A new RCT on guaranteed annual income

Via Ben Southwood, from David J. Price and Jae Song (pdf):

We investigate the long-term effect of cash assistance for beneficiaries and their children by following up, after four decades, with participants in the Seattle-Denver Income Maintenance Experiment. Treated families in this randomized experiment received thousands of dollars per year in extra government benefits for three or five years in the 1970s. Using administrative data from the Social Security Administration and the Washington State Department of Health, we find that treatment caused adults to earn an average of $1,800 less per year after the experiment ended. Most of this effect on earned income is concentrated between ages 50 and 60, suggesting that it is related to retirement. Treated adults were also 6.3 percentage points more likely to apply for disability benefits, but were not significantly more likely to receive them, or to have died. These effects on parents, however, do not appear to be passed down to their children: children in treated families experienced no significant effects in any of the main variables studied. These results for children are estimated precisely enough to rule out effects found in other contexts and inform the literature on intergenerational mobility. Taken as a whole, these results suggest that policymakers should consider the long-term effects of cash assistance as they formulate policies to combat poverty.

That’s basically a 40-year follow-up, which is nice to see.  These results should be taken seriously, but they are also a good illustration of the limits of RCTs for some policy questions.  In my recent piece, I argued UBI might be problematic for its interaction with immigration, politics, and the work ethic, all at the macro level.  You may or may not agree, but a smaller-scale RCT won’t pick up those effects.  It can be the case that a marginal move toward UBI makes sense for any small or mid-sized group, or for any particular in-kind benefit, without the full transformation necessarily being welfare-improving.

Here is a recent piece criticizing a guaranteed annual income.  Here is Arnold Kling, mostly defending the idea relative to alternatives.

Will Wilkinson, in his response, doubles down on macro-macro:

I have some misgivings about the method by which Tyler comes to his conclusion that a UBI “would do more harm than good.” It seems that he’s holding the status quo constant, adding a UBI, and then imagining what might happen. But isn’t this a confusing way to proceed? A world in which a UBI were politically feasible would be different in many other ways.

Do read the whole thing.


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