UBI: Still A Terrible Idea

Who should you trust: the Science, or your lying eyes?

This is a question that seems to recur surprisingly often. Lots and lots of professionals in the “social sciences” are invested in a worldview that goes against most people’s common sense and day-to-day experience, and they tend to produce “science” that validates their worldview rather than common sense–but too often at the cost of, shall we say, “creativity” in how the data is selected or analyzed or presented.

If you sift the wheat from the chaff, if you look at the studies that have the best methods, or stand the test of time, or just look at the underlying data, you find that, contrary to what some would say, there is actually very powerful scientific evidence to validate most people’s common sense and day-to-day experience.

The fact that established social scientists seem so invested in disproving reality creates opportunities for those brave enough to look at what’s in front of them. One of our favorite such people is Brad Wilcox, whose Institute for Family Studies seems dedicated to using the most sophisticated social science methods to show that your grandmother was right: yes, married people are happier than single people; yes, divorce is terrible for kids and for parents.

Our personal favorite is the finding that married people have sex more often, and report being more satisfied with their sex lives, than single people. This would seem like common sense, since after all married people sleep in the same bed every night, were it not for decades of popular culture which has taught us that married people have sexless lives of drudgery and misery and that single life is an endless joyful bacchanal.

All of which is a longwinded way of saying that there’s a new study on UBI.

The sophisticated people view of UBI (which can be found on the left, on the right, on the technocratic center, and among libertarians) is that it is the best solution to job losses caused by advanced technology, and the best way to get rid of our burdensome and meddlesome social welfare bureaucracies. People can be freed from the shackles of drudgery and engage in their passions!

The commonsense view is that if you give people a guaranteed income, they will get lazy, spend it on crap, and everyone will be worse off.

Which is correct?

According to this new study, the common sense view is correct.

The first thing that must be said is that it is a surprisingly robust, long-term study: the study “provided $1,000/month unconditionally for 3 years to 1,000 individuals in the treatment group, with a group of 2,000 people receiving $50/month serving as the control.” That’s a big sample and that’s a long time. The study looked at people in low income counties in Texas and Florida, and collected voluminous data from high-response questionaires and a custom mobile app. This is a much, much better study design than any UBI study we can recall seeing, certainly since the high quality RCTs from the ’60s and the ’70s when the idea was trendy then.

It’s all fascinating. Genuinely. Here’s a good X dot com thread by the author explaining the main findings from the study. And here’s the whole study.

But–the bottomline? “The transfer caused total individual income to fall by about $1,500/year relative to the control group, excluding the transfers. The program resulted in a 2.0 percentage point decrease in labor market participation for participants and a 1.3-1.4 hour per week reduction in labor hours, with participants’ partners reducing their hours worked by a comparable amount. The transfer generated the largest increases in time spent on leisure, as well as smaller increases in time spent in other activities such as transportation and finances. Despite asking detailed questions about amenities, we find no impact on quality of employment, and our confidence intervals can rule out even small improvements. We observe no significant effects on investments in human capital, though younger participants may pursue more formal education.”

The bottomline is people worked less, and they worked less not because they pursued their passions or caught up on their education, or cared for their children. They worked less because they got lazy, because they received unconditional income.

This will shock every ideological progressive, and surprise no person who is at all acquainted with human nature.

Especially in a world where drugs (and “drugs” in the form of very compelling digital entertainments) are so plentily available, if we decide it’s ok to lose low-skill jobs and replace them with UBI, we would create an absolute social disaster for the bottom 65% of the population. We have to figure out something else.

It’s not just us saying that. It’s the Science.

Policy Links

#Manufacturing – Over at City Journal, Michael Gibson writes about the important new hub of defense tech startups in El Segundo, California. Watch this space.

#IndustrialPolicy – Interesting new NBER paper which looks at the investments by the Chinese government in AI versus similar investments by private venture capitalists. “We draw three important contrasts between government and private VC funds: (i) government funds are spatially more dispersed than private funds; (ii) government funds invest in firms with weaker ex-ante performance signals but these firms exhibit growth rates exceeding those of firms in which private funds invest; and (iii) private VC funds follow government VC investments, especially when hometown government funds directly invest on firms with weaker ex-ante performance signals.” In sum, it looks like the government isn’t great at “picking winners and losers”, but neither is it terrible.

#IndustrialPolicy – Speaking of, the excellent Statecraft newsletter has a new article looking at a piece of the government you may not have heard of: DRIVe, which is the in-house biotech venture capital firm of BARDA, the Biomedical Advanced Research and Development Authority. BARDA “helped bring Moderna’s mRNA vaccine through clinical trials to market.”

#Debt – The Washington Post editorial board asked several think tanks, both left and right, how to reduce the national debt and made an article out of it. This is a worthy effort! “Each proposal reduces the ratio of debt to gross domestic product by at least one-third by 2054 relative to the Congressional Budget Office’s current forecast. In contrast to Republican claims that cutting wasteful spending is sufficient and Democrats’ belief that raising taxes on the rich is enough, the think tanks all curbed debt through both revenue raisers and spending cuts, though the precise mix varies from plan to plan.” If you’ve followed budget discussions, the proposals will not surprise you: they’re a mix of entitlement reform, higher taxes on high earners, and closing of loopholes. Still, again, this discussion is important and it’s good to have the Washington Post air it honestly.

#Antitrust – Lina Khan’s FTC investigates McKinsey.

#BigTech – Switzerland now requires all government software to be open source.

Chart of the Day

Via Mark Krikorian: a visual representation of the lack of diversity in today’s immigrant population compared to a century ago:

Meme of the Day