
Stockton residents got $500/month basic income, spent on food, clothing, bills - starpilot
https://ktla.com/2019/10/03/stockton-residents-who-received-500-a-month-in-basic-income-experiment-spent-money-on-food-clothing-and-bills/
======
Suncho
The interesting questions surrounding UBI are macroeconomic in nature. How
does it change the economy? We know that consumers need money in order for the
economy to function. The question is whether basic income is an efficient way
to provide it to them. Is it even possible to give everyone free money?

These trials are just testing how individual people respond to unconditional
direct cash transfers. We already know that people are better off if they have
more money. Not super interesting. It's not changing the economy _around_
them.

Not that they would, but even if everybody just spent their basic income on
booze and drugs, it wouldn't really be evidence against the effectiveness of
basic income.

The choices aren't UBI versus no UBI. The choices are UBI versus all the
convoluted ways we currently try to push money to consumers through the labor
market. To the extent that we're creating jobs to push money to workers, we're
not creating those jobs because there's actually work that needs doing.

If we calibrate the amount of the basic income to the economy's productive
capacity, then we can allow the labor market to be efficient. In an efficient
labor market, jobs only exist because there's actually work that needs doing
and the only purpose of wages is to provide an incentive for people to do that
work.

[http://www.greshm.org/blog/poverty-is-
optional/](http://www.greshm.org/blog/poverty-is-optional/)

~~~
holy_city
(not an economist but I'm really interested in this)

What's the difference in theory and practice between UBI and changing the
standard deduction/marginal rate? Like if we give out $6k a year to everyone
through a $500 check, what is the difference in how that money is spent versus
if we increased the standard deduction to where people would pay $6k less in
taxes? (assuming that people are in fact paying at least $6k)

I get that this is partly an experiment to figure this out, but what does the
current theory say?

~~~
derefr
> assuming that people are in fact paying at least $6k

That's the big difference. UBI _most_ helps the people who are paying the
_least_ tax right now, such that a pure deduction wouldn't do anything for
them. It's a "negative regressive" tax, whereas an increase in
deductions/decrease in marginal rates—or a tax credit—is a "negative
progressive" tax.

~~~
dragonwriter
A tax credit, if it is refundable, is exactly the same as UBI, and even if
nonrefundable isn't “negative progressive” in the sense that a deduction is.

------
chipperyman573
I see a lot of similarities between this and YC's attempt at UBI[0], one thing
that was pointed out a few times in the YC launch thread was that if you give
a small subset of people $500/mo, then yeah of course they'll experience
immediate relief, because nobody else they're competing with also got $500/mo.
But if everyone gets $500/mo at the same time, we can't be sure the same will
happen. The market might respond differently and suddenly rice will cost
$50/lb (or it might not, I don't know, but this study doesn't prove it won't)

Overall this is a cool idea, I'm glad that 125 people got the help they
desperately (according to the article, anyway) needed, but I don't think this
really indicates anything broader.

[0]: [https://basicincome.ycr.org/](https://basicincome.ycr.org/)

~~~
ohazi
The difference would all go to landlords. Competitive commodities like rice
have downward price pressure, because all it takes is one supplier selling for
a penny less than all the other $50/lb price gougers, and the market will be
theirs until the next penny defector, until you reach the commodity price.

With housing it's the opposite. Low teaser price to get you to sign a lease,
and then you're guaranteed large rent increases until you move out because the
landlord knows how much moving sucks.

~~~
zizee
UBI would increase people's mobility, allowing them to move to cheaper areas
where employment opportunities are not quite as strong.

~~~
c0nducktr
People often are already able to do that but don't, because surprisingly to
some, most people find the idea of leaving everything and everyone you know
just to find a better job absolutely dreadful.

We need to remember that we're talking about humans, and not some _particle_
which can simply find a shorter path to wealth.

Edit: To be clear I'm not necessarily opposed to UBI, but I find this 'people
are but cogs in the machine' view of economics especially appalling.

~~~
zizee
> I find this 'people are but cogs in the machine' view of economics
> especially appalling

I resent your implication that I think people are just cogs in a economic
machine.

People move location all the time for a variety of reasons. Sometimes
economic, sometimes for lifestyle, sometimes for the weather.

I suggested UBI would give people more options, more choice, more power in
their lives and you suggest I hold an appalling view and think people are
nothing more than wealth seeking particles? Thanks very much.

~~~
c0nducktr
I wasn't trying to say you specifically feel that way, but when we're talking
about predatory behavior of landlords, giving those who are being taken
advantage of the ability to leave town seems like a second rate solution.

------
dsfyu404ed
>People in the program get $500 each month on a debit card, which helps
researchers track their spending. But 40% of the money has been withdrawn as
cash, making it harder for researchers to know how it was used. They fill in
the gaps by asking people how they spent it.

If they know they're being studied they're gonna tell the researchers they
spend the money on "good" things. Wanting to please people who are helping you
out is very much human nature.

~~~
vortico
40% withdrawn as cash is a ton. Did the funders inform their test subjects
that they can't/shouldn't do this? Virtually all expenses listed in this
article accept debit cards, so there's no reason they should be withdrawing
this much cash. If the purpose of this experiment is to show that people don't
just buy vices like gambling and drugs, I'd say the experiment failed or was
inconclusive.

I would go further to say that test subjects should report proof of _all_
expenses for this experiment, because they could just offload the "good" stuff
onto the debit card which leaves more room for "bad" stuff to be paid with
your existing income, which isn't reported.

------
junar
Here is a description of the experiment design:

[https://www.stocktondemonstration.org/wp-
content/uploads/201...](https://www.stocktondemonstration.org/wp-
content/uploads/2019/08/SEED-Pre-analysis-Plan.-8.6.19-1.pdf)

One detail I found interesting:

> Participant recruitment began with a random sample of households within
> census tracts at or below Stockton’s household AMI of $46,033, providing a
> representative sample of Stockton residents within those census tracts.

~~~
snurk
[https://medium.com/@codergator/no-stockton-california-is-
not...](https://medium.com/@codergator/no-stockton-california-is-not-running-
a-basic-income-pilot-20dae6534afa)

------
rinchik
Ugh the whole idea of UBI scares me. It sends me shivers. The idea of shifting
responsibility for a personal well being from a person to a governmental
entity is really, really, really scary.

It will cost us larger government apparatus, more tangled, deeper bureaucracy,
black hole for taxes, and is definitely something I wouldn't wish upon us.

IMHO, UBI teaches dependency, and is extremely politicized. And very, very
easy to sell by corrupt politicians for votes (power). Once they have that
power, how certain are you they wont use your dependency and wield this power
against you?

~~~
letsgoyeti
In a world where there were no existing welfare programs, I can see UBI
discouraging work and increasing bureaucracy.

But almost every UBI/Negative income tax proposal that's serious wants to
_replace_ existing disparate welfare programs with UBI.

The advantages of doing that replacement would be:

1\. lower bureaucracy since we would just hand over checks to folks rather
than doing all kinds of checks to see if they are eligible

2\. every person would be treated the same way, we would get rid of welfare
cliffs in benefits

~~~
rinchik
You are stating a very decent, theoretical proposition I can agree with.

The problem is that this version/proposition works only in "isolated system"
([https://en.wikipedia.org/wiki/Isolated_system](https://en.wikipedia.org/wiki/Isolated_system))
i.e. "ideal theoretical environment", green field project, if you will.

Unfortunately, it can not happen in the real-world scenario. Existing welfare
programs (80% of which, strictly in my personal opinion, is a politicized
misgovernance), and dependency those have promoted are already deeply rooted
in the brains of our population. 1000s of bureaucrats are employed with these
programs that will not step down, people's minds and dynamics is a whole
differen variable: In no way single Jessy with 5 children would agree to the
same benefit as Susanne with only 2.

Also when Government was any good at anything? What we will end up with is a
whole new governmental branch sucking on taxes with a set of newly emerged
corrupted bureaucrats.

~~~
letsgoyeti
Well, I'll just say you have to separate the analysis of the policy proposal,
from what kind of actual policy we would end up with given political
constraints.

A similar critique of whether it's politically feasible could be made of any
other proposal, including, say, a libertarian one where every existing welfare
program is gutted.

> Also when Government was any good at anything?

Depends on who you ask, I guess.

------
snurk
This "experiment" is a sham in many ways, both in design and the reporting:

* The researchers call it "guaranteed income". That's somewhat accurate, because it's $500 extra payment, no questions asked. But it's not in any way "basic income", or "universal basic income" which is how it's being reported.

* It's paid for by an organization (SEED) which claims the thing it's seeking to prove. (That no-questions-asked welfare improves peoples moods.) The result is pre-determined.

* Just 120 low-income people are receiving an additional $500/month. This is far from Universal Basic Income: No income test, enough money to survive on, and no other gov support.

* SEED is making unsupported claims about how the money is getting spent (only on wholesome, necessary items). They can't assert that, however, because they're not tracking the _rest_ of the subjects' spending. They also did not track the subjects' spending before the intervention. Thus, they cannot rule out "lifestyle inflation".

* The study methods specifically allow for 25 subjects to be used for "political" purposes during the study, for interviews on TV, etc.

Sources:

1\. seed | Stockton Economic Empowerment Demonstration
[https://www.stocktondemonstration.org/](https://www.stocktondemonstration.org/)

2\. SEED Pre-Analysis Plan [https://www.stocktondemonstration.org/wp-
content/uploads/201...](https://www.stocktondemonstration.org/wp-
content/uploads/2019/08/SEED-Pre-analysis-Plan.-8.6.19-1.pdf)

------
noodlesUK
I know it’s not ideal from the point of view of UBI proponents, but why
wouldn’t they have blocked cash withdrawals from the cards? It would have
provided much more useful data (if made it a little less convenient).

I suppose it’s a useful datapoint in itself that the recipients did choose to
withdraw large portions as cash. They’re probably largely unbanked segments of
the population.

~~~
TearsInTheRain
People definitely spend their money differently if they know their
transactions are being monitored in a study such as this. Blocking cash
withdrawals definitely biases the results

~~~
4ntonius8lock
Sort of. I'd say it makes it more relevant to UBI implementations that
restrict cash.

UBI can be implemented in many different ways. In the end, people spend most
of their income on rent, food and transportation. So it makes sense that UBI
will be spent on that.

The main thing is that this experiment is not UBI.

UBI is for everyone. That avoids the poverty trap that exists in america right
now: people getting government money due to poverty fearing doing things that
might get them some temporary private money, but that would then make them
ineligible to continue getting government support. Many poor families are very
careful to stay within the income that allows them to keep getting assistance.
And that's not bad of them. It's the logical conclusion if the potential to
maybe continue to make better money means they are definitively going to stop
getting that which allows them to survive.

------
oppositelock
UBI sounds nice, and I'm sure that the experiments will show that it's great,
so long as the UBI funds come from an external source. Now, imagine how things
would look in Stockton if everyone received UBI, but that it also had to be
funded in a closed system. I'd wager real money that it would be a huge drain
on the economy.

~~~
snurk
It's not a real UBI experiment for many reasons:
[https://medium.com/@codergator/no-stockton-california-is-
not...](https://medium.com/@codergator/no-stockton-california-is-not-running-
a-basic-income-pilot-20dae6534afa)

------
daxterspeed
For the people who are seeing the "Sorry, this content is not available in
your region." message the article is available through the Internet Archive
Wayback Machine (fetched today, Google's cache was giving me a 404)
[http://web.archive.org/web/20191004000016/https://ktla.com/2...](http://web.archive.org/web/20191004000016/https://ktla.com/2019/10/03/stockton-
residents-who-received-500-a-month-in-basic-income-experiment-spent-money-on-
food-clothing-and-bills/)

------
softwaredoug
I just got a $220 check in the mail from the state of Virginia related to the
US Federal tax changes passed in 2017.

I have $10s of thousands in the bank, and my wife and me have a combined >
$200K income.

I feel so selfish cashing this check, seriously, there are so many
services/things the state needs this money for to serve people that haven't
been as fortunate as me. I've been so lucky to be born in this country to
middle-class parents. I would carelessly spend $220 on silly things over a
weekend I probably don't need

Just tax me more already!

~~~
gedy
So give it away?

~~~
softwaredoug
Yes for sure, but for the many other upper middle class people like me most
likely the $220 is gone to sit in a bank or spent frivolously.

~~~
prepend
I don’t think you can speak authoritatively about other people like you. Maybe
they have kids in college and need a text book. Maybe they are getting hit
with unexpected medical expenses. If I assume things about other people’s
money, I’m very likely to be wrong.

I once made $25k and my boss made $50. I thought ve was rich and couldn’t even
imagine what to do with all that money. I could have said “for him most likely
the $220 is gone to sit in a bank or spent frivolously.” I would have been
super wrong. Finances are private and unique. Talking out my ass about what
other people should spend their money on is boring and useless.

~~~
simplify
It's not "speaking authoratively", it's basic human nature. Whatever is the
default option will be the majority behavior.

If the default is _not_ to help others, then most will not. That's the way the
world works. That's why taxes work.

This is not an argument about morality or judging others.

~~~
prepend
You said “but for the many other upper middle class people like me most likely
the $220 is gone to sit in a bank or spent frivolously.”

That is not a correct statement. I think it’s much more likely to be spent on
whatever that person deems valuable. Perhaps you think it’s frivolous, but
that doesn’t make it frivolous. You don’t know the size of their family or the
circumstances requiring expense.

------
malandrew
The only reasonable way to test UBI is at scale, starting small with stepwise
increases. Give everyone $50. Wait one year. Increase it to $100. Wait another
year. The only way to reliability figure out what is going to happen and then
fix the problems is to start very small and perform a large scale experiments
before we blow all that money on something unproven.

There are way too many unintended consequences of starting at %500+ dollars.

------
realbarack
How do UBI proponents propose to deal with rent-seekers? What's stopping every
slumlord in the country from jacking everyone's rent up $1000 / month in
response to a UBI subsidy of the same amount?

It seems like you could deal with this via a Japanese-style de-zoning (which I
like) or nationwide rent control (which I don't). But maybe I'm missing
something—what do the UBI experts say?

~~~
jumbopapa
I don't know how inflation doesn't happen. If you increase the money supply
you increase demand for goods.

~~~
eloff
You would obviously get some inflation. How much is anyone's guess. It
wouldn't eat up all the UBI, but some percentage of it, certainly.

------
ilaksh
I think things like UBI will be much more practical if we can widely deploy
decentralization technologies that will allow us to get a better handle on
resource consumption and availability etc. And maybe you would even need to go
further by switching to digital money that is fully integrated with resource
tracking.

------
JChase2
You'd need a longer term study to see if the group's recieving it are better
off than a control group after x years, assuming that's the specific thing you
want out of this study.

------
willyg123
Testing UBI on a small scale fails to address how inflation will impact the
buying power of the recipients. Findings from experiments like this are
worthless.

------
dlphn___xyz
is this $500 on top of welfare and other social programs?

------
mruts
That sounds similar to what I would tell my parents I spent my money on when I
used to ask them for money when I was addicted to heroin. This “study” is
total garbage.

~~~
daenz
At least the researchers don't seem to be hiding the fact that accounting for
almost half of the money was done purely on the honor system:

>But 40% of the money has been withdrawn as cash, making it harder for
researchers to know how it was used. They fill in the gaps by asking people
how they spent it.

------
edoo
I was reading about one of these free money trials and realized it will never
really work that well. If you don't earn your money you will not spend it
wisely. In one of the trials a lady had a $150/month cell phone plan. I make
my own money and have a $20/month unlimited plan. My cat was getting fat until
I got him a puzzle feeder. The slightest amount of work for his resources
means he uses massively less resources. I suspect if everyone were given free
money the monthly nut of the average poor person would rapidly increase to
consume all funds and leave them in effectively the exact same or worse
position.

~~~
s0rce
Many people experience significant lifestyle and spending creep as they earn
more money, even when its still paid to them in exchange for work many still
spend it all on subjectively frivolous things. I don't think giving people
free money will be all that different. There are people who won't waste it
regardless. Also, UBI doesn't mean no one will work and not understand the
value of money.

