
Modelling a Basic Income with Python and Monte Carlo Simulation - spindritf
http://www.chrisstucchio.com/blog/2013/basic_income_vs_basic_job.html
======
zeteo
>shut the fuck up and write some fucking code [links to argument that simply
writing code is the best way to learn programming]

Way to confirm stereotypes that programmers are abrasive and narrow minded.
Writing code may be a good way to learn programming; that doesn't mean it's
ideal for discussing economics. For one thing, even for an expert the code
takes longer to read than a baldly stated list of assumptions. And not
everyone is a Python expert.

> if I’m wrong, either Python is computing the wrong answer, I got really
> unlucky [...] or one of my assumptions is wrong.

Umm no. This is a false alternative. How about a lot of assumptions being
_left out_ altogether. E.g. it's pretty clearly assumed that this doesn't
affect economic growth, any benefits resulting from changed income inequality
[1] are left out, inflationary effects do not exist etc. Any half serious
student of economic modeling would have a field day picking out all the
details routinely discussed in macroeconomics that this analysis is ignorant
of.

And anyway who are these financial results even calculated for? If it's the
government, then the expenses are fully incurred, but the "JK Rowling factor"
is taxed at less than 100% to compensate. If it's the average person, you need
to somehow factor in the benefit of reading Harry Potter!

[1]
[http://en.wikipedia.org/wiki/Gini_index](http://en.wikipedia.org/wiki/Gini_index)

~~~
yummyfajitas
I am an abrasive and "narrow minded" programmer - I believe in careful thought
and analysis rather than mood affiliation and talking points. You might be
surprised to discover that www.chrisstucchio.com represents my views and my
views alone - I feel like you might have confused it with
www.allprogrammerseverywhere.com. <\- Snarky comment again represents me, not
all programmers everywhere.

The article addresses what results are being calculated, and why other things
you might wish to model are not included: "I’m going to focus on one specific
aspect of it - a Cost/Benefit analysis studying the effects on the government
budget, and [minus] the value of the work produced by people benefitting from
the program. There are other aspects to consider, _but I’m more interested in
Monte Carlo than in politics, so I’m going to ignore those for the time
being._ "

The ideology I'm pushing hard here is that you should carefully think and
model things, rather than just reflexively saying "ooh complex, here are
liberal/conservative talking points." I just picked on Basic Income
specifically since I see a lot of discussions about it here (e.g. yesterday),
and those discussions are just a mix of vapid and innumerate political talking
points by people who clearly don't even have a mental model of the world.

If you want to build a better model, please do it. It will be vastly more
useful than the normal discussion we see here on the topic of BI (and on many
other such topics).

~~~
zeteo
>you should carefully think and model things

I agree and that's basically my criticism of the article. The underlying
economic model can be expressed in 2-3 arithmetic equations. It competes in a
field where people routinely spend years to research very sophisticated models
that nonetheless often prove inaccurate in the field [1].

To give an analogy, how would this sound as an argument to develop a business:
"I assume that we can borrow 10M at 5% interest and pay it back over 5 years
and that sales will increase 50% over that period. Here, I wrote some code and
it turns out positive. I'm not interested in discussing the reasons for my
sales forecast; if you have a different opinion, just write your own code."
And we're not even talking about a business here, but the whole economy.

[1]
[http://en.wikipedia.org/wiki/Econometrics#Limitations_and_cr...](http://en.wikipedia.org/wiki/Econometrics#Limitations_and_criticisms)

~~~
yummyfajitas
I didn't attempt to claim that my proposal was the economic state of the art.
I claimed it was a jumping off point to illustrate how to do monte carlo
modelling in the third paragraph.

If you showed me your business forecast, I would indeed tweak the model until
I felt the probability distributions governing the assumptions covered all the
plausible values. The net result would likely just be a very fat distribution
that said nothing. And if so, _that 's useful information to have_.

That's very nearly the result we get here - note that the Basic Job estimates
range from $300B to $1.5T. See Scarmig's excellent comment which cuts to the
heart of this matter.

~~~
shawabawa3
> And if so, that's useful information to have.

> That's very nearly the result we get here - note that the Basic Job
> estimates range from $300B to $1.5T.

The problem I have with this post is this. It is _NOT_ useful information to
have.

What is that range based on? Nothing. Your guesses. There is no known
probability of the real-life result lying between those values, therefore the
values are meaningless.

I'm all for models, models are great, but they _need_ data. There's no point
in a model based on assumptions, it's basically just a smokescreen for making
your opinion look like fact.

> I would indeed tweak the model until I felt the probability distributions
> governing the assumptions covered all the plausible values.

Basically you would tweak the model until the result matched your opinion. If
you had data of 100 similar startups and you calculated the distributions of
their loans and sales growths, THEN AND ONLY THEN is your model useful

edit: I'm giving up on this thread now because I feel like this -
[http://xkcd.com/386/](http://xkcd.com/386/)

------
shawabawa3
I'm sorry but this is a bit ridiculous

There are dozens of completely arbitrary assumptions and nobody could possibly
know if they were anything close to being right

> If you disagree, write code.

Ok..

"With a Basic Job, you can’t - your choices are a Basic Job for $14480 or
possibly a McJob for marginally more (say $15000). I’ll model this by assuming
the number of non workers will increase by up to 5%, or decrease by up to
20%:"

I disagree, I made my model assuming that the number of non-workers increases
by between 60 and 80%

Oh look! My results show that basic income is better! Great, that's what I
believed before hand, my model must be good.

edit: I'm all for mathematical modelling, but there needs to be some kind of
basis for the assumptions, and it helps if there are less than a bajillion
assumptions too. Anyone could tweak all the assumptions so they still sound
reasonable and come up with any conclusion they wanted from this model

~~~
rayiner
The purpose of doing a simulation like this is to bring the discussion down to
more concrete levels.

E.g. "I’ll model this by assuming the number of non workers will increase by
up to 5%, or decrease by up to 20%: I disagree, I made my model assuming that
the number of non-workers increases by between 60 and 80%."

Okay, now instead of arguing about basic income in the abstract, you're
arguing about projections of how much the number of non-workers changes. The
latter is a lot more concrete and easier to analyze further.

~~~
ynniv
No. Making up a model is an absurd way to predict anything, because there is
no validation. Useful models have shown to be predictive over time (except
when they aren't, and then someone amends the model). "I'll model this by
assuming..." is only fooling yourself through confirmation bias. A new model
can tell you anything you want it to tell you... An accurate model is the only
useful one, and there is rarely any basis for accurate macroeconomic models
until decades after a change happens.

Statistics don't come after lies and damn lies accidentally. A naive model of
liquid cooling ends in a fatal explosion and the discovery of phase change.

~~~
dllthomas
I think models of this type are a useful way of "thinking things through"
further than you'd be able to do in your head, and a push to make sure you're
being concrete about what you are and are not considering. It's not "doing
science", it's not meant to give reliable predictions - there are too many
degrees of freedom; it's meant to help with reasoning. It would follow,
though, that "The simulation says X, therefore we should Y" is an
inappropriate use of it.

~~~
rayiner
Right. The doing science thing is a red herring. Its not claiming to generate
reliable conclusions because it is scientific. Its claiming to generate
insightful analysis because it is systematic.

~~~
ynniv
Compulsive gamblers and tarot card readers are also systematic. Thinking that
systematic implies insightful is deeply flawed.

(Disappointed by the downvotes... I'm not trying to be pithy.)

~~~
dllthomas
That it is systematic implies you can use it to generate insights into things
that are causally linked. In the case of tarot cards, that's maybe a little
about the traditions it grew out of but not a lot about the present or future.
In this case, it's about the reasoning and assumptions you are using in trying
to work out whether the policy is a good idea. This is only indirectly tied to
the question of whether the policy is _in fact_ a good idea. Insights about
that need support of, y'know, evidence. But this kind of thing can totally be
useful for understanding what questions need to be asked.

Incidentally, I am not convinced that tarot cards _cannot_ be useful at
generating insights - privileging random hypotheses and reconsidering your
situation could be a useful means of reducing the impact of hypotheses you're
privileging for other reasons. Everything must still be evaluated in light of
actual evidence, though, of course, before conclusions are drawn.

~~~
ynniv
_That it is systematic implies you can use it to generate insights into things
that are causally linked._

Only if the model is accurate. If (as in the case of tarot reading and failed
gambling) you have a system that doesn't correspond to the world you will draw
conclusions that are detailed and reproducible but not insightful of the
world. Inaccurate models are only misleading, not vaguely insightful.

~~~
dllthomas
Systematic interaction with a model can be used to learn things _about the
model_ whether or not the model is accurate. Otherwise we are in agreement, I
think.

------
scarmig
I've posted a much simpler model than what Chris did, to make it clearer
what's driving his results:

[https://gist.github.com/anonymous/7452196](https://gist.github.com/anonymous/7452196)

Run it, and it will look very similar to what the more complicated model
results in.

Almost the entirety of his model's result comes from the fact that the BI is
given to everyone, while the basic job is not. All the other parameters he
brings up are interesting asides but irrelevant to the actual results of the
simulations. His model of the basic jobs proposal is pretty much equivalent to
a proposal that "if you're unemployed, you should get a basic income; if
you're employed, you shouldn't."

Basic income advocates consciously reject this. I don't have time to finesse
the simple model right now to represent why we reject that proposal (I have,
well, a job to go to =). But I'll hopefully get to it this evening.

~~~
wirrbel
I have attended a talk by Götz Werner, who advocates for a basic income. In
this talk he was basically describing basic income as a reform of the tax
system. Basically G.W. argues for most taxes to be abolished in favour of a
significant increase in VAT (Value added tax).

He had several arguments for this. One is, that at the moment in Germany,
labor is taxed, so there is an incentive to move production to overseas. A VAT
is applied to goods from abroad and from the same country fairly.

The basic income would then be a negative tax refund to compensate for the
social problems that a high VAT causes (since poor people suffer under high
VAT more than rich people).

So let us say a person spends 1000 EUR on VAT-relevant purchases (food,
clothes, phone, etc.). Now a VAT is introduced, so the products now cost 2000
EUR. Then a basic income of 1000 EUR would annihilate the additional burden.
Another person spending 2000 EUR a month at the moment would soon have to
spend 4000 EUR, 1000 EUR being provided by the basic income, therefore this
person would have to spend 3000 EUR (1000 EUR increase) to buy the same goods
as before. Because other taxes would be abolished, the income would be higher.
Furthermore, with VAT there would be less tax loopholes and tax collection
would be a lot easier.

As a _second_ idea, this basic income could be chosen to be above the level
necessary to compensate for the VAT. This is the idea which is in generally
associated with the basic income and outlined in the model.

I will take a look at the model more closely. I find this approach really
interesting.

~~~
nisa
> Götz Werner

While talking about basic income we should not forget that he's running one of
the largest drugstore chains in Germany. If everyone would have a basic income
the difference in income would be going into consuming products. So retail
would benefit a lot from it.

On the other hand removing tax on labor would benefit retail too because it's
a major cost factor there.

I'm not convinced that we would have better society if we would implement his
proposed scheme.

~~~
jacobr1
I think the biggest item missing when discussing BI is the huge change in
behavior you have among those making near to the proposed BI payment. I
suspect the marginal value of selling one's labor would increase significantly
against the opportunity cost of increased subsidized labor. That is maybe you
are willing to work 40 hours/week minimum wage at a shit job compared to the
alternative of unemployment. But if the alternative is just BI that that is
better than the shit job. But these people still have the time to work and a
willingness to earn more - but the bargaining position is different. So I
suspect you would see raises rise for lower-end full-time positions, causing
fewer of them to exist and spurring more automation while at the same time see
lots more low marginal value jobs that have wage values below the new
equilibrium point - such as more temp/part time positions where people can
quickly enter/exit the job market when they need some additional cash - which
in turn further raises the prices of semi-skilled labor since it will be more
sparse. This would even further incentivise subgroups to enter low-effort
training to capture these wages.

------
zoul
I think the whole discussion boils down to this:

 _An additional cost is the incentive or disincentive for engaging in
productive work created by the Basic Income. On the one hand, the BI creates
disincentives for recipients to engage in productive labor. If you are happy
earning direct_cost each year, why bother putting down Call of Duty and
getting a boring job? (…) My inclination is that it is more likely to reduce
labor than increase it. So I’ll assume that the number of non-working adults
will increase by up to 10%, or decrease by up to 5%._

This is always going to be the crucial input parameter that makes or breaks
the whole idea, and no amount of math modelling is going to tell you how
millions of people will behave after such radical change.

~~~
AndrewDucker
Absolutely.

_My_ feeling is that people would always like a little bit more money. Basic
income removes the "cliff" effect, whereby earning more money can actually
reduce your income. Therefore people will work more.

After all, if you could go out and work for five hours next week, and be
guaranteed that those five hours would give you the cash to buy something you
have your eye on, then why wouldn't you?

~~~
sillysaurus2
It also seems like people are overlooking an important fact: people find
ambition attractive. So anyone without any ambition in life other than to
collect a basic income while playing games may find themselves shunned by
their preferred sex. If you want to date, then you'll probably want a job. And
almost everybody wants to date (or at least to mate). Therefore there may be
no basis for being afraid that basic income will reduce people's desire to go
work.

~~~
yummyfajitas
Write some code and see if altering that assumption changes the result.

Here is the code. You are interested in line 17.

[https://gist.github.com/stucchio/7447067](https://gist.github.com/stucchio/7447067)

~~~
sillysaurus2
EDIT: Anaconda worked, thanks. Experimenting with the code now.

~~~
Thrymr
Your scipy install is broken, it has nothing to do with his code. If you can't
successfully run:

    
    
        from scipy.stats import *
    

then it's not going to work.

Try installing a scientific python distribution like Enthought Canopy or
Anaconda. On Unix systems it's possible to build it yourself, but on Windows
unless you have the right compiler licenses and enjoy pain, you probably don't
want to do that.

------
JackFr
[http://www.nobelprize.org/nobel_prizes/economic-
sciences/lau...](http://www.nobelprize.org/nobel_prizes/economic-
sciences/laureates/1974/hayek-lecture.html)

"It seems to me that this failure of the economists to guide policy more
successfully is closely connected with their propensity to imitate as closely
as possible the procedures of the brilliantly successful physical sciences -
an attempt which in our field may lead to outright error. It is an approach
which has come to be described as the "scientistic" attitude - an attitude
which, as I defined it some thirty years ago, "is decidedly unscientific in
the true sense of the word, since it involves a mechanical and uncritical
application of habits of thought to fields different from those in which they
have been formed.""

"Unlike the position that exists in the physical sciences, in economics and
other disciplines that deal with essentially complex phenomena, the aspects of
the events to be accounted for about which we can get quantitative data are
necessarily limited and may not include the important ones. While in the
physical sciences it is generally assumed, probably with good reason, that any
important factor which determines the observed events will itself be directly
observable and measurable, in the study of such complex phenomena as the
market, which depend on the actions of many individuals, all the circumstances
which will determine the outcome of a process, for reasons which I shall
explain later, will hardly ever be fully known or measurable."

------
brador
Complexity + assumptions. There are too many variables and unknowns to make
even a reasonably accurate model. Also, you're dealing with rational and non-
rational actors and the creation of new actors as time moves forward. Cute
analysis though.

~~~
grimtrigger
I think thats one of the most important points of the article. People who
argue definitively one way or the other on basic income are simply making
assumptions they can not logically make.

I hope some country/state out there tries out an experiment with basic income
(just not mine). Politically, I don't think it will happen. A few poor people
getting benefits cuts will ring a lot more loudly than middle class and rich
people getting benefits raises.

------
glomph
A basic job system and a basic income system do not have the same effect in
terms of replacing current 'wealth transfers' (what a ghastly term for such a
disparate set of social policies and programs).

16% of US government spending is on pensions (by the posters own source).
Those people need money to live. Unless you expect them to work until they die
/ become disabled, then they are not covered by the naive model of a basic job
system.

Indeed the basic job model completely ignores 52 million people who are not in
the workforce or disabled (by their own numbers). Many of these people require
government money to live as well. It is worth noting that in (small) trials in
canada it was overwhelmingly students and parents that stopped working (and
that is out of the labour force) and in much smaller numbers than the author
suggests (although admittedly this may be because they knew the program was
temporary).

Most of the costs and benefits involved in a welfare system are not present in
this model. The suggestion that the only value people receiving welfare create
is the occasional one in ten million great work is frankly shockingly old
fashioned. It is as if 300+ years of political philosophy have simply passed
the author by. To say the least you need to think about the effects on child
care, students, crime rates and all the latent costs that a lack of financial
freedom creates.

------
iSnow
Without empirical data, it is next to pointless to throw together some
assumptions and model them.

No, writing code is not the point here. Anyone can write code to do this kind
of modeling. Reducing the huge amount of degrees of freedom in the model in a
meaningful and fact-based way is key. And here the author fails big time.

------
Bsharp
Good article, it's nice to see someone not only provide some actual analysis,
but also be clear with their assumptions and welcome critique.

~~~
ronaldx
Welcoming critique? I didn't get that at all. I personally think writing "shut
the fuck up" removes any sense of critique being welcomed.

The author does kindly gives us permission to critique as long as we accept
his model - a very naive device with zero academic or economic justification.

~~~
Bsharp
You're leaving the part out where he says "and write some fucking code." He
wants people to show him he's wrong with analysis/simulation instead of tell
him he's wrong with their opinions, which is entirely valid.

~~~
ronaldx
As long as the situation is mathematically more complicated than the board
game Go (for example), opinions probably beat code.

Expert opinions certainly beat naive code.

This is not to say that code cannot be valuable, but the justification for
this code does not even begin to touch upon real macroeconomic issues.

One of the possible concerns of a basic income is rampant inflation - it's
clear that the author has not even considered this.

~~~
Bsharp
Expert opinions are often based on economic models which use incredibly
simplified assumptions and questionably appropriate mathematical techniques.
At least this guy is willing to post his model for the world to pick apart.

~~~
ronaldx
As a direct criticism, the choice of the Normal distribution adds nothing to
the model other than acting as a cover for the author's choice of point
estimates. I believe you would get the same results independent of the
distribution. Choosing a Normal distribution serves only to create an apparent
range of results that are weighted towards the author's preferred choices of
values.

Peer-reviewed economic models would have to justify their model assumptions in
a more robust way, including empirical data where appropriate. I'm not an
expert but I expect this is a good place to start:
[http://www.journals.elsevier.com/economic-
modelling/](http://www.journals.elsevier.com/economic-modelling/)

All models use simplified assumptions and questionably appropriate techniques,
I agree - that is practically the definition of 'model'. However, a useful
model should justify those assumptions and techniques using current research-
level knowledge, and/or show how the model applies successfully to reality.

I see this model to be as useful to economic discussion as saying "the world
is flat, plus or minus 5 degrees". It ignores all current work in the field.

~~~
Bsharp
If you're expecting research-level detail in a blog post from someone who is
admittedly not an economist, your expectations are too high. The post was
meant to present a simple Monte Carlo simulation in Python using a current
topic as its subject. He isn't writing a NYT Op-Ed citing his results as
evidence that BJ > BI based on sophisticated modeling techniques.

------
darkxanthos
"If you disagree, write code."

Love this.

Also nice application of Monte Carlo simulations. They're great for thought
experiments.

------
Jacqued
While interesting, I think this demonstrates why numbers are basically useless
in these kinds of discussions.

Even with a very simplistic model, there are too many assumptions that can be
contested forever and that will ultimately only depend on what the people
debating already think about it. I, for example, would make the assumption
that the marginal value produced by a Basic Job worker in an hour would be
close to 0, while administrative costs are underestimated by an order of
magnitude. Now, it might be fun to try these out when I get home, but I don't
think I can get any significant insight from it.

And if you were to refine the model, it would then become too complicated to
discuss in ways that could be comprehended by most people - too much effort
and they'll stop listening.

Moreover, it fails to account for larger benefits to society, which cannot be
measured in the way such a simulation works. For this one we could seem crime
dropping (happier society, prison costs diminishing, etc.), global health
indicators improving (thus preventing tremendous cost), etc.

~~~
darkxanthos
So should we just go with our gut and intuition? There are places where that's
a valid approach (a reason why Amazon Turk thrives) but understanding complex
systems is probably not the place for that.

I do agree his model is probably overly simplistic. What could be awesome
though is open sourcing something like this and having the debate evolve as a
series of pull requests and forks that represent different assumptions and
scenarios.

------
spindritf
I don't think you use it anywhere but

> The marginal income from labor under a BI is precisely (1 - tax_rate) *
> income, rather than (1 - tax_rate - lost_benefits) * income.

shuldn't the second one be (1 - tax_rate) * income - lost_benefits? I don't
know if/how benefits are taxed in the US.

~~~
wavefunction
Many transfer payments in the US are subject to taxation. This includes Social
Security, Unemployment, and some forms of Disability.

------
transfire
The purpose of economics is defeated by making "busy work". The government can
pay everyone to dig holes, but do we need all those holes? That's the
fundamental problem with the Basic Job concept. But give everyone basic
income, now they have money to spend. When they spend the money it creates
jobs to produce the things that people actually need and want. No simple
programming model can account for this.

I should also point out that governments already create far too many "busy
work" jobs as it is. The IRS and welfare systems are some of the best examples
due to overly complex regulations and means testing.

~~~
tptacek
I'm not sure how this observation defeats the purpose of economics. The reason
you give people a basic job is not that we need the work done --- after all,
the alternative to it is the basic income, which pays them to do nothing. The
purpose of the basic job is to fix the incentive problem of a basic income,
which would encourage people not to work because there'd be inadequate
marginal benefit to a low-wage worker to take a job.

~~~
fleitz
It actually pays them to do whatever they are doing. Living != Nothing.

There's no reason to imply that whatever the government tells them to do for
their basic job produces more value than whatever they decide to do. It's
pretty well established that the more government tells people what to do for
work, the less an economy produces.

Lets make people pick trash instead of helping educate their kids, surely
picking trash is of much more societal value...

~~~
tptacek
The problem isn't that they're doing "nothing"; it's that there is a lot of
work that gets done at the bottom end of the income spectrum that would stop
getting done if a basic wage were provided. When people stop doing that work,
the price of that labor increases, the price of the things that depended on
that labor increase, demand decreases in response, more people lose their
jobs, and people that depended on goods enabled by that labor --- people that
include those people relying the basic income --- are worse off.

~~~
fleitz
I'm pretty sure that printing money and giving it to poor people is a much
better idea than printing money and giving it to rich people.

How come there's no basic job attached to the money GS gets? How come no one
is worried that rich people are going to stop working after we spent 5 years
giving them all the money we can borrow?

How many stockbrokers do you know that quit their jobs because the government
is flooding the market with free money?

HSBC didn't stop laundering money for drug cartels just because the US gov't
was offering them all the free money they would ever want.

~~~
tptacek
I agree but don't see what this has to do with the discussion at all.

------
anonymoushn
I'd like to propose a third policy, the NOPtransferpayment. The way the new
policy will work is, a new tax will be implemented for 1000 times the net
income of every person who earns an income (after all other taxes and transfer
payments). A new transfer payment will be implemented for 1000 times the net
income of every person who earns an income (after all other taxes and transfer
payments). This tax and transfer payment will not count toward calculations
used by other programs. A new department will be created and staffed by 0
people, and 0 new forms will be necessary to implement the tax and transfer
payment.

A policy like this could reasonably be said to cost nothing, produce nothing,
and indeed do nothing. If we think that congress generally makes the world a
worse place by implementing policies that do things, then it would be an
improvement for congress to work on this sort of thing instead. However, its
cost-benefit under the proposed model is not $0 or (pay_per_lawmaker *
n_lawmakers * nop_debate_time) but $13 quadrillion. The proposed model
indicates that this program costs about 180 years of global production at the
current rate, or a substantial portion of the value of the entire planet and
all humans living on it. If we suppose the planet is worth about $200
quadrillion, we will run out of it about 15 years after implementing this
policy.

------
maxerickson
Such a post would really benefit from some analysis of how sensitive the model
is to each assumption.

I think that might be the most interesting way of looking at such an abstract
model.

------
j2d3
What if we tied a basic income to accepting 24x7 monitoring of the body and
all communications from the body's point of view in space... i.e., a
monitoring band that tracks health biometrics, as well as audio and video,
ambient temp, humidity, etc. - full instrumentation of each individual who
opts in.

The monitoring band would also act as the recipient's communicator
(smartphone) - so - they can freely use it to call, text, email, get apps,
etc., it's just that all the data they generate - each individual
participant's trace - is recorded.

The massive amount of data collected from people willing to trade a homeless
lifestyle for one with a steady income would have tremendous value in
aggregate, and be unavailable to anyone for nefarious purposes. The only thing
you have to do to get the basic income is be willing to have all your data
recorded (but not shared publicly!)

Your anonymized data will then be made available (along with everyone else's)
via an API to developers of apps, and, assuming you give them permission, they
will be able to access your sensitive / personal / private data as well.

------
gknoy
Interestingly, the cost of even the more expensive option in his model appears
to be similar in magnitude of the `wealth_transfers` field (which doesn't seem
to be plotted or used later).

If the plan is to replace certain spending with a basic job or income, it
would be interesting to see the comparative costs and efficiency of what we're
replacing as well.

------
freeman478
Note that he did not substracte the current wealth_transfers from his
cost/benefits analysis.

it does not change the comparsion of BI vs BJ but it is interesting to note
that even with his assumptions it means the effective impact on USG Budget is
approx 0 for BI and a big reduction of $ 2 trillion for BJ.

~~~
yummyfajitas
I forgot about that one. I don't actually expect to change anyone's mind on
the political issue - my real interest here is simply writing a monte carlo
tutorial and pushing the "model everything" ideology.

------
wmt
I can't criticize a hypothesis if I cannot create a better one? That's
extremely unscientific.

------
wehadfun
What about the increase in family size. If having more children increases a
family's income people will have more kids. People receiving welfare do it all
the time. These kids will not be contributing towards the basic income but
will be drawing from it.

------
mk270
if you disagree, write some code

unstated assumption: and do so quickly enough for it to influence the
discussion before it slips off HN

~~~
yummyfajitas
Post it on your own blog and tell me when you do. I'll certainly upvote it.

~~~
mk270
Deal: I want to investigate the case where everyone is bullied into quitting
their job, by thugs who don't want laziness to stop being a social norm

------
agentultra
It seems to me that perhaps the title of this link is misleading. The author
doesn't model anything and shifts the burden of proof onto the reader if any
doubt is cast on his assumptions. He also invalidates any conclusions
regarding BI in the premise which makes the entire model meaningless (a kind
of syllogistic fallacy iirc).

Really this article should probably be something along the lines of, "Monte
Carlo Simulations in Python."

This is not a discussion of BI at all.

------
truthteller
What a bizarre article. this is a worthless exercise without any data.

the task of building a model of labour market and estimating your model with
real data is very complicated.

~~~
lotyrin
Relevant username, really too bad you're down here.

    
    
        import random
        
        def sky_is_green():
            return random.choice([True])
    

Please, if you disagree, write some fucking code.

------
VLM
"There are no qualifications beyond being an adult citizen to receiving a
Basic Income."

A minor mistake. The only "sorta well known to Americans" basic income is the
Alaska fund which does only pay to adults.

However most proposals seem to apply to "living humans" or whatever. After
all, kids need to eat too. Or if using the franchise fee model of
justification, kids lives are being ruined by the economic system too.

~~~
jofer
As far as I know, Alaska's permanent fund pays to children too, as long as
they're born in the state or have lived there long enough to be counted as
residents (2 years, maybe? Can't remember.).

~~~
VLM
Well, that's embarrassing, you are 100% correct. I looked it up, and the only
non-recipients other than non AK residents are felons in prison (no idea why,
I guess to punish their families with less income or make sure they can't pay
restitution to victims?)

So, no, I have no idea where he gets the idea only adults would get an income.

------
yetanotherphd
This is great, if only the field of Economics would start to use models based
on mathematical assumptions in order to predict the outcomes of policies.

------
didgeoridoo
This seems like a perfect scenario to try out Bret Victor's "explorable
explanations"; i.e. not just documenting assumptions & code inline with your
reasoning, but making the document itself explorable and reactive:
[http://worrydream.com/#!/ExplorableExplanations](http://worrydream.com/#!/ExplorableExplanations)

------
bsbechtel
I fully admit, I didn't read through the details of your assumptions, just
skimmed the post, but I didn't see anything addressing the changes in prices
of basic goods if everyone can afford them. Do you model any increase/decrease
in prices - e.g., a 10% increase in demand for housing cause a 10% increase in
housing prices?

~~~
VLM
Everyone can already afford basic goods. Its just at the lowest of incomes
instead of a varied portfolio of extremely expensive to administrate benefits,
all that would be wiped out and replaced with one simple check.

A slumlord can TRY to raise his rent 10% anytime he wants, including today,
but if the residents aren't making any more money, that plan is not going to
work very well.

At the highest levels multimillion dollar lakefront homes aren't going to be
affected unless we unleash subprime loans again (which would be profitable, so
we will, but thats another discussion).

The primary effect would be on the shrinking middle class. Many of those
extremely expensive welfare administrators are middle class and replacing
those jobs with an extremely small shell script is going to result in massive
middle class job loss. That should be modeled.

One mistake in the model was assuming "basic job" would produce anything at
all. I suspect the most likely outcome of putting one dude in charge of two
dudes, one digging holes, and the other filling the holes in, is both guys are
going to pay a small bribe to the boss to falsify the paperwork. Another
severe attitude problem issue is you assign a guy to a "basic job" picking up
trash in a park, well, if he goes fishing instead, you can't fire him from a
guaranteed job. You're supposed to be a teachers aide at school; well, yes,
but I'm checking facebook on my phone instead, what are you going to do about
it? I suspect the value produced will approach zero.

Another model error is assuming the only unusual payoff will be JKRowling
style, but I suspect you'll have 100000 amateur theater geeks and wanna be
musicians for every billion dollar author. So the cultural production should
explode. Hard to say if it'll be worth anything, but they'll be a lot of it,
that's for sure.

~~~
bsbechtel
>Everyone can already afford basic goods. Its just at the lowest of incomes
instead of a varied portfolio of extremely expensive to administrate benefits,
all that would be wiped out and replaced with one simple check.

I think you and I disagree on this assumption. For one, we still have homeless
people, although for a handful it is a lifestyle choice. I'd say it's far more
nuanced and complex than to just say everyone can already afford basic goods.
If someone loses all their current gov't benefits, but starts receiving
$1,000/mo which they are free to spend however they want, how do their buying
habits change? No one really knows.

As far as I know, food stamp programs and other current welfare programs have
many restrictions on the types of goods you can purchase.

In addition, we aren't considering the marginal costs of increased production
of some goods, while others are negligible - e.g., software.

I agree with your other criticisms of the model though.

------
ckluis
Overall good attempt, but there are factors which are harder to measure.

How many people start new companies since they have a little fallback support?
(potential increase or decrease)

How many dual-income families can afford to have a single parent working with
the income of two families coming in? (potential decrease)

How many people can afford not to work while in college now? (potential
decrease)

In previous question, Does this mean their long term chances of success are
higher? (potential increase)

How many people could use the benefits after a layoff + savings to better them
selves and their future before re-entering the work force? (potential
increase)

~~~
yummyfajitas
_How many people start new companies since they have a little fallback
support?_

This is partially modelled by the jk_rowling() function. If you feel that is
insufficient (I agree, it probably is), add a term you feel is realistic and
check if it changes the result. For any parameters you don't know, choose a
probability distribution that you feel encompasses all plausible values of the
parameter.

Then run your new model. Who knows, it might be the case that no matter what
plausible value you choose, it doesn't matter. Or it could change things
entirely. These are both useful things to find out, and we'll only know if you
write some code.

~~~
ckluis
Thanks for responding. I should have clarified in my initial post that I am
marketer with only barely passible php hacking skills. If I were to spend more
time learning to properly program, it would probably not be in Python.

I'm sorry you felt I needed a downvote for offering suggestions for additional
variables (I do not think the jk_rowling function alone solves those issues)
was a negative comment. I was trying to help without having the skills to
directly participate.

Nevermind the dual Masters in Business or the Minor in Economics. Oh and
ignore the fact that I talk to my brother about complex economic issues (he
has a Masters in Econometrics).

Ignore the fact, I think this is fascinating topic and have tried to read
everything I can on the topic.

I'm sorry I tried to help without code.

------
bitwize
Remember, folks, there are four kinds of lies: lies, damned lies, statistics,
and computer models.

