Is UBI a failed concept?

I came across the following video by Pete Judo. If you are very much interested in Academic research especially in Behavioral Economics, I recommend his channel.

The gist of the video is one of the experiments on Universal Basic Income “failed”. The subjects did not benefit much from having UBI, and in fact, they were poorer after the experiment.

Here are a few parameters of the experiment that I will put here for discussion in this issue of the newsletter. And another caveat, I didn’t have the time to dig up the paper for reading so I might do that during the year-end holiday break later on.

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Length of Experiment - 3 years or 36 months

Control Group - 2,000 pax collecting USD$50 per month

Experiment Group - 1,000 pax collecting USD$1,000 per month

Results were collected through a list of survey questions

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One of the key findings that surprised me was that pax in the experiment group did not do much to improve their human capital, i.e., they took the opportunity to pick up new skills. Most of them spent it on leisure.

So, does that debunk the “for UBI” argument that UBI will give participants some stability and that they can focus more on picking up skills that should make their lives better?

Right here is my argument.

Taking a Break

Let’s put ourselves in the shoes of a participant, receiving $1,000 per month and you KNOW that it is for 36 months. You have been working for the longest time and life was a struggle as you make ends meet. Finally, you have a sum of money that ensures your “survival” (another point for discussion later) for a while. What will you do? I will take a break as well. How long or how short then? This depends on how “tired” I am with the life before UBI. For me, there is a good chance I will take a year’s long worth of holiday, spend time with the family, catch up on this thing called YouTube, and have part of my time taken up by ads.

Now for me, I might take a year-long break but that is not representative unless we can collect more data from it. There might be participants that take 24 months (2 years) too.

Picking Up the Pace

It takes a certain characteristic to plan and execute a 3-year plan to take advantage of the UBI. After taking a long break, and that long break is a unique experience that not many humans have experienced before, it is time to pick up the pace again. Need to start that learning engine that you’ve kept dormant for a long period. Ever tried to restart an engine you’ve not started for the longest time?

Let’s spend time looking for a training program then. One of the decisive parameters the participants might be thinking of is… “Is there a program I want to take AND can afford it? Again the affordability issue was not addressed in the video at least. I think some data on whether the participants have looked for a training program and if they did, why did they not take it up might be good for the UBI study.

I’m Economic Ready!

Assuming a group of them manage to complete the rest, selecting and completing the desired and affordable training program all within 33 months. This gives the participant about 3 months to look for a job and to conclude that his/her life has become better after the 36-month UBI experiment, he/she should be drawing a salary that is higher than pre-UBI days. Again, some economic data will be good to determine if participants are applying for a job in a good economic climate or not.

Hurdles and Hurdles

Based on what you have read so far, you will know my points of discussion on whether this UBI experiment has truly failed. The point I want to drive at is that unless there is more information, we cannot conclude that UBI here failed. We can only conclude that UBI with the experiment parameter did not improve the quality of life of the participants.

Discussion on UBI

I will argue that to see the benefits of UBI, participants need to know that UBI is provided a lifetime (or equivalent say 10 - 20 years). As Singapore is an aging society, it gives me a view into how retirees think and I have to say there are retirees who do want to work to keep themselves occupied because an idle mind is a devil’s playground. I believe that after a period of rest, almost all participants will want to start working or learning again.

Another point I will discuss on is the quantum of UBI, which in this experiment is One Grand US Dollars. In Singapore at least, with SGD$1,000, one can lead quite a carefree life barring any major catastrophe, but not much leisure travel. I do believe such an amount can erode one’s motivation quickly and a better quantum may be around $700. The point I want to drive at is that quantum is another consideration for the successful execution of UBI.

Supporting Activities

For UBI to work, other supporting activities should be taken into consideration. For instance, designing suitable training programs, career coaching, and study areas. When UBI is implemented, if the relevant agencies can at the same time offer training programs to the participants, that may at the very least occupy their mind-space that they should take advantage of the stable environment to commit time for learning.

Conclusion

I felt it was a rushed conclusion to make that UBI failed. Despite the video, I am still a strong believer in UBI with different parameters as compared to the one discussed in the video. And yes, I concur it will not be easy to conduct such an experiment with the parameters I stated given the expenses and timeline. We might have human-level intelligence in machines before we conclude such an experiment. :P

So what are your thoughts on Universal Basic Income? Aye or Nay? Why?

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