A new report on a basic income scheme launched in Iran

Of course, we could argue that workers should be more motivated by the promise of a good reward, but it looks like evidence from behavioral economics suggests that fear of loss is approximately twice as powerful as the hope of gain. So let's not underestimate the power of fear to generate productivity.

By the way, I am generally supportive of the UBI, just wanted to point out a potential cost. Over the long run I think the UBI's benefits would exceed its costs, but I can't deny that there are real costs to an UBI (beyond the simple direct costs).

> workers would also be more likely to create new businesses entirely if the personal financial risks associated with doing so were diminished

What kind of UBI are we talking about? If it's the one funded by dismantling the social safety net then no - you won't get more income when losing your job, because the same money is now spread among more people (most of whom still have a job). If it's in addition to the existing safety net, you'd get more of the same advantages by expanding unemployment benefits instead (make them higher / longer lasting / easier to obtain).

For example USA does not have government mandated paternity leave and hence a lot of people value that 3 month salary over staying at home without pay. This means the McDonald on corner is able to have necessary staff and the Comcast technician is able to come to your house on a Saturday.

People leaving jerk boss is not always a good thing because Jerk is a value between 0 to 1. UBI simply tilts it in employees favor which is exactly same as against society's benefit.

For these exact same reasons, you also don't need a minimum wage. And you don't need laws about hiring/firing people. If you get fired, it's a hit, but not an existential crisis that requires government intervention. If, as an employer, you offer too low a salary, people simply won't take it. We don't need to ensure that the minimum wage meets some basic standard of living, because you're already guaranteed that by virtue of your humanity.

A UBI raises the minimum to a level where government intervention in the workplace is no longer required to ensure decent treatment of human beings. In so doing, it eliminates deadweight loss of all kinds, from every corner of the market.

One of the reasons why UBI appeals to the HN crowd is because the HN audience leans towards entrepreneurs and wannabe entrepreneurs. But for the economy at large, far more people would rather try to keep their heads down and get home to their families.

Most people are not responsible financial stewards. They don't take their excess income and put it into investments, they take their excess income and put it into improving their standard of living. That means using the extra income generated from a day-job goes to higher rent, car payments, and other liabilities not easily released.

Most middle-income people will end up in the same place - unable to leave their jobs due to the difficulty of finding a new one. Upper-income people will pay more in taxes essentially to end financial insecurity among lower-income people living paycheck-to-paycheck.

Just curious what the amount of money could cover, in terms of food and shelter.

https://en.wikipedia.org/wiki/United_Nations_Security_Counci... http://www.nytimes.com/2013/04/02/world/middleeast/irans-dou...

https://www.nytimes.com/2013/06/04/world/middleeast/us-adds-...

An even bigger issue for it as a case study might be the present Iranian government's keenness to phase the program out.

[1]http://basicincome.org/news/2012/05/opinion-irans-citizens-i...

As far as I can tell this keeps coming up because the answer is "no" but the explanation is complicated.

The are two types of inflation.

One is industry-specific and happens when the government subsidizes something. For example, if the government provides education subsidies then the cost of education increases compared to other things like food or transportation.

The other is currency-specific. When the government prints a lot of new currency, the value of a dollar goes down. Prices go up not because there is more demand for products but because there is less demand for dollars.

A UBI doesn't do either of those things. It doesn't subsidize any specific thing and it doesn't create any new money.

The closest you can get is that there is a theory that higher income people spend less of their income than lower income people, so anything that transfers money from higher income people to lower income people is equivalent to creating new money, because the money in the hands of higher income people was effectively out of circulation.

That general form has nothing to do with a UBI. It applies equally to any government program that produces per-capita public benefits from sales or income tax revenues. The rich pay a tax and the poor get public schools and housing subsidies, which means the poor have the money they didn't spend on schools or housing and can spend it on something else.

Moreover, the effect is small (most people aren't rich enough to never spend their money), and it's simple to compensate for it -- the government is constantly creating new currency because more currency is required as the economy grows. So if you want less inflation, print less money.

And that's assuming that moderate inflation would be a problem, but in fact it's a benefit. The country is in a debt crisis. People have too much mortgage debt, too much student debt, too much credit card debt. The government itself has too much public debt. The prices of housing and education and medicine are too high, but lowering nominal prices is very difficult because everyone has mortgages and contracts that assume the existing prices. The US balance of trade has been out of whack for decades. Lowering the value of the dollar helps with all of those things because it lets the nominal price of those things stay the same while reducing their actual cost back to sane levels.

So the important questions are: does UBI increase or decrease productivity and how is wealth divided after UBI.

It looks like you'd be able to maybe cover basic staple foods in Iran with this income, without anything left for shelter or other necessities. But that said, it means the median income is only about equivalent to $3k/yr US in spending power, which is incredibly depressing, and makes me wonder if I'm doing some math wrong, since surely half the population can't be poor to the point of homelessness. Perhaps the numbers I'm looking at don't factor cost of living in rural vs urban areas, and there is an order of magnitude difference?

Sure, this is reasonable.

> $1.50 per day is $1.50 per day regardless of the median income.

No, the relevant concept here is PPP (purchasing power parity) adjustment.

I want enough of a fall back that people survive. I want it uncomfortable enough that people decide to get a more productive job if they can. (leaving only the disabled to actually live on the basic income)

Of course I don't know what your habits are. If they are walking around the park you can do that cheaply, I'm willing to take the risk that you won't get bored quickly doing that.

I am not saying it's good or bad but I think it will be very difficult to figure out what the eventual outcome of UBI will be in a few decades.

In other words, if young people were 10% of the labor pool, and experienced a 10% reduction in work, that would be significant to that demographic, but a less significant 1% increase overall would mask it from impacting the bigger picture.

> For the most part, we focus on the labor supply of poorer workers, who are more likely to reduce their labor supply as a result of a modest increase in unearned income. Our results do not indicate a negative labor supply effect for either hours worked or the probability of participation in market work, either for all workers or those in the bottom 40% of the income distribution. We do find a negative labor supply effect for workers 20-29 years old for their hours worked.