What Happens When People Get Cash With No Strings Attached?
Roosevelt Institute
426

A famous social experiment in the 1970s enlisted a random selection of people in six U.S. states and guaranteed them enough money to live on through tax credits equivalent to the poverty line.

Hmmm.. The wording there is a bit.. clunky. In reading the reports of those studies from Robinson Hollister and Alice O’Connor (two of the people involved in designing and running those studies) the tax credits were the equivalent to the difference between their earned income and the poverty line. That may not seem like much of a difference from what you said but the effect is significantly different.

Everyone got different amounts. If the poverty line for a particular family situation was $7,000/year and your family earned $6,700/year, you got an additional $300. Another identically situated family earning $4,000/year got $3,000/year.

This “negative income tax” had only small effects on work: a 10 percent increase in the cash transfer people received decreased work by at most one percent.

Which translated to a 13% overall reduction in family labor. That’s not the end of the world but it isn’t nothing either.

Like the negative income tax experiments, the casino dividends improved children’s education, resulting in a one-year increase in school attendance.

Is that a direct result of the payments or a side-effect based on the structure of their overall program? You’re also attributing all of these results to the cash distributions but a part of their whole casino revenue program also funds subsidized housing, local medical care facilities and the reservation schools. What percentage of each result is attributable to the cash dividend vs. the other programs? For example, while drug use has gone down for minors, it hasn’t changed at all for adults. So the cash dividends don’t seem to have any real effect there.

They pay “shares” to both adults and to minors. But the minor’s shares are deposited into a trust in the minor’s name. Neither the minor nor their family can touch that money until the minor turns 18. If/when they want to claim it they have to provide a copy of their high school diploma or GED certificate. Without one, they can never get that money.

There is an effect either way but if that effect is based on the idea of accessing some future trust fund account and not the actual stipend being paid now, that throws a major twist in most of the current UBI proposals.

But overall I agree we need more studies. I don’t see how, for example, using the Alaska example renders anything useful. Would any reasonable person cease working for $800/year? Even the Casino dividend example is only $4,000/year. That may be enough to cover a family’s electric bills for the year but it isn’t anywhere close to what UBI proponents are suggesting be given out. My understanding is that those casino dividends are now in the range of $8,000/year and even that is still well under what most UBI proponents are suggesting.

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