The framing here is a bit off. As far as I can see, they don’t link to anyone actually saying something like “poverty is cured by direct cash transfers.” I don’t know who believes that. I browsed through the Denver study and while some metrics didn’t significantly improve, many of them did. I think the author overplays their hand somewhat.
Some NGOs that help unhoused people did shift to direct cash transfers because 1) they still help improve material conditions (even the author agrees with this), and 2) it’s politically easier than trying to convince locals to actually build affordable housing.
Of course a holistic approach is probably going to improve conditions better, but no one with actual political power is interested in doing that.
> Homeless people, new mothers and low-income Americans all over the country received thousands of dollars. And it's practically invisible in the data. On so many important metrics, these people are statistically indistinguishable from those who did not receive this aid.
> I cannot stress how shocking I find this and I want to be clear that this is not “we got some weak counterevidence.”
I don't think this is surprising when considering personal experience with people, at least not for me.
I know people with various degrees of success in their lives. For instance, you meet someone who is chronically broke. At first, you empathize and see them as more or less a victim of misfortune. Unseen car repair bills, job losses, etc. But if its someone you follow over years and get to know, you begin to realize a lot of their problems are self inflicted. For instance, they may get a new job with a big pay raise. But they just adjust their spending up. Some windfall that could turn things around becomes a vacation. And so on.
The same is true with other personal problems. Like the perpetually single person, who upon further examination, doesn't do anything to help their chances. Or the overweight person with a thyroid problem, that really just over indulges.
Helping people we're close to and love is hard enough. I can't imagine just solving some strangers problems by writing them a check
What you say is 100% true for some. I saw a poor family run a fundraiser for themselves; they spent $300 on a donation party that brought in < $50 (and was unadvertised except amongst friends). Truly dumb implementation, by not-dumb people.
It is 100% not true for others. My neighbors know every damn trick in the book for welfare; it's a part of their budget. More money removes serious obstacles in their days.
The main study mention found 3 years of 1k a month had no impact on health, stress, sleep, jobs, income, education, child's education, or time spent with children compared to the control. Other studies have also shown tiny benefits a their headline findings.
I think its clear UBI is not the savior people wish it was, sadly.
I’m not convinced because all of these examples gave people a pittance. $1000 a month at most? Give me a break. If someone is drowning, you can’t give their arm a little tug and claim that as strong evidence that pulling them out of the water won’t save them.
It's 66% of the current Federal Poverty Level. That means that much of the poor people studied (in the US) were making less than that annually (they don't all lump up at the high end of poverty).
If giving someone a 66% or more bump in income doesn't change their situation, they didn't have money problems to begin with.
The centerpiece of the author's thesis, which is that "the media" exaggerates the impact of cash payments to the poor, is undercut by an egregiously sloppy reading of the results of the Denver Basic Income study: she criticizes the project's claim that there was significant improvement in housing for people receiving $1000/mo vs the control group receiving $50/mo, citing results that show 43% of the controls were in housing by the end of the study while 44% of the test group were. What she fails to mention is that 12% of the controls were already housed at the beginning of the study, vs only 6% of the test group.
She also fails to mention that the Baby's First Year study was unfortunately overlapped by the Covid epidemic, introducing an enormous confounding factor (made all the more significant since the study measured child welfare), not to mention the Covid payments that likely dwarfed the $333/mo study payments and would have been received by both control and test subjects.
This is a completely unsurprising outcome to anyone who has actually been poor and spent considerable time around poor people. Being poor is both a mindset and an actual socioeconomic status. Giving enough cash to marginally change socioeconomic status will not change the mindset. The biggest thing we could is actually improve financial literacy in the US by mandating it as part of our standard educational curriculum, but that will never happen as so much of our economy is built off exploiting the uneducated, who are almost always poor.
I started in pretty much the same circumstances as most of my peer group, with one distinct difference, my dad had gone to school for business and accounting and was a bit miserly, he instilled in my an understanding of the value of a dollar and the right skillset to track where my money is going. That small little difference is what separates the fact I will end up dying a multi-millionaire and my peer group are mostly going to end up dying broke. Obviously there's hundreds of thousands of little choices we make every day of our lives that nudge things in one direction or another for your financial trajectory, but starting with a grounding in financial literacy is literally life-changing.
It's not cash that people need, it's education, so that they can actually effectively use the money they already earn. I started saving from my very first job as a teenager, and have never stopped. The median American net worth excluding home equity is negative, mine has never been negative at any point in my entire life, from before I was an adult, despite growing up low-income in a rough area.
A few hundred to $1K seems too little to have much impact.
Going from 0-$1k/mo or $1K to $2k/mo means you're still broke.
You can definitely afford some food or necessities that were harder before, but fundamentally, you still need to hustle to change the fundamental financial situation.
I would still have expected that going from 0-1K to 1-2K would allow a lot more people to bootstrap themselves out of poverty. At least under the hypothesis that Poverty is a symptom of a persons circumstances, with most notably a lack of a financial buffer allowing for smart moves (e.g. the Sam Vimes theory of boots, or not being able to get a job because you cannot afford transportation).
In that case, that extra money should likely cause quite a few people to get out of those self-reinforcing poverty traps, and let them escape.
A question for people who, like the author of this article, are genuinely surprised by these results: do these results change the way you think about what social interventions are feasible? Do they change the way you think about human nature?
Every time I read explorations into basic income or cash transfers, I look for any signs that recipients' models of how money or wealth work are changing, and I don't see it. Thus, it seems to me like an evergreen source of naivete where the directors of cash expect the structural problems from not understanding those concepts to erode, but never do.
I wonder about the possibility of a graduated financial literacy scale for participants that studies can use.
For example, I have too many connections to the financially struggling to not ask for the receipts when they complain to me. Well, they demur, the cost of living is expensive. Okay, but can I see your spending? Typically never, but when I do, it's bad loans, unrestrained taxis-for-your-burritos and impulse purchases that fritter their income away $5-50 at a time indefinitely. There is no saving. There is no wealth. Only impulsivity. Nor is there change or recognition. New or bigger income sources only change one variable of their equation while their spending behaviors are fixed, and the outcomes are the same.
Contra, "The First $10,000 [of Net Worth] is the Most Important":
> What’s the smallest amount of money that you would consider “life-changing”? Some might say $100,000. Others over $1 million. If you had asked me this question a few years ago, I would have told you something similar.
> But today, I’m convinced that the most life-changing amount of money is $10,000—in particular, the first $10,000.
[…]
> Why? Because getting out of Level 1 fundamentally changes how you experience life. You go from focusing on your next paycheck and dreading your next bill to enjoying your time without worry. Getting out of Level 1 frees your mind so that you can focus on other things. That first $10,000 can bring: Stability […]; Confidence […]; Momentum […]; Mental freedom.
I believe this was previously flagged and has now been unflagged by the mods.
I wonder why they chose to unflag this and not, for instance, “Brennan Center for Justice Report: The Campaign to Undermine the Next Election,” which is far better journalism and had a lot more discussion: https://news.ycombinator.com/item?id=44816165
They say they don’t make moderation decisions for political reasons, but I am finding it harder and harder to see.
24 comments
[ 4.8 ms ] story [ 55.6 ms ] threadSome NGOs that help unhoused people did shift to direct cash transfers because 1) they still help improve material conditions (even the author agrees with this), and 2) it’s politically easier than trying to convince locals to actually build affordable housing.
Of course a holistic approach is probably going to improve conditions better, but no one with actual political power is interested in doing that.
> I cannot stress how shocking I find this and I want to be clear that this is not “we got some weak counterevidence.”
I don't think this is surprising when considering personal experience with people, at least not for me.
I know people with various degrees of success in their lives. For instance, you meet someone who is chronically broke. At first, you empathize and see them as more or less a victim of misfortune. Unseen car repair bills, job losses, etc. But if its someone you follow over years and get to know, you begin to realize a lot of their problems are self inflicted. For instance, they may get a new job with a big pay raise. But they just adjust their spending up. Some windfall that could turn things around becomes a vacation. And so on.
The same is true with other personal problems. Like the perpetually single person, who upon further examination, doesn't do anything to help their chances. Or the overweight person with a thyroid problem, that really just over indulges.
Helping people we're close to and love is hard enough. I can't imagine just solving some strangers problems by writing them a check
It is 100% not true for others. My neighbors know every damn trick in the book for welfare; it's a part of their budget. More money removes serious obstacles in their days.
I think its clear UBI is not the savior people wish it was, sadly.
If giving someone a 66% or more bump in income doesn't change their situation, they didn't have money problems to begin with.
She also fails to mention that the Baby's First Year study was unfortunately overlapped by the Covid epidemic, introducing an enormous confounding factor (made all the more significant since the study measured child welfare), not to mention the Covid payments that likely dwarfed the $333/mo study payments and would have been received by both control and test subjects.
https://www.denverbasicincomeproject.org/research
https://newrepublic.com/article/199070/government-cash-payme...
I started in pretty much the same circumstances as most of my peer group, with one distinct difference, my dad had gone to school for business and accounting and was a bit miserly, he instilled in my an understanding of the value of a dollar and the right skillset to track where my money is going. That small little difference is what separates the fact I will end up dying a multi-millionaire and my peer group are mostly going to end up dying broke. Obviously there's hundreds of thousands of little choices we make every day of our lives that nudge things in one direction or another for your financial trajectory, but starting with a grounding in financial literacy is literally life-changing.
It's not cash that people need, it's education, so that they can actually effectively use the money they already earn. I started saving from my very first job as a teenager, and have never stopped. The median American net worth excluding home equity is negative, mine has never been negative at any point in my entire life, from before I was an adult, despite growing up low-income in a rough area.
Going from 0-$1k/mo or $1K to $2k/mo means you're still broke.
You can definitely afford some food or necessities that were harder before, but fundamentally, you still need to hustle to change the fundamental financial situation.
In that case, that extra money should likely cause quite a few people to get out of those self-reinforcing poverty traps, and let them escape.
I wonder about the possibility of a graduated financial literacy scale for participants that studies can use.
For example, I have too many connections to the financially struggling to not ask for the receipts when they complain to me. Well, they demur, the cost of living is expensive. Okay, but can I see your spending? Typically never, but when I do, it's bad loans, unrestrained taxis-for-your-burritos and impulse purchases that fritter their income away $5-50 at a time indefinitely. There is no saving. There is no wealth. Only impulsivity. Nor is there change or recognition. New or bigger income sources only change one variable of their equation while their spending behaviors are fixed, and the outcomes are the same.
Money is a metric. Life is qualitative, with quantitative pieces.
> What’s the smallest amount of money that you would consider “life-changing”? Some might say $100,000. Others over $1 million. If you had asked me this question a few years ago, I would have told you something similar.
> But today, I’m convinced that the most life-changing amount of money is $10,000—in particular, the first $10,000.
[…]
> Why? Because getting out of Level 1 fundamentally changes how you experience life. You go from focusing on your next paycheck and dreading your next bill to enjoying your time without worry. Getting out of Level 1 frees your mind so that you can focus on other things. That first $10,000 can bring: Stability […]; Confidence […]; Momentum […]; Mental freedom.
* https://ofdollarsanddata.com/the-first-10000-is-the-most-imp...
* https://news.ycombinator.com/item?id=44931836
* https://ofdollarsanddata.com/the-wealth-ladder/
The research he cites finds that happiness starts levelling out at Levels 3-4 of his framework. Some of his posts on the subject:
* https://ofdollarsanddata.com/?s=happiness
I wonder why they chose to unflag this and not, for instance, “Brennan Center for Justice Report: The Campaign to Undermine the Next Election,” which is far better journalism and had a lot more discussion: https://news.ycombinator.com/item?id=44816165
They say they don’t make moderation decisions for political reasons, but I am finding it harder and harder to see.