Should the Government Guarantee Everyone a Minimum Income?

A number of versions of this idea have been proposed. There have also been a number of experiments with the idea, and at least one very rigorous study of the effects. I’ll get to some of that below.

However, I suspect three things: (1) Most people have a preference for or against the idea. (2) Their opinion is not based on logical argument or empirical study results. (3) Their opinion is heavy influenced by how they emotionally respond to the idea.

The idea of a universal basic income (or UBI as it’s called) asks us to resolve two conflicting preferences which most of us have to one degree or another. The first is the inclination to help others in need. The second is a dislike of able-bodied individuals consuming goods and services produced by others, without helping produce what they consume in any way.

My hypothesis is: People will favor or oppose UBI depending on which of these preferences is stronger.

Preferences Inherited from Ancestors

Where did these preferences come from? Almost certainly you were born with a lot of preferences. Whether you prefer cherry pie to banana cream pie or vice versa was probably determined before you were born—the result of a random toss of the genetic dice.

But you have other preferences that are probably not random. These are preferences that that you inherited from your ancestors who passed them along over thousands of years. They have persisted because they have evolutionary survival value.

There are enormous benefits from individuals interacting with each other to meet their needs. However, whenever people interact there is potential for a conflict of interest. In modern civilized society, those conflicts are resolved in the marketplace (e.g., by market-clearing prices) and in the political system (e.g., by majority vote).

Around 50,000 years ago, our ancestors lived in small groups of about 150 people. They had neither an economic system nor a political system as we know them today. Yet because they lived at the subsistence level and because they continually were at war with other tribes, they desperately needed a way of cooperating to achieve the collective goal of group survival. The way they solved that problem was through culture.

Like other mammals, human beings are genetically predisposed to protect and sacrifice for their offspring. But they are not so disposed with respect to nonfamily. The role of culture is to overcome this disposition. In particular, it is to induce people to subordinate their own self-interest to the welfare of the group as a whole. It does so by extending the idea of “family” to nonfamily via the notion of extended kinship.

This is why rites, rituals and ceremonies are important. After the death of a tribe member, they encourage the view that the loss is not just a loss to a family. It is a loss to the entire group. The birth of a child is not just an addition to a family. It is an addition to the group as a whole. A marriage is not just a union between two people. Marriage rites signal that the entire tribe has an interest in the union, including an interest in how the children are raised.

Consider a few of the problems ancestral societies faced. Victory in battle is made more likely by the actions of heroes. Yet as David Friedman has explained, it’s in no one’s rational self-interest to be a hero. To the contrary, self-interested individuals will tend to be cowards and let others take heroic risks. Yet if every warrior is cowardly, the battle is likely to be lost.

How Culture Shapes Our Preferences

Similarly, the killing of large game must have been a risky enterprise. Yet it is in the immediate self-interest of each hunter to let others take the risks and feast along with everyone else after the kill has been made. Yet if every hunter thinks this way, the kill will not be made and the tribe as a whole will go hungry.

In a hunter-gatherer society, there must have been many other ways in which cooperation was needed to aid group survival. These would have included gathering food, gathering potable water, maintenance of the camp site, taking care of the children, tending to the sick, etc. In each of these activities, the individual’s incentive is to shirk.

How does culture solve these problems?

Human beings seem to have a universal desire for status. Hence, rites, rituals and ceremonies that honor exemplary behavior are a way to confer status on individuals who subordinate their narrow self-interest to the benefit of the group as a whole. Heroism in battle and risk-taking in the killing of dangerous game are two examples.

The converse of conferring status is to confer shame. Not much is known about shaming rituals, which might have included the formal expelling of an individual from the tribe. Even without ceremony, shaming is a universal way small groups discourage anti-social behavior—especially when the pursuit of self-interest endangers or impoverishes the group as a whole.

Were these customs adopted merely because they work? Or, were they to some extent adopted by people who were genetically inclined to be influenced by their culture? We don’t know. But one thing is clear. If some of our ancestors were genetically inclined to view their own tribe through the lens of extended kinship, they would have had an advantage over those who lacked those genes and needed to be encouraged to conform by other means.

Why the Public Question Universal Basic Incomes

Here is the bottom line. Caring for those who are wounded in battle or ailing for some other reason would have been very much part of our ancestors’ lifestyle. Allowing able-bodied members of the tribe to consume without helping to produce would have been unthinkable.

Genetic transmission may be the reason why so many of us have those same preferences today. Even so, they are in conflict with the thinking so many academics who favor giving people money without asking for anything in return.

And that is what we have been doing. Although we don’t call it UBI, the amount that we are spending on behalf of low-income individuals without any work requirement is enormous. Writing in the Wall Street Journal, former U.S. Senator Phil Gramm and House of Representatives Budget Committee Chairman Jodey Arrington note:

“Since funding for the War on Poverty ramped up in 1967, welfare payments received by the average work-age household in the bottom quintile of income recipients has risen from $7,352 in inflation-adjusted 2022 dollars to $64,700 in 2022, the last year with available household income data. This 780% increase was 9.2 times the rise in income earned by the average American household.”

In fact, if we count each dollar spent for the benefit of these individuals as equivalent to a dollar of take-home pay, the per capita income of the bottom fifth of the income distribution, the next fifth, and the middle fifth are virtually the same. Yet only one-third of households in the bottom fifth have an adult who is working, while 92 percent of the households in the middle fifth contain a working adult.

As noted, there have been a number of experiments with UBI and in one case there is a randomized controlled trial (RCT) involving 3,000 individuals and a monthly UBI amount of $1,000. Megan McArdle in the Washington Post reports on the results:

The recipients [did not], as was hoped, use the cash cushion to find better jobs, invest in their own ability to earn, or pursue entrepreneurship. What did increase significantly was their consumption, while their work hours decreased—so that participants ended up earning about $1,500 less per year, net of the transfer, on average. Most of their extra time was spent on leisure, not work.

I don’t expect this study (or others) to change anyone’s mind, however. The public already overwhelmingly supports work requirements in welfare programs, even as the academic world remains enamored of the opposite approach.