Commentary
In the 2020 election, an intriguing candidate emerged in the Democratic Party’s presidential nomination race: Andrew Yang. Yang gained attention for his proposal to provide everyone with $1,000.
Andrew Yang’s campaign strategy mirrored Trump’s 2016 approach by focusing intensely on a single issue. While Trump centered on immigration, Yang’s focus was on universal basic income (UBI).
Yang’s UBI plan was straightforward: every individual in the country would receive $1,000 per month, regardless of their financial status or age. A vote for Yang meant a vote for cash.
Despite criticism from within his own party regarding giving $1,000 to wealthy individuals, Yang remained firm on the universality of the payment. By ensuring every person received $1,000, potential incentive problems and bureaucratic hurdles associated with traditional welfare programs could be avoided.
Why UBI?
Yang presented several reasons for implementing UBI. One major concern was the potential displacement of low-skilled jobs due to advancing technology. UBI was seen as a way to prepare the country for taking care of workers affected by these changes.
Additionally, Yang argued that UBI would not only serve as a safety net but also unleash people’s creativity and entrepreneurial spirit. The guaranteed income would offer individuals the financial security needed to pursue their passions, start businesses, or further their education. Yang contended that UBI would not lead to increased laziness but rather enhance overall productivity.
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Some UBI proponents suggested that implementing UBI could streamline the government by replacing the current complex welfare system. However, a realistic path toward abolishing existing welfare programs has not been clearly articulated by advocates of this policy.
So, is Andrew Yang’s vision of UBI accurate? Would UBI truly unleash the entrepreneurial spirit in all Americans, or would it simply lead to increased leisure time? Let’s delve into the evidence.
The Disappointing Basic Income Study
A recent working paper by researchers Eva Vivalt, Elizabeth Rhodes, Alexander W. Bartik, David E. Broockman, and Sarah Miller, titled “The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States,” released by the National Bureau of Economic Research (NBER), sheds light on the impact of providing $1,000 per month unconditionally to 1,000 low-income individuals over three years.
The study revealed that the recipients became poorer overall, with a reduction in annual total individual income of approximately $1,500 in comparison to the control group. This was attributed to recipients working fewer hours (1.3 hours per week less) and staying unemployed for longer periods. The decrease in labor supply affected not only the recipients but also other adult members of their households.
Unemployment duration for recipients increased by 1.1 months.
Despite claims of increased entrepreneurial intentions among recipients, this did not translate into actual entrepreneurial activity. Similarly, there were minimal improvements in education outcomes observed among the sample.
Ultimately, the study found that recipients used the additional time gained from reduced work hours primarily for leisure activities. The data indicated that individuals valued leisure time highly and did not significantly increase their engagement in activities such as creative output, entrepreneurship, community involvement, self-improvement, or spending time with children.
The study’s findings suggest that a UBI might lead to reduced work effort and increased leisure time, contrary to the notion of sparking human creativity and productivity.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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