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Comment by gwillz | Hacker News Reader

> "What happens when someone spends all their UBI"

I think that's the most important question.

I believe the story is that one will abuse whatever welfare they get. Whether it's stamps, credits, services or money.

Here in Australia they've been trialing a cashless debit card to control what people spend their welfare money on. Somehow, it's still costing _more_ than just giving people money and the recipients aren't happier either. Some are using the card to buy things like batteries and re-selling them to then buy their drugs and alcohol. So there's money spent to restrict the money, but the money is still abused. So why not just give them the money?

In the end - money is money. Poverty is literally only solved with money. Surprisingly, the cheapest and easiest way to solve someone's poverty is to just give them money. If they abuse it? Fine. They were going to do that anyway.

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> Poverty is literally only solved with money.

That's a big statement, with a lot of evidence against it. I recall an experiment where a homeless man was given $100,000, and was back on the streets in no time.

The idea that you "solve problems with money" seems to be an American disease. That we just haven't pumped enough money into the machine to make it work.

Homelessness and poverty are big, complex problems. Money is likely part of the solution, but so is education, and we aren't going to fix that with Yet More Money -- seriously, the US spends an insane amount on education to receive incredibly poor results.

> Surprisingly, the cheapest and easiest way to solve someone's poverty is to just give them money. If they abuse it? Fine. They were going to do that anyway.

I agree with you there. All the efforts to curb "abuse" have been an absolute waste of time.

The psychology of a large one time payment versus a passive, smaller one is absolutely immense and should not be equated. Native tribes have oftentimes given their youth large payments that get spent on expensive consumer goods that wind up back in pawn shops, but UBI experiments in Kenya and in low income areas around the world have shown dramatically different results with the hallmarks of upward mobility presenting (risk taking, lower stress, future orientation, etc.). Lottery wins are nothing like a permanent trust fund that pays out if you stay out of jail like in Yang’s UBI.

There must be some data on lottery winners taking one lump sum and small payouts over time.

I read somewhere around 80%+ take the lump sum about 12 years ago. Given the risks of inflation over 25+ years it isn’t a bad idea. Most lottery winners get accosted by family members or spend like crazy with their money and wind up broke in the end. However, a great deal of them do at least take care of their health at least (getting teeth fixed was common). A mental trap of scarcity makes it difficult for the perpetually poor to think of money as nothing more than something to be spent rather than invested, but even here the HGTV dream home winner around 2007 sold the house to create... a construction company, which went bankrupt quickly.

Financial literacy can be taught over time though similar to helping people diet and control portions.

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