A new study has found that the social scheme to introduce Universal Basic Income (UBI) would be a disaster for society.
The plan involves paying all citizens a basic income, whether they work or not.
The radical idea has often been touted by radical Democrats.
In the 2020 election, the Democratic Party’s presidential primary candidate Andrew Yang ran on plans to introduce UBI in America.
Yang promises to give everyone $1,000 each per month.
Andrew Yang’s campaign strategy was to hyper-focus on UBI as a single issue.
Yang’s version of UBI was alluring in its simplicity.
Every person in the country, rich or poor, old or young, would receive $1,000 per month.
A vote for Yang was a vote for “free money.”
Many from his own party denounced the idea of giving rich people $1,000 per month.
However, Yang held strong to the payment being universal.
By making sure every person gets $1,000, Yang’s plan would avoid some incentive issues and the bureaucracy that accompanies typical welfare programs.
Yang gave several reasons for wanting to introduce UBI.
One primary concern Yang had was that advancing technology, such as artificial intelligence (AI), would soon begin to displace many low-skilled jobs.
UBI would help the country get ready to take care of displaced workers.
But Yang claimed a myriad of benefits for UBI beyond just a safety net.
UBI would free people up to be creative and entrepreneurial, he claimed.
A guaranteed income would allegedly provide people with the security they need to pursue their passions, start businesses, or go back to school.
Contrary to the claims of detractors, a UBI wouldn’t increase laziness but would only improve people’s productivity, or so he claimed.
Sometimes, UBI supporters even highlighted how it would make the government smaller if it replaced our current complicated welfare system.
However, no advocate of this policy has ever explained a realistic path toward abolishing current welfare programs.
Not have they ever provided evidence to support this work-free UBI-supported utopia touted by the radical Left.
Nevertheless, a study has now emerged that put the socialist scheme to the test.
Researchers Eva Vivalt, Elizabeth Rhodes, Alexander W. Bartik, David E. Broockman, and Sarah Miller’s working paper, titled “The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States,” was recently put out by the National Bureau of Economic Research (NBER).
The study “leverag[ed] an experiment in which 1,000 low-income individuals were randomized into receiving $1,000 per month unconditionally for three years.”
What were the results?
First, it made the recipients poorer.
“Overall, the transfers led to a reduction in annual total individual income of about $1,500 in our main survey measure, compared to the control group,” the researchers revealed.
People worked less (1.3 hours per week less) and stayed unemployed for longer, the study found.
Not only do the recipients work less; this happened to other adult members of the household as well.
Unemployment duration “increased by 1.1 months” for recipients.
In addition, people didn’t use this extra time to find a better job.
Recipients appear to be more selective in their applications, but the authors say, based on their survey measurements:
“We do not see much in the way of differences in the types of jobs participants applied for.
“The results do not support any changes in quality of employment.”
The researchers also looked at whether people were doing other productive things during unemployment.
The authors examine whether the receipt of basic income increases entrepreneurship.
While they find people claiming to have more entrepreneurial intention, this does not translate into actual entrepreneurial activity.
Most of the recipients also failed to seek out further education.
The authors say, “By and large, we do not observe significantly improved education outcomes in our sample, though there are some indicators of minor improvements.”
So what did people do with the extra time they got from working less?
The study found that the recipients simply relaxed.
In concluding the results of the paper, the authors say:
“[P]articipants in our study reduced their labor supply because they placed a high value, at the margin, on additional leisure.”
The authors provide an even more in-depth breakdown of time usage from their study.
They estimate the number of minutes per day allocated doing different activities.
Apart from the “other activities” category, the biggest increases in time were non-commuting transportation, social leisure, and solitary leisure.
Some time was also spent doing work around the home and “self-care.”
On the flip side, people spent less time working, sleeping, caring for children, generating income, and engaging with their communities.
Furthermore, less time was spent on self-improvement, searching for jobs, and exercise.
The numbers here may seem small, but if you apply this to millions of people daily, it becomes very weighty.
Not all of the results were statistically significant, but the major point is, that overall, people used the time they gained from working less to engage in leisure.
There is no evidence of increased use of time in other categories UBI proponents purport to care about, such as creative output, entrepreneurship, community engagement, self-improvement, or even spending time with children.
At best, the evidence shows a UBI would cause people to work less and relax more.
As the case for UBI is built on unleashing the stifled engine of human creativity, it seems that the scheme isn’t up for the job.
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