If you run the math, the max financially sustainable UBI for the US is about $1500/month, less for most other countries. Very few people are going to quit their jobs for $1500 a month. Even if you're only making $7/hour, the difference between $1500 and $1500+$7/hour is the difference between rice and beans for every meal and a somewhat normal life.
Those making $7/hour are often working two jobs, UBI would allow them to quit one of them.
Average income is $48k in the US. Increase income tax rate enough that somebody with average income nets at 0. So having them pay $18k more in taxes while receiving $18k in UBI seems feasible-ish, if barely. Having them pay $36k more in taxes puts the rate over 100%...
That's assuming this never results in a single job not getting done. For example, I'd stop working and just live on rents, some trading, how many would do the same?
This is a more general problem with UBI of course, they all depend on a global desire for every single individual to contribute to society. And here I am, I don't think more than 10% or so of people feel that need. Of course 50% just outright can't, due to being too young or too old.
And assuming you're figures are correct that would already drop $1500 to $750, which wouldn't cover rent at all.
Most people living on rents make above average income. They'd pay more in increased taxes than they'd get from UBI.
The $1500 was after taxes. If it wasn't, the average person would end up paying more in taxes than they receive in UBI. The goal was to net the average person to $0.
Yeah, I'm really surprised how useless this study is. They just gave some money away and that's the end of it. That being said, I do think that it's really hard (if not impossible) to simulate how UBI would work in the real world.
It's funny how UBI is one of the few economic policies that require such rigorous study to be considered for implementation. Pretty much every other aspect of our economic system was just implemented because of economic theory building without much empirical justification.
> implemented because of economic theory building without much empirical justification
Not even that sometimes. Like the US attempting to re-ordering the world trade system by imposing massive tariffs. They did this even though both economic theory and empirical evidence (previous historical attempts at doing this), showed it would be disastrous.
Yeah, for some things a bit of speculative imagination, thinking through possible outcomes isn't actually that bad compared to more evidence oriented alternatives. You can't really have a control group for community wide effects and without a control group you don't even know if an observed change happened because of what you did out despite of what you did even after the experiment. Sometimes hindsight isn't 20/20 at all but surprisingly blind.
What I think could be a very interesting on-ramp to something more UBIesque, in an environment with lots of need-based social support payments like Germany, would be an opt-in flat taxation mode for earning on the side of receiving aid: taxed high starting with the first cent earned, and in exchange those earnings are explicitly excluded from and need-based considerations or thresholds. That could greatly reduce all "not worth the hassle" considerations and uncertainties. It could be implemented as a special bank account where every incoming transaction is automatically taxed, and every payment or withdrawal certified "I'm allowed to have this without putting anything need-based in question.
What tax rate? The logical first candidate would be wherever the income tax curve tops out for high earners. If that's the highest those can be bothered with before they "stop performing", you should not be surprised if low earners would not want to perform at a higher effective tax rate either. But that tax rate should not be so low that a shift to regular taxation makes no sense in cases sufficiently permanent and wellhpaying that the administrative change isn't just overhead.
Would €1,200/month "for life" inspire you to behave any differently? I suspect relatively few Germans aspire, long-term, to the lifestyle which that income would support. And then there are long-term considerations - like inflation. And gov't spending programs going away after either an election, or a financial crisis.
If it's inflation adjusted and I trust it's forever, I would 100% quit my job and work on something less stressful that I enjoy more. 1200 Euro is slightly below my average monthly expenses; my job pays multiple times this, but I keep at it to save and make sure I won't ever want for money.
It would greatly reduce the barrier between receiving transfer money and earning for yourself that the existing need-based transfer system creates. This is a huge hindrance for jumping off the receiving end. Lump sum transfer also creates an incentive situation where non-standard frugality approaches can thrive (e.g. various shared living concepts), whereas need-based transfer really only just shoves every receiver into a pretend-middle class standard cookie cutter pattern.
It sure would. I was living off of a way smaller stipend for 2 or 3 years (the Austrian "Selbsterhalterstipendium"), and it was the most unproductive time of my life because I got enough to get by with minimal effort, since the conditions for the stipend were ridiculously low. I learned that if I can get money with basically no strings attached, I become lazy. Nowadays I'm not, simply because I have to work for stuff. I enjoy my work, but I wouldnt do it if it wasnt necessary.
It was a great time, but it tought me that people get lazy if they don't have to work. So now I am obviously projecting my own lazyness to the general population, which is why I am against UBI.
One area I would like to see more data on is how UBI will be paid for and the impact of this on worker preferences. If taxes increase on medium-high earners to pay for it, you very well could see a drop-off in labor force participation even if it isn’t directly related to the receipt of UBI.
That study has shown exactly nothing. Of course I'm not going to quit if I'm out of job and UBI after three years.