But what if that’s an unrealistic goal. The whole point of UBI is that it’s a lot easier to get people into jobs if you let them keep their ‘welfare’ at the same time, albeit with some phase-out. (I.e. the people who are actually getting money on net are those with low-value jobs)
I don’t understand what that means. You’ll never be able to get everyone off unemployment into a job; you’ll surely be able to get some people off unemployment into a job.
The whole point of UBI is that it’s a lot easier to get people into jobs if you let them keep their ‘welfare’ at the same time
This is entirely not obvious to me, given that the motivation to go get a job will be less.
This is entirely not obvious to me, given that the motivation to go get a job will be less.
Given the way welfare is set up in the US right now, I’d argue, quite strongly, that the motivation to go get a job would be more, given, under many circumstances, that you have to reach upper-middle class levels of income before you reach the same standard of living achievable on welfare. (I’m a staunch libertarian, mind. UBI isn’t my ideal, far from it, but it’s a hell of a lot better than what we have right now.)
I strongly recommend anybody opposing the UBI on general principle grounds run a google search on “Welfare Cliff”, and research exactly how terrible the existing system is. Don’t let the perfect be the enemy of the better.
Yup. Much of the advocacy for UBI can be rephrased as “let’s get rid of welfare cliffs!” given that mostly any sane (cliff-less) welfare system can be rephrased as a UBI plus a marginal tax/phaseout schedule. (Sometimes these are dependent on other factors like the presence of children, but you could also account for such variations in a UBI-based system if you really wanted to.)
If I understand the current US system correctly, if you are a single person who is able to work and simply chooses not to do so, you may not qualify for any welfare whatsoever. If that is correct, a UBI would surely decrease your incentive to work.
Yes, this is the least convenient case. But UBI can still be a win in the longer run since it obviates the case for minimum wages and a lot of onerous regulation in the labor market. And let’s be honest, if there are single folks who would be induced to exit the labor market under a (realistic) UBI, they’re probably not getting much done at work in the first place!
This is entirely not obvious to me, given that the motivation to go get a job will be less.
Not sure what you mean. If you can have a paying job and some of your ‘welfare’ on top of it, the incentive is obviously greater than if getting a paying job meant giving up all welfare. This matters, especially for low-paying jobs which are the kinds welfare recipients are most likely to get.
If you can have a paying job and some of your ‘welfare’ on top of it, the incentive is obviously greater than if getting a paying job meant giving up all welfare.
Not at all. If the UBI is meaningfully large (there is really no point in something like $100/month), you would be able to live on it. If you can live on UBI, the incentive to find a job is less because the alternatives are MUCH more pleasant.
The carrot is slightly larger, but the stick becomes almost non-existent.
Are you comparing UBI recipients to people who get no subsidy/welfare at all? I’m not sure that’s a meaningful comparison. And one can structure the UBI amount such that utility of income is still steeply increasing at the margin—or, phrased differently, such that folks will most likely want to supplement their UBI by doing some work on the side. It’s a lot harder to do that if the premise is that you’re “looking for work at this time” but not actually getting market income.
Are you comparing UBI recipients to people who get no subsidy/welfare at all? I’m not sure that’s a meaningful comparison.
UBI recipients, by the virtue of that “U”, are also known as “the entire population”. I am a bit confused which “comparing” are you talking about.
one can structure UBI such that utility of income is still steeply increasing at the margin
Can you demonstrate? If you increase the marginal utility of earned income at some level, you will by the same token decrease that marginal utility at some different level. Unless you want UBI to monotonously increase with the amount earned, of course...
people will want to supplement their UBI by doing some work
Humans are satisficers. If UBI is sufficient to pay for a room, an internet connection, and enough pizzas, why should I work? Work takes an awful lot of time, is often unpleasant, the bosses are not the nicest people, etc. Much easier to spend time in front of a screen or hanging out with your friends.
And by the time your low-motivation teenager figures out that money is useful and that advancing in life could be worthwhile, he is in his late 20s and basically unemployable—not only because of lack of skills, but also because of lack of work ethic.
I’m not talking about phaseouts or things like that, I’m just saying that the UBI amount can be set at a level where looking for some work on the side has a high utility at the margin.
Humans are satisficers. If UBI is sufficient to pay for a room, an internet connection, and enough pizzas, why should I work? Work takes an awful lot of time, is often unpleasant, the bosses are not the nicest people, etc.
Well, by working, you can pay for a nicer room, a faster connection, and better pizza toppings. Yes, many jobs are unpleasant, but some are not. Especially as the UBI would make things like minimum wages obsolete, so folks would be free to seek better work conditions in exchange for some combination of higher skills and giving up some pay.
There are factors pointing both ways here. If getting a job means giving up benefits for the unemployed, or means-tested welfare that you’ll become ineligible for, that’s a disincentive to get a job. But utility isn’t linear in money, and so a job paying N dollars will always be more attractive to someone making zero dollars than the same job is to someone on UBI worth K dollars—and increasingly so the higher K is. That’s also a disincentive.
Which of these disincentives is bigger depends on the sizes of N and K and the specifics of the welfare system. I think I’d usually expect the incentive landscape on the margins to be friendlier under UBI, but it’s by no means a certainty.
But what if that’s an unrealistic goal. The whole point of UBI is that it’s a lot easier to get people into jobs if you let them keep their ‘welfare’ at the same time, albeit with some phase-out. (I.e. the people who are actually getting money on net are those with low-value jobs)
I don’t understand what that means. You’ll never be able to get everyone off unemployment into a job; you’ll surely be able to get some people off unemployment into a job.
This is entirely not obvious to me, given that the motivation to go get a job will be less.
Given the way welfare is set up in the US right now, I’d argue, quite strongly, that the motivation to go get a job would be more, given, under many circumstances, that you have to reach upper-middle class levels of income before you reach the same standard of living achievable on welfare. (I’m a staunch libertarian, mind. UBI isn’t my ideal, far from it, but it’s a hell of a lot better than what we have right now.)
I strongly recommend anybody opposing the UBI on general principle grounds run a google search on “Welfare Cliff”, and research exactly how terrible the existing system is. Don’t let the perfect be the enemy of the better.
Yup. Much of the advocacy for UBI can be rephrased as “let’s get rid of welfare cliffs!” given that mostly any sane (cliff-less) welfare system can be rephrased as a UBI plus a marginal tax/phaseout schedule. (Sometimes these are dependent on other factors like the presence of children, but you could also account for such variations in a UBI-based system if you really wanted to.)
If I understand the current US system correctly, if you are a single person who is able to work and simply chooses not to do so, you may not qualify for any welfare whatsoever. If that is correct, a UBI would surely decrease your incentive to work.
Yes, this is the least convenient case. But UBI can still be a win in the longer run since it obviates the case for minimum wages and a lot of onerous regulation in the labor market. And let’s be honest, if there are single folks who would be induced to exit the labor market under a (realistic) UBI, they’re probably not getting much done at work in the first place!
Not sure what you mean. If you can have a paying job and some of your ‘welfare’ on top of it, the incentive is obviously greater than if getting a paying job meant giving up all welfare. This matters, especially for low-paying jobs which are the kinds welfare recipients are most likely to get.
Not at all. If the UBI is meaningfully large (there is really no point in something like $100/month), you would be able to live on it. If you can live on UBI, the incentive to find a job is less because the alternatives are MUCH more pleasant.
The carrot is slightly larger, but the stick becomes almost non-existent.
Are you comparing UBI recipients to people who get no subsidy/welfare at all? I’m not sure that’s a meaningful comparison. And one can structure the UBI amount such that utility of income is still steeply increasing at the margin—or, phrased differently, such that folks will most likely want to supplement their UBI by doing some work on the side. It’s a lot harder to do that if the premise is that you’re “looking for work at this time” but not actually getting market income.
UBI recipients, by the virtue of that “U”, are also known as “the entire population”. I am a bit confused which “comparing” are you talking about.
Can you demonstrate? If you increase the marginal utility of earned income at some level, you will by the same token decrease that marginal utility at some different level. Unless you want UBI to monotonously increase with the amount earned, of course...
Humans are satisficers. If UBI is sufficient to pay for a room, an internet connection, and enough pizzas, why should I work? Work takes an awful lot of time, is often unpleasant, the bosses are not the nicest people, etc. Much easier to spend time in front of a screen or hanging out with your friends.
And by the time your low-motivation teenager figures out that money is useful and that advancing in life could be worthwhile, he is in his late 20s and basically unemployable—not only because of lack of skills, but also because of lack of work ethic.
I’m not talking about phaseouts or things like that, I’m just saying that the UBI amount can be set at a level where looking for some work on the side has a high utility at the margin.
Well, by working, you can pay for a nicer room, a faster connection, and better pizza toppings. Yes, many jobs are unpleasant, but some are not. Especially as the UBI would make things like minimum wages obsolete, so folks would be free to seek better work conditions in exchange for some combination of higher skills and giving up some pay.
There are factors pointing both ways here. If getting a job means giving up benefits for the unemployed, or means-tested welfare that you’ll become ineligible for, that’s a disincentive to get a job. But utility isn’t linear in money, and so a job paying N dollars will always be more attractive to someone making zero dollars than the same job is to someone on UBI worth K dollars—and increasingly so the higher K is. That’s also a disincentive.
Which of these disincentives is bigger depends on the sizes of N and K and the specifics of the welfare system. I think I’d usually expect the incentive landscape on the margins to be friendlier under UBI, but it’s by no means a certainty.