
A new report on a basic income scheme launched in Iran - pmcpinto
https://theoutline.com/post/1613/iran-introduces-basic-income
======
Endama
I wonder if UBI actually allows the economy to become more efficient. It could
be the case that an abusive employer would be more severely punished by the
labor market if the economic cost to the worker is diminished by a UBI (i.e.
My boss is a jerk, I'm just going to quit and find an employer that treats me
better). I would assume then that satisfied employees, with good employers,
would then be more productive than their dissatisfied counterparts.

It also seems reasonable to assume that workers would also be more likely to
create new businesses entirely if the personal financial risks associated with
doing so were diminished by a UBI.

~~~
tryitnow
The flip side of this is abusive workers who will refuse to put in good effort
because the cost of getting fired is lower.

Of course, we could argue that workers should be more motivated by the promise
of a good reward, but it looks like evidence from behavioral economics
suggests that fear of loss is approximately twice as powerful as the hope of
gain. So let's not underestimate the power of fear to generate productivity.

By the way, I am generally supportive of the UBI, just wanted to point out a
potential cost. Over the long run I think the UBI's benefits would exceed its
costs, but I can't deny that there are real costs to an UBI (beyond the simple
direct costs).

~~~
zimzam
That's not an abusive worker, that's just a bad worker.

In the current system bosses are sometimes hesitant to fire people if they
know they have a family to support. Knowing people have UBI to lean on there's
much less guilt about letting people go.

~~~
jlebrech
and people can leave when they have a shitty boss and they know they could be
their own boss.

It'll also kill of a load of businesses where there's a bulk of minimum wage
staff that could work for themselves.

------
pesfandiar
Iranian expat with some insight into this program here; any study that doesn't
isolate confounding factors will be inconclusive at best, especially since the
Iranian economy has been changing drastically in recent years. Hyperinflation
during Ahmadinejad administration, economic embargoes, and the nuclear deal
affected people's lives so much more than a measly basic income.

Also, a fraction of the average (or even median) income is not a good
indicator, because of high class division in Iran. It certainly doesn't
translate into what $16K can give you in the US. E.g. if you're an unemployed
youngster living with your parents in Tehran, it can help you with your
entertainment budget, but it's in no way a life-changing amount.

~~~
bryondowd
Just curious, but would it be enough to subsist in a rural part of the
country?

Just curious what the amount of money could cover, in terms of food and
shelter.

~~~
pesfandiar
It could be a big help. In fact, the program's name roughly translates to
"subsidy" or "helper amount", which sets the right expectation I guess.

The cost of living is vastly different in urban centres and rural areas
though, as is the quality of life in general. You can live on that kind of
money if you live in the boonies and only consume locally-sourced food
(increasingly rare as the middle east is getting hit hard by climate change),
but anything that's imported will be prohibitively expensive. That includes
medicine and fuel.

Once you enter a large city (where you can have an acceptable quality of
life), shelter becomes very expensive. Putting together the deposit to rent an
apartment for Iranian youth is almost as hard as saving up for a mortgage
downpayment in the US.

~~~
geff82
And honestly, most now live in the cities. By the way on a good standard for
many and with almost no homeless people to be seen (I call you, USA).

------
cbanek
These studies have been popping up on HN, and they're all pretty interesting,
yet all seem fairly inconclusive to me.

This one started in 2011, and I'm guessing since the article doesn't say they
stopped, that it is still going on?

> The report found no evidence for the idea that people will work less under a
> universal income, and found that in some cases, like in the service
> industry, people worked more, expanding their businesses or pursuing more
> satisfying lines of work.

but yet they say:

> The researchers did find that young people — specifically people in their
> twenties — worked less, but noted that Iran never had a high level of
> employment among young people, and that they were likely enrolling in school
> with the added income.

It seems like tracking how many people who are enrolled in school would be
fairly easy to track to verify this. They do say in the paper that youth does
have a reduced labor rate, but then they say it might be education (but
provide no numbers):

> While there is no evidence of a negative supply response for the average
> worker, male or female, there is one for youth in their twenties. If one
> were to expect a strong negative impact it would be for youth, who have weak
> job attachment, can stay in school longer, or enjoy more leisure, though we
> do know which of these options they choose.

While I do think there's value in looking at the micro circumstances, I do
wonder how culture will change and shift because of UBI, and how that will
also affect its outcome.

For example, if we say that we believe in UBI, that means that basically
everyone should have enough money to live. We're offering an entitlement to
which people will feel entitled. Over time, how will that change society?

One past example of this would be college education. Nowadays everyone goes to
college, but it wasn't always so. Would as many people to go college if
society didn't push them that way? One other such cultural shift might be
women entering the workforce, or desegregation, and how that lead toward the
fight for civil rights.

~~~
simion314
Since many things happen in that period this is not a controlled experiment so
you can't have strong conclusions, they can notice some correlations at most
such as the program did not increased the number of unemployed people, maybe
something else balanced this program but this was not found so the authors are
challenging others to look at the data and find things that support the idea
that unemployment would rise or other bad side effects.

------
jasode
Found a litte more background info.[1]

If I'm reading that right, Iran basically tried to swap fuel subsidies with
"universal grants" (aka "basic income"). The grants were a lower amount than
the fuel subsidies so it was a strategy for the government to reduce overall
spending.

What's not clear is if people _kept working_ to help pay for the shortfall in
fuel subsidy or compensate for spending on other goods that the higher fuel
subsidies allowed. Maybe this clarification is in the researchers 31 page pdf
but I haven't had a chance to read the whole thing.

[1]
[https://books.google.com/books?id=MPahDQAAQBAJ&pg=PT162&lpg=...](https://books.google.com/books?id=MPahDQAAQBAJ&pg=PT162&lpg=PT162#v=onepage&q&f=false)

------
darioush
Having lived in Iran, the program is not a UBI, but a "replacement" for the
petroleum and energy subsidies that were provided to all. So, instead of the
government paying for your gas - which subsidies consumption - the idea is to
pay a fixed subsidy primarily to benefit the very poor. This income has a
large benefit for the very poor parts of society, but they still have to work
to make ends meet. If this amount of money makes a difference to you, you
probably have no disposable income. This is more akin to a tax reform than a
UBI program, though.

------
tezka
Even though I am sympathetic to the idea of Universal income, the fact the
Iran's economy experienced inflation as high as 45% the rapid rise of which
correlates closely with the start of this program[1], should make this a
worrisome rather than promising case study.

[1] [https://d3fy651gv2fhd3.cloudfront.net/charts/iran-
inflation-...](https://d3fy651gv2fhd3.cloudfront.net/charts/iran-inflation-
cpi.png?s=irairaninfnrate&v=201705282226v&d1=20070101&d2=20171231)

~~~
intopieces
It also correlates closely to the increase in banking sanctions, which were
enacted very close to the spike in that graph.

[https://www.nytimes.com/2013/06/04/world/middleeast/us-
adds-...](https://www.nytimes.com/2013/06/04/world/middleeast/us-adds-to-its-
list-of-sanctions-against-iran.html)

~~~
tezka
sure, sanctions may very well be one of the factors causing such high
inflation levels (although I am hesitant to say that they completely explain
away the massive increase in the money supply. FWIW, according to IMF, in 2008
Iran's M1 base has been around $70 billion[1]. Giving a population of over 75M
a $1.5 * 365 does nicely increase that base by around 50%). My main main point
however was not to claim that the UBI program caused the inflation, rather to
challenge the reliability of the main claim of the report as to the change the
UBI makes to people's working behavior. Under such high inflation, whatever
the cause, people need to work more, rather than less, to make ends meet, so
comparing their behavior to pre-inflation periods is just bad science.

[1]
[https://en.wikipedia.org/wiki/Central_Bank_of_the_Islamic_Re...](https://en.wikipedia.org/wiki/Central_Bank_of_the_Islamic_Republic_of_Iran#Money_supply_and_inflation)

~~~
Retric
Handing out money every month means it's much closer to 1.5 * 30 than 1.5 *
365.

~~~
tezka
The article says $1.5 a day IIANM

------
oarla
Maybe a dumb question, but I have always wondered this.

Won't UBI just shift the poverty line to a value above whatever it is now(0
maybe), without changing the income inequality/wealth difference. In a hyper-
simplistic hypothetical scenario, if it's assumed that a person is poor if he
has $0, with UBI, he'll have $X/month, making him above the poverty line. But
now the entire country, rich and poor, have at least $X/month, which might
translate to an increase in cost of all goods/services by $X, rendering the
poor as poor and rich as rich.

~~~
AnthonyMouse
> Won't UBI just shift the poverty line to a value above whatever it is now(0
> maybe), without changing the income inequality/wealth difference.

As far as I can tell this keeps coming up because the answer is "no" but the
explanation is complicated.

The are two types of inflation.

One is industry-specific and happens when the government subsidizes something.
For example, if the government provides education subsidies then the cost of
education increases compared to other things like food or transportation.

The other is currency-specific. When the government prints a lot of new
currency, the value of a dollar goes down. Prices go up not because there is
more demand for products but because there is less demand for dollars.

A UBI doesn't do either of those things. It doesn't subsidize any specific
thing and it doesn't create any new money.

The closest you can get is that there is a theory that higher income people
spend less of their income than lower income people, so anything that
transfers money from higher income people to lower income people is equivalent
to creating new money, because the money in the hands of higher income people
was effectively out of circulation.

That general form has nothing to do with a UBI. It applies equally to any
government program that produces per-capita public benefits from sales or
income tax revenues. The rich pay a tax and the poor get public schools and
housing subsidies, which means the poor have the money they didn't spend on
schools or housing and can spend it on something else.

Moreover, the effect is small (most people aren't rich enough to never spend
their money), and it's simple to compensate for it -- the government is
constantly creating new currency because more currency is required as the
economy grows. So if you want less inflation, print less money.

And that's assuming that moderate inflation would be a problem, but in fact
it's a benefit. The country is in a debt crisis. People have too much mortgage
debt, too much student debt, too much credit card debt. The government itself
has too much public debt. The prices of housing and education and medicine are
too high, but lowering nominal prices is very difficult because everyone has
mortgages and contracts that assume the existing prices. The US balance of
trade has been out of whack for decades. Lowering the value of the dollar
helps with all of those things because it lets the nominal price of those
things stay the same while reducing their actual cost back to sane levels.

~~~
mac01021
Imagine, though, a city where most poor people earn about $1000 per month
spend about $750 rent (housing). If the landlords catch wind that everyone is
now taking in $1200 after the institution of UBI, won't they collectively up
their rates to $950 (because where else are the tenants going to go)? And who
does that help but the landlords?

This is the (less abstract) way I've seen the question asked before. I'm not
necessarily saying that this is what would happen (it could though, especially
if the landlords are on the zoning board). I'm just saying you haven't
necessarily answered the concern here.

~~~
AnthonyMouse
> Imagine, though, a city where most poor people earn about $1000 per month
> spend about $750 rent (housing). If the landlords catch wind that everyone
> is now taking in $1200 after the institution of UBI, won't they collectively
> up their rates to $950 (because where else are the tenants going to go)?

Where is the extra $200/month supposed to come from? A UBI doesn't create new
money. If the average person had $1000/month before then they will still have
$1000/month. For the government to pay $1 in UBI it has to collect $1 in
taxes. There is no extra money for the landlords to capture.

~~~
dragonwriter
> For the government to pay $1 in UBI it has to collect $1 in taxes.

Excluding debt financing (with which it need not increase present taxes) or
monetization (with which it need never increase taxes.)

> There is no extra money for the landlords to capture.

Even in the balanced-budget, non-monetized case, landlords renting to a
particular social class may have more money to capture if the taxes are levied
on a different class (landlords or other vendors selling to a different class
may lose money for the same reason.)

~~~
AnthonyMouse
> Excluding debt financing (with which it need not increase present taxes) or
> monetization (with which it need never increase taxes.)

Which is equally true of any government program financed in those ways.

> Even in the balanced-budget, non-monetized case, landlords renting to a
> particular social class may have more money to capture if the taxes are
> levied on a different class (landlords or other vendors selling to a
> different class may lose money for the same reason.)

That's hardly "UBI leads to fully-canceling prices increases".

------
ghufran_syed
My concern about UBI is not the initial situation, but what happens in a
democratic society, when the majority of citizens can continually vote for
increases in the level of UBI, which will be paid for by the small number of
the richest in society. If $20000 UBI annually is good, why not vote to
increase it to $40000? Or $60000? Or $1,000,000? And will "the rich" be happy
to keep paying more and more, while their level of work remains the same?
Isn't there _some_ level of taxation at which those people would quite
rationally either work (and earn) less, or go live in another country that
doesn't have a similar tax burden?

I feel there is something very different between the richest 80% choosing to
tax themselves more to support the poorest 20%, vs the poorest 80% or 90%
forcing the richest 10 or 20% to hand over an ever-increasing amount of money.
Even if you think that is morally correct, I don't think it would _work_

~~~
flukus
The situation is no different than it is now. People can vote for welfare
increases or lower taxes, or vote for increased taxes on the rich.

------
neilwilson
Why basic income experiments are a fallacy of composition.
[https://medium.com/modern-money-matters/is-basic-income-
basi...](https://medium.com/modern-money-matters/is-basic-income-basically-
finnished-babadac2d29b)

------
ttoinou
This article is really bad. M. Friedman has nothing to do with UBI. What is
the origin of the money given ? No one seem to talk about it.

From the paper "Assuming that leisure is a normal good, economic theory
predicts that an increase in unearned income reduces labor supply [...] In
this paper we study a large cash transfer program in a developing setting, one
that has come under criticism for its potential negative labor supply effect"
Why would reducing the labor supply be a bad thing ? If we can live the same
lives and work less, that's definitely a good thing.

~~~
ende
Friedman advocated a form of UBI called negative income tax. Today we know it
applied as policy in the form of the EITC.

~~~
dragonwriter
The EITC is not a negative income tax or UBI, it's a ramp-up/ramp-up means-
tested and behavior-tested welfare program.

It may have been inspired by the NIT, but the essence of the inspiration was
lost entirely in conventional welfare-program thinking.

~~~
ende
Yes, you're right. To be clear, Friedman's NIT was merely a spiritual
successor to the UBI, and the EITC is of course what happens when ideas
traverse through the bastardization of academia to actual policy making.

Who is to say what an actual UBI would look like after undergoing a similar
process.

------
kangnkodos
The article says, “In the U.S. such a measure would translate to about $16,000
per year.” No. $1.50 per day per household is not the same as $45.00 per day.
I see what they did. They zeroed in on 29% of median income. That’s a nice
trick to make their argument stronger, but it makes no sense. $1.50 per day is
$1.50 per day regardless of the median income. This article tells us what
would probably happen if you gave a family $1.50 per day. It says absolutely
nothing about what would happen if you gave them $45.00 per day

~~~
bryondowd
I was going to argue with this, but looking into it, it seems the cost of
living is only about 50% of the US, so it's really more equivalent to $3/day
or so in the US, which would be about $1k/yr. So yeah, I'm a lot less
impressed by this now.

It looks like you'd be able to maybe cover basic staple foods in Iran with
this income, without anything left for shelter or other necessities. But that
said, it means the median income is only about equivalent to $3k/yr US in
spending power, which is incredibly depressing, and makes me wonder if I'm
doing some math wrong, since surely half the population can't be poor to the
point of homelessness. Perhaps the numbers I'm looking at don't factor cost of
living in rural vs urban areas, and there is an order of magnitude difference?

~~~
notahacker
Shelter costs very little in poorer countries where the land is worth much
less and building regulations and taxes are reduced (and some consumer goods
Iranians don't expect to have or don't replace regularly cost more) which is
one of the big problems with PPP adjustments trying to assess costs of living
in different countries based on a basket of goods. Not that the unconventional
method the article uses of scaling median income to suggest it's as high as
$16k per year is any more representative. To the extent it's possible to
compare the standard of living of an Iranian on UBI with a US standard of
living it's probably in between those extremes...

~~~
gorkemyurt
Very few homeless people in Iran as people can always return back to their
'village' if they don't make it in the city. There will be relatives helping
them out and land more or less costs nothing.

------
geff82
I disagree to call this a UBI. No one in Iran was ever able to live from this
in any way. It is like the 193€ child support the German state pays to every
parent: it is helping, but I could not pay even the lowest rent in the country
with it. I know this "UBI" from Iran because of my relatives there and
essentially it was considered a joke and no one cried a tear when it went
away.

------
tuxidomasx
To be honest, the idea of universal income appeals to me because it sounds
like free money.

So one could simply decide not to work at all and use that UBI money for
housing, food, and habits and everybody would be fine with that.

I can see how that would have appealed to my 20-something year old self; and
it's not much different than how it appeals to my 30-something year old self.

~~~
bluGill
You lost me with the "and habits". Bill Gates has said he wants his kids to
have enough money to do anything, but not so much they can do nothing. Which
is to say you can get a good education, but at some point you need to do
something with your life other than gamboling, drugs and prostitutes [you can
substitute/add whatever wasteful habits you want here]. It is quite obvious
(almost a straw-man) that if everybody did that society would collapse.

I want enough of a fall back that people survive. I want it uncomfortable
enough that people decide to get a more productive job if they can. (leaving
only the disabled to actually live on the basic income)

Of course I don't know what your habits are. If they are walking around the
park you can do that cheaply, I'm willing to take the risk that you won't get
bored quickly doing that.

~~~
ythn
At what point is your definition of "discomfort" another person's definition
of "poverty?" Discomfort today is poverty tomorrow, especially if the standard
of living keeps going up.

~~~
bluGill
this is a trick question and the fact that I do not have an answer is why I
ultimately oppose the idea (everything else I can see the pros and cons going
either way so I would want to see how they plays out in practice in our
culture before I give judgement on if it is good or bad).

The reason it is a trick question is based on the following two real people I
know. (I'm trying to hide as many details as I can, but these are real people
so there isn't much I can do)

Person A was a straight-A student until she dropped out in 10th grade. Then
she a few kids by different men - all losers who rarely held any sort of job
(she dropped out before getting pregnant, but getting pregnant was her plan).
In short the stereotypical image of "folks standing in a welfare line"

Person B was born with Downs Syndrome. He is assistant usher at the movie
theater, a job he has held for years and does okay in, but when there are
problems the head usher (some kid who has only worked there for 2 weeks) takes
over.

When we are talking person A: she made her bad choices and I have no sympathy
for them, she can live well below the poverty line. I make some different
choices: when she dropped out her life was better (no school) than mine, but
by choosing to continue in school I made my life better.

When we are talking person B: life is stacked against him. He was never able
to amount to anything, but he has my full sympathies. I want him to have a few
luxuries in life that he will never earn himself.

There are lots of other cases you can point to where ultimately I want to give
a different answer on a case by case basis.

------
ChuckMcM
Specifically they found that generally people didn't work less, although young
people did and they aren't sure if they are just not working, or if they are
going to school. They counter that observation that employment in young people
is also low in general. (presumably allowing for systemic unemployment of some
form).

There is a consistent outcome from many BI tests, which is that just knowing
there will be some money each month can mitigate stress and anxiety in people.
People with reduced stress and anxiety are both more productive and more
functional.

~~~
maxxxxx
I think you can judge success of UBI only over decades and generations of
people. People who grew up in a world of UBI will have a totally different
view on life than current generations.

I am not saying it's good or bad but I think it will be very difficult to
figure out what the eventual outcome of UBI will be in a few decades.

~~~
vorg
> you can judge success of UBI only over decades and generations of people.
> People who grew up in a world of UBI will have a totally different view on
> life

Thay's why I think experiments like the Finnish one also mentioned on the
linked page:

"Finland will select 2000 unemployed citizens to receive 560 euros a month for
2 years - no strings attached. It's part of an experiment to find out what
happens people's desire to work when they're guaranteed a basic income."

are nearly useless for evaluating the effect of UBI on an economy.

------
matthjensen
Here is a new working paper on implementing a budget-neutral UBI in the US. We
use a suite of open source models.

[https://www.aei.org/wp-content/uploads/2017/05/UBI-
working-p...](https://www.aei.org/wp-content/uploads/2017/05/UBI-working-
paper.pdf)

------
nwah1
The biggest problem is that, as per the law of rent, rents will rise by the
amount of the dividend once the market has time to react to it.

There would be constant compulsion to raise the basic incomes at the cost of
greater and greater public debts or taxes on production... and all the
corresponding deadweight loss.

However, if it were funded by taxing land by value, then the rising rents
would produce a sustainable public surplus.

------
idibidiartists
I believe UBI would lead to changing the fundamental nature of money as it
goes from scarcity based to rate-of-flow based in its value basis. It will
work as long as people who receive UBI spend that money, as opposed to horde
it. That mens UBI should be given to people who have no other sources of
income, not to those who will likely just accumulate it with no intent to
spend it.

~~~
vizeroth
There's a significant gap between the bottom end of people with other sources
of income and those who will "accumulate it with no intent to spend it".
Further, even if you give it to everyone across the board, most of the people
who don't need it for basic expenditures and have no intention of saving for a
big purchase at some point in the future (e.g. a down-payment on a car or
house) would likely be making enough money that the UBI is less than their
taxes.

------
nnfy
>The report found no evidence for the idea that people will work less under a
universal income, and found that in some cases, like in the service industry,
people worked more, expanding their businesses or pursuing more satisfying
lines of work.

>The researchers did find that young people — specifically people in their
twenties — worked less, but noted that Iran never had a high level of
employment among young people, and that they were likely enrolling in school
with the added income.

Seems the authors' agendas are leaking through, these two consecutive
paragraphs from the article essentially contradict each other and the premise
of the article.

What I read: "we found evidence that young people did work less, but we hand
waved it away with a seemingly plausible and totally unsubstantiated
assumption."

This is politicized science.

~~~
swampangel
The linked report makes the distinction a little clearer:

> For the most part, we focus on the labor supply of poorer workers, who are
> more likely to reduce their labor supply as a result of a modest increase in
> unearned income. Our results do not indicate a negative labor supply effect
> for either hours worked or the probability of participation in market work,
> either for all workers or those in the bottom 40% of the income
> distribution. We do find a negative labor supply effect for workers 20-29
> years old for their hours worked.

~~~
notahacker
The linked report is also more comprehensive than the summary, including the
points that: (i) the next Iranian government and Iranian press strongly
believe that it _did_ cause massive reductions in labour supply in certain
suggestions including citing a paper claiming a loss of 500,000-700,000
agricultural workers[2] (ii) the context of the poorer people not dropping out
of work was a period of enormous inflation (caused in part by US sanctions)
and the removal of enormous food and fuel subsidies which the program replaced
and (iii) this measures very short term impacts (prior to the program launch
and within the first three months): against the backdrop of rising prices and
brand new US sanctions it's perhaps particularly unlikely that many poorer
workers would rush to quite their jobs, even if it were to produce such an
effect in the longer term in times of greater economic security (iv) it's
actually specifically focusing whether people were more likely to quit their
jobs than people who didn't get the subsidy for the first three months due to
paperwork problems rather than whether employment didn't fall overall; the
paper correctly points out that in an economy with wide access to cheap credit
(not Iran) the orthodox economic view would actually expect those receiving
subsidies now and those expecting to receive them asap to respond by reducing
willingness to supply labour by similar amounts (v) there was a perfectly good
reason for them doing the study that way because Iranian labour force trends
are all over the place

TLDR: the actual study doesn't tell us very much through no fault of the
authors, because a lot of other shocks were happening to the economy at the
time. Which is a shame, because it was a huge new program in a middle income
country that didn't involve outside capital, which would have made it much
better evidence of a UBI's expected effects than most studies carried out.

[2]having read that paper as well, it doesn't appear to be a claim with
empirical support

