. I haven’t found that to be true of any organization of any size I’ve ever encountered. The Pareto Principle seems as applicable to Soviet systems as anywhere else.

                “And wasn’t it a staple criticism of welfare, that people who were receiving benefits were secretly going out and getting jobs on the side?”

                Shrug, I’ve only encountered the opposite formulation: complaints that even people with jobs are defrauding the government on the side (though disability is the example here more often than welfare). So I’d question the order of events and direction of causation on that combination.

                “Not just for a paycheck, but because they found meaning and worth in being productive.”

                I personally agree with this philosophy, but contact with other human beings has shown me repeatedly that more people have bullshit jobs they regard as meaningless than dirty jobs they regard as meaningful. I’ve also seen a decent amount of research that implies that video games largely fulfill this same desire, so UBI is at least as likely to give you “productive” people whose meaning and worth isn’t being the best plumber in town but rather the best DPS in their MMO guild. Just as porn is the junk food of intimacy, tv drama is the junk food of social connection, video game achievement is the junk food of work productivity.

                “That seems to me to be something very intrinsic to our nature, and not something that really needs to be imposed from without.”

                That’s a lovely thought, but history and research suggests that it’s rather easily subverted or substituted towards activities that are nonetheless not economically productive, like my WH40K hobby or hours spent trying to beat F2P games without actually spending money on the gatcha. 😉Report

              • Avatar Chip Daniels in reply to Urusigh
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                says:

                You’re touching on something that we leftists argue about with respect to a UBI versus a federal jobs guarantee.

                Some leftists like Erik Loomis over at LGM hold that a UBI isn’t going to work because people have an inherent craving for work as part of how they find meaning in life. So some sort of New New Deal jobs program is needed.

                I tend to fall on this side; Although I am not afraid of a UBI making us into loafers, I think taking that same amount of money and directing it to CCC or WPA type infrastructure programs would be more beneficial in the long run.

                And we may find agreement in this much- that even if I am right that a very low percentage of people loaf, it may be true that it doesn’t take more than that to cause societal problems.

                Even at the depths of the Great Depression the unemployment rate was “only” 25%.

                If only 20% of people find themselves unable to cope with their newfound jobless freedom, a large pool of young men without prospects or futures or dreams is a powerfully explosive situation.Report

              • Avatar Urusigh in reply to Chip Daniels
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                says:

                “If only 20% of people find themselves unable to cope with their newfound jobless freedom, a large pool of young men without prospects or futures or dreams is a powerfully explosive situation.”

                Yeah, that’s one of the historical issues that worries me in that scenario. Violent revolutions tend to occur anytime ~30%+ of working age men are unemployed for any significant length of time. Unemployed young men, particularly fatherless young men, are the primary demographic for drug use, crime, sexual assaults, gang recruitment, school shootings and terrorism. Given that male workforce participation has already been sliding for decades, UBI could easily multiply that demographic and the associated negative outcomes.

                “I think taking that same amount of money and directing it to CCC or WPA type infrastructure programs would be more beneficial in the long run.”

                I’d agree that’s better than UBI, though I’m still wary of expanding gov and pointless boondoggle infrastructure projects (not saying they all are, just that “bridge/rail to nowhere” is a thing). I’d be open to it if filtered down as grants to states and lower to implement in ways that best fit local needs and communities. It’s nice to find a point of policy where our very different viewpoints can converge.Report

              • Avatar Oscar Gordon in reply to Urusigh
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                says:

                I could see UBI being contingent on public service. I doubt there would ever be enough work to keep those living on UBI employed full time, but it could be something like military reserves (one weekend a month, 2 weeks a year), with exceptions for the fully disabled, etc.Report

  4. Avatar Urusigh
    Ignored
    says:

    Shrug. It’s not a particularly useful experiment. The primary concerns about ‘free money’ schemes isn’t how the person will act over the course of a few months, we already have unemployment insurance to use for case studies in that regard. The true question is this, how will people’s decisions change if something like UBI becomes a reliable, socially acceptable way of life? That moves the context entirely away from “safety net for a rough patch” to treating ‘hikkimori NEETs dying unnoticed after complete social withdrawal to binge streaming TV/games’ as a valid life choice rather than a slow form of suicide.

    Because let’s face it, judging by how we already spend our leisure time and disposable income, the percentage of recipients who will happily stay home in their government subsidized housing and watch netflix until fast food and a sedentary lifestyle kills them far far FAR outnumber the tiny minority who will use the opportunity to upskill for a better job or independently produce the next “Great American Novel” or other work of meaningful art. The vast majority of people take the path of least resistance, so before we lower the standard, we really need to have an honest conversation about where that path leads and if it’s really a life we would want for anyone we care about.Report

  5. Avatar Jaybird
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    says:

    Speaking of a UBI…

    Report

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