Universal Basic Income Studies
The National Bureau of Economic Research (NBER) published a new November 2024 working paper titled “Household Responses to Guaranteed Income: Experimental Evidence from Compton, California.” The study provided 695 households with $500 per month for two years, and more than 1,400 were assigned as a control group.
Part-time workers registered a 13-percentage point lower labor force participation rate, though full-time employment volumes remained little changed. Excluding the transfer payments, monthly income levels fell by $333, and monthly expenditures declined by $302. Household debt balances decreased, but the decline was statistically insignificant. Housing security improved, but there were “no overall effects on indices of psychological and financial well-being.”
There was a modest divide regarding the frequency of the universal basic income. Twice-monthly transfer payments made recipients more likely to own a car, enjoy lower credit card debt, and report better food security than participants obtaining quarterly transfers.
Researchers learned there was “weak evidence of reduced alcohol consumption, and moderately strong evidence of relative increases in tobacco consumption.” The paper concluded: “In sum, the cash transfers have a strong positive impact on the index of housing security, but no clear impact on the indices of psychological well-being, financial security, or food security.”
This is not the first study to find holes in the universal basic income premise. In July, the NBER published a working paper titled “The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States.”
Researchers gave 1,000 individuals in Illinois and Texas $1,000 per month over three years beginning in 2019. The average household income among the participants was about $29,000. They also gave $50 per month to a control group of 2,000 people. The test subjects receiving a basic income guarantee were less productive and unlikely to bolster their employment status or enhance their human capital. In fact, the free cash reduced their annual income by $1,500 because of a 2% drop in labor market participation and clocking in 1.3 fewer hours per week.
“You can think of total household income, excluding the transfers, as falling by more than 20 cents for every $1 received,” wrote Eva Vivalt, a University of Toronto economist who co-authored the study, on X. “This is a pretty substantial effect.”
Not all hope was lost for the economists. They found that the younger recipients invested more in their education. However, this is a subjective conclusion since the United States has endured the consequences of the most highly educated generation in history as students study fields that contribute little to the modern economy.
Over the years, Liberty Nation News has reported on the various studies analyzing the effects of a universal basic income. They typically found that no-strings-attached free cash highlights the same trends: money mismanagement, little or no improvement to their financial well-being, and reduced job satisfaction and incomes. Additionally, the data also revealed little difference between those receiving small cash payments and large capital injections.
Damon Jones, a professor at the University of Chicago Harris School of Public Policy, summarized these discoveries on X this past summer: “So, free time is good & guaranteed income recipients use some of the money to free up time. The results are bad if you want low income people to be doing other things with their time, for example working.”
Populations and Artificial Intelligence
Historians have posed a variety of theories about the chief culprit behind the fall of the Roman Empire, from foreign expansionism to monetary debasement. However, the main contributor was the population collapse. In AD 400, Rome’s population was more than one million. A hundred years later, it cratered to about 100,000. Put simply, households were not having children. The upper echelons of society did not want kids.
The United States and many advanced economies are witnessing the same trends. The US population is poised to decline in 2080. South Korea has one of the fastest aging populations and one of the lowest birth rates in the world. China abandoned the one-child policy, and the government is urging households to spur fertility rates.
Meanwhile, the artificial intelligence boom has sparked a tsunami of fears surrounding a robotic takeover. Even if T-1000s are not enslaving mankind, there is consternation that AI will wipe out jobs or, at the very least, eliminate brain cells. Would fewer employment prospects exist if more companies embrace generative AI, robots, and other technological advancements? Conservative and libertarian economists have dismissed this concern, purporting that AI will produce new opportunities, expanding the pie like the automobile and computers.
Still, these might be generational challenges that will alter indebted civilizations. Will universal basic income schemes be the panacea offered by governments? Politicians will undoubtedly introduce these programs to complement the massive welfare state. Whether it will breed exceptional results or the same unintended consequences will inevitably require further studies – and the doubling down by statist officials and bureaucrats.
For now, the studies aren’t showing positive outcomes.
Andrew Moran, Economics Editor at LibertyNation.com. Andrew has written extensively on economics, business, and political subjects for the last decade. This article was first published HERE
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