Financial prospects and optimism rise based on the economy, including among younger adults.
Amusingly, despite most people expecting next year will see their personal finances in a better place than now, those identifying as Democrats view themselves as “worse off” than before the last election. Seems like some odd political thinking getting mixed up in these various polls. Not surprising perhaps, since logical consistency is pretty rare.
Being “broke” today is a completely different standard than being broke 30 years ago, or just a few years ago.
What do you base this on?
The fact we all have bigger TVs and better phones?
As the article mentions, same idea applied for previous presidents. My guess is because the terms “better off” and “worse off” are not quantified. For example, one may be more wealthy or have higher income now than before, implying they’re “better off” under that definition, but with an uncertain political and trade climate, higher inflation, higher expectation of inflation, dissatisfaction with the direction the government may be considering (regulation vs deregulation, entitlement reform, retirement privatization, universal healthcare, etc), one could expect their financial luck to turn around and their wealth to evaporate quicker, so they really are worse off.
Yeah, that statement conveniently forgets that those huge bag cell phones were still $1500 back in the day, where $1500 was a LOT more spending power than it is today. It’s funny to see people complain about Apple charging $1k for a phone, yet they buy it anyway. Such is life, I suppose.
The “universal basic income” idealists aren’t going to like this study’s results. Free money didn’t help financially and did hurt on various happiness, mental health, etc, metrics. Did increase laziness tho.
Liberals argue that no-strings-attached handouts encourage better financial decisions and healthier lifestyles. The theory is that low-income folks become more future-oriented if they’re less stressed about making ends meet. The Harvard study put this hypothesis to the test and found the opposite.
Here as the setup
During a randomized trial conducted from July 2020 to May 2021, researchers assigned 2,073 low-income participants to receive a one-time unconditional cash transfer of either $500 or $2,000. Another 3,170 people with similar financial, demographic and socioeconomic characteristics served as a control group. Participants earned an average of about $950 a month and had $530 in unearned income (e.g., food stamps). About 80% had children, and 55% were unemployed.
The top-line result: Handouts increased spending for a few weeks—on average $26 a day in the $500 group and $82 a day in the $2,000 group—but had no observable positive effect on any individual outcome
So these people were on track to spend all their windfall in 20-25 days. Did this help? Nope, and neither did more cash vs less.
Handout recipients fared worse on most survey outcomes. They reported less earned income and liquidity, lower work performance and satisfaction, more financial stress, sleep quality and physical health, and higher levels of loneliness and anxiety than the control group. There was no difference between the two cash groups.
A reasonable interpretation from the WSJ, not the study itself -
the payments made work less rewarding, which reduced feelings of personal well-being. Cash recipients reported less earned income and felt worse about their work. It’s no surprise that people who received a large percentage of their monthly income for doing nothing were less motivated to work and less satisfied with their work. Earning a paycheck can give workers a sense of personal agency that encourages them to make better financial and health decisions. Receiving a handout may do the opposite.
As for financial outcomes, poor people often struggle to manage money, and this is one reason why many remain poor despite receiving plentiful government assistance. Merely giving people more money won’t make them better stewards of it, as the study showed. In some cases, people spend more than they receive and become overextended.
You might be surprised that Harvard allowed this to be published at all, given their political leanings these days, but I’m sure they all thought the results would be great going in. But they can’t exactly take the donor’s $500k and not write a paper about how it turned out, so we get to find out the truth after all.
These findings contradicted the predictions of 477 social scientists and policy makers the researchers surveyed. That’s not surprising. Most liberal academics and politicians believe government handouts are the solution to all problems. If transfer payments were a ticket to the middle class, the War on Poverty would have succeeded long ago.
The researchers posited that perhaps the cash payments weren’t generous enough to generate a positive result.
Ha! They were liberals, of course. They’ve never seen a failed social policy that they can’t imagine might be fixed by blowing twice as much taxpayer (or in this case donor) money on it.
I can see it increasing stress simply because you know you haven’t done anything to earn the payments - so there is nothing you can do to ensure the handouts continue. That’s something that’ll dissipate over time as the concept becomes more ingrained in our culture as being an entitlement, a short term study cannot account for that effect.
Seems like even this study also ignores how such payments would be inflationary - more money in more hands will cause price increases that negate the benefit of having this extra money in the first place. Much like what we are seeing after so many low wage workers began to receive as much as double their previous hourly wage.
So, this was a random one-time payment? UBI is supposed to be a regular monthly payment.
Did they control for other federal benefits? For example, last I checked food stamps had a hard cut-off, i.e., if you make under a certain amount of money in a month (~$1500?), you get ~$500+ extra in food stamps, but if you make more than that amount, you get nothing. By making $1 more, you lose $499. The same goes for Section 8 and similar federal housing assistance – there’s one where your rent payment is a percentage of income, so if you get a one-time payment, you use part of it to pay rent. Also Supplemental Security Income – it limits your cash “resources” to $2K/person or $3K/couple max, and if you get income from other sources you lose the SSI dollar for dollar. Point being that while a $500 payment is probably fine, a one-time $2000 payment will cause the average participant to lose food stamps, at least.
And it doesn’t surprise me that the recipients spent the money and did it quickly. That’s kind of the point of UBI – you get money so you can spend it and live a better life and make better decisions. But a one-time payment is a joke.
I don’t think anyone thinks this way. Free money is free money, especially if you don’t have any. But I agree that even if this was the case, it would dissipate over time if this was a guaranteed entitlement.
While I can see that such payments would be inflationary, they wouldn’t necessarily negate the benefit of having this money. Inflation hurts the poor the most, because prices rise faster than income. But if they made or were given enough money to live a decent life in the first place, inflation wouldn’t affect them as much.
Sorry for not reading the rest of your post, but have comments on where it was going … or should have been going. 
Imagine a rat that has had to navigate a maze in order to get 10-year-old cheddar cheese. Now, imagine a rat that has been given universal basic kraft cheese slices, one-half inch from it’s nose. Which rat will you bet your life on surviving adversity (which may be disguised as diversity)?
Isn’t this the reason that we ask, or possibly asked, welfare recipients to do something for the handout that taxpayers provided?
What sense of accomplishment is attained, or even perceived in a drug addled state, by opening an envelope?
I suspect that this is the genesis of the Eloi. Gabe, you were at least as good as Nostradamus,
What about the stay-at-home parents? That’s an unpaid job that’s more difficult than many paid jobs. There’s plenty of sense of accomplishment in raising children.
I doubt that anyone doing manual or tedious work for money gets much of that sense of accomplishment. I certainly didn’t at my first jobs in high school and college – I did them because I needed money. This is why the free payments make work less rewarding – because the low-wage work sucks, people just never have the time to stop and think about how much it sucks.
I think lots of such people do get that sense of accomplishment. Plenty of people take pride in their work, no matter how tedious or menial it may seem.
Flip the reward - and I’ll bet more often than not, the ‘rat’ navigating the maze will be more satisfied with his kraft cheese product slice than the ‘rat’ who was just handed the aged cheddar. Unless he sees the second rat get handed the better reward, then frustration starts to drown out the feelings of accomplishment.
This reminds me of Abhijit Banerjee’s findings on poverty in the developing world. He and his wife won the Nobel in Economics for their experimental research. There are several YouTube videos with their MIT lectures on the topic.
Are you still talking about rats 
? I doubt they’d care.
This.
The study isn’t really relevant to UBI.
I for one like the idea of UBI since it could replace an inefficient pile of governemtn programs SNAP, TANF, Seciton 8, SSNI, unemployment insurance, etc etc
There is a % of the population that won’t work for good or bad reasons. We can have 12 different ways to help them and police them and judge them or we can just cut everyone a check and not care.
I like the idea of rolling all those things into a works program - a guaranteed 8-hr/day job for anyone who wants it. Be it landscaping, copying/filing, janitorial, food service, whatever the local governments have to do (even if it’s sitting in a room waiting patiently all day, if you are too disabled to actually do anything productive). No unemployment, because there’a always a paycheck available. No SNAP, you want food then you just need to work for the day and you can buy your own. Etc, etc. People can make a career of it if they want.
This is too idealistic. It assumes people want to better their situation and won’t live their entire lives on UBI. Reality is that you can’t have an UBI instead of all those programs because people will have different number of dependents, some will live in San Francisco requiring significant payments just to afford an apartment, and so on.
The UBI as a fix-all-problems looks good on paper but it’s impractical in reality.
I see your point, but there are regional adjustments at least to SNAP and SSI – the state adds a little extra to the federal benefits. UBI is not any less practical than the existing assistance programs.
It’s hard enough to find people to flip burgers at $13/hr now. What happens to the price of going out to eat when it pays more to stay at home than it does to work at one of those places?