If we’re talking economic efficiency, then your own utility should be included.
My starting assumption is that I decided not to work because I believe I am better off. We are wondering if my decision to stop working was inefficient, i.e. if it makes the world worse off despite me voluntarily choosing to do it. So the salient questions are (i) how does this affect everyone else? Does it cause harms to the rest of the world? (ii) am I predictably making a mistake (e.g. by not adequately accounting for the ways in which working benefits my future self)?
In a UBI scenario, you should be able to stop working while still consuming
Yes, I’m talking about the additional consumption if you earn+spend more money.
Yes, I’m talking about the additional consumption if you earn+spend more money.
Generally speaking, if we’re asking “what’s the impact of policy X?” in economics, we:
consider how each agent will react to policy X
compare outcomes under the decisions which each agent will actually make
Key point: we do not compare outcomes under decisions the agents could make (i.e. their choice-sets), we compare outcomes under decisions they will make, in both a with-policy scenario and a without-policy scenario.
In this context, that means we ask
How will you react to the UBI—i.e. how will your production and consumption (as well as everyone else’ production and consumption) change in a world with UBI vs a world without UBI?
What does that imply about how nice the world will be with or without UBI?
The question you are currently asking is instead “given UBI, how will production and consumption change if I do vs do not work?”. But that’s not the relevant question for evaluating UBI. For evaluating UBI, the questions are
“given UBI, will you work?”—to which we’ll assume the answer is “no”, for current purposes
given that, is the world better off with (no UBI + you working) or (UBI + you not working)
In particular:
We are wondering if my decision to stop working was inefficient
This is not the question. The question is whether UBI is inefficient, given that you will react to the UBI by not working. The question is not whether your own decision is inefficient.
(If the question were whether your own decision is inefficient, then the discussion of externalities would be roughly correct; at that point it’s basically just the usual question of whether individual utility-maximization produces efficient outcomes.)
Many people’s view of a UBI depends on whether recipients in fact stop working. For example, people are interested in running studies on that question, often with a clear indication that they would support a UBI if and only if recipients don’t significantly decrease hours worked.
What are we to make of this concern?
A natural way to understand it is to separate the effects of UBI into {recipients may decide to reduce hours worked} from {all other effects}. Then the concern could be understood as a suggestion that this change in hours worked is bad even if the the other effects of a UBI would be good. Put differently, people who express this concern may believe that a UBI would be good if we magically causally intervened to ensure that people continued working the same amount, while the effects of UBI alone are more uncertain.
The reason to respond to this view, rather than directly analyzing all the effects of a UBI together, is that it seemed to me to indicate a moral error that could be separated from the other complex empirical questions at stake.
(Given that this seems like a kind of unenlightening thread about a topic that’s not super important to me, I’ll probably drop it.)
(Given that this seems like a kind of unenlightening thread about a topic that’s not super important to me, I’ll probably drop it.)
Reasonable. If you want a halfway-decent defense of the view that whether UBI is a good idea should depend on whether recipients stop working (while still accepting that work is not inherently good), you might like this.
Learning a lot from this discussion, thank you. I am in agreement with idea that viability of UBI depends on people who are currently working more or less continuing to work. If everyone stopped working, then obviously UBI (and civilization) fails. In fact, you need a large proportion (dependent on level of UBI) to keep working and paying taxes, otherwise UBI consumption simply fires inflation. On the other hand, everyone who does work has more spending power than those who don’t so it seems to me there is powerful incentive to work. I can see that people might use it to reduce work hours, but given experiments on 4 day week, I dont think that would necessarily reduce productivity in many industries.
I cant see a way to determine by reason alone that UBI will be successful without actually running trials over long period to assess response.
My starting assumption is that I decided not to work because I believe I am better off. We are wondering if my decision to stop working was inefficient, i.e. if it makes the world worse off despite me voluntarily choosing to do it. So the salient questions are (i) how does this affect everyone else? Does it cause harms to the rest of the world? (ii) am I predictably making a mistake (e.g. by not adequately accounting for the ways in which working benefits my future self)?
Yes, I’m talking about the additional consumption if you earn+spend more money.
Generally speaking, if we’re asking “what’s the impact of policy X?” in economics, we:
consider how each agent will react to policy X
compare outcomes under the decisions which each agent will actually make
Key point: we do not compare outcomes under decisions the agents could make (i.e. their choice-sets), we compare outcomes under decisions they will make, in both a with-policy scenario and a without-policy scenario.
In this context, that means we ask
How will you react to the UBI—i.e. how will your production and consumption (as well as everyone else’ production and consumption) change in a world with UBI vs a world without UBI?
What does that imply about how nice the world will be with or without UBI?
The question you are currently asking is instead “given UBI, how will production and consumption change if I do vs do not work?”. But that’s not the relevant question for evaluating UBI. For evaluating UBI, the questions are
“given UBI, will you work?”—to which we’ll assume the answer is “no”, for current purposes
given that, is the world better off with (no UBI + you working) or (UBI + you not working)
In particular:
This is not the question. The question is whether UBI is inefficient, given that you will react to the UBI by not working. The question is not whether your own decision is inefficient.
(If the question were whether your own decision is inefficient, then the discussion of externalities would be roughly correct; at that point it’s basically just the usual question of whether individual utility-maximization produces efficient outcomes.)
Many people’s view of a UBI depends on whether recipients in fact stop working. For example, people are interested in running studies on that question, often with a clear indication that they would support a UBI if and only if recipients don’t significantly decrease hours worked.
What are we to make of this concern?
A natural way to understand it is to separate the effects of UBI into {recipients may decide to reduce hours worked} from {all other effects}. Then the concern could be understood as a suggestion that this change in hours worked is bad even if the the other effects of a UBI would be good. Put differently, people who express this concern may believe that a UBI would be good if we magically causally intervened to ensure that people continued working the same amount, while the effects of UBI alone are more uncertain.
The reason to respond to this view, rather than directly analyzing all the effects of a UBI together, is that it seemed to me to indicate a moral error that could be separated from the other complex empirical questions at stake.
(Given that this seems like a kind of unenlightening thread about a topic that’s not super important to me, I’ll probably drop it.)
Reasonable. If you want a halfway-decent defense of the view that whether UBI is a good idea should depend on whether recipients stop working (while still accepting that work is not inherently good), you might like this.
Learning a lot from this discussion, thank you. I am in agreement with idea that viability of UBI depends on people who are currently working more or less continuing to work. If everyone stopped working, then obviously UBI (and civilization) fails. In fact, you need a large proportion (dependent on level of UBI) to keep working and paying taxes, otherwise UBI consumption simply fires inflation. On the other hand, everyone who does work has more spending power than those who don’t so it seems to me there is powerful incentive to work. I can see that people might use it to reduce work hours, but given experiments on 4 day week, I dont think that would necessarily reduce productivity in many industries.
I cant see a way to determine by reason alone that UBI will be successful without actually running trials over long period to assess response.