Over the years I've always been intrigued whenever I've come across studies about the effect of giving money to poor people. eg. What happens when you just give people money? (also here)
The answer to the question of what happens when you give poor people money almost universally seems to be: Good things.
I've seen studies that look at what the people typically choose to spend the money they're given on (answer: education, business start-up costs, food for their families), what effects it has on employment (answer: some people use the money to help start their own business, others use it to get an education, so employment goes up or down only a little depending on how those two factors balance. The number of people who cease working out of laziness in response to the money is nearly always zero.)
However, those have been simply the occasional study that I've happened across personally over the years. What sparked this thread, is that economists from MIT and Harvard have recently analyzed all the studies of this type they could find from around the world that met their stringent criteria. In zero cases did the welfare programs result in people working less.
The studies found the welfare programs resulted in all sorts of improvements in the quality of life of the target groups and the areas where they lived in. But what doesn't show up in the data is increased laziness. As the article points out, other studies run in the US and Canada have found that in cases where welfare programs result in any sort of decrease in hours worked it is because people are choosing to focus on improving their own education once the pressure to work-to-survive is lifted slightly. The data seems to fairly clearly show that in most countries in the world, simply giving more money to poor people has pretty much nothing but positive results.
Is there a point at which too much welfare becomes a bad thing? I'm honestly not sure. We don't have good enough data on the subject to know. Switzerland is going to vote next year on whether to have a "universal basic income", which means a living wage paid to each and every adult in the country. I am hoping that they vote 'yes' just so everyone can observe the outcome, and we can find out whether it works or not.
The answer to the question of what happens when you give poor people money almost universally seems to be: Good things.
I've seen studies that look at what the people typically choose to spend the money they're given on (answer: education, business start-up costs, food for their families), what effects it has on employment (answer: some people use the money to help start their own business, others use it to get an education, so employment goes up or down only a little depending on how those two factors balance. The number of people who cease working out of laziness in response to the money is nearly always zero.)
However, those have been simply the occasional study that I've happened across personally over the years. What sparked this thread, is that economists from MIT and Harvard have recently analyzed all the studies of this type they could find from around the world that met their stringent criteria. In zero cases did the welfare programs result in people working less.
The studies found the welfare programs resulted in all sorts of improvements in the quality of life of the target groups and the areas where they lived in. But what doesn't show up in the data is increased laziness. As the article points out, other studies run in the US and Canada have found that in cases where welfare programs result in any sort of decrease in hours worked it is because people are choosing to focus on improving their own education once the pressure to work-to-survive is lifted slightly. The data seems to fairly clearly show that in most countries in the world, simply giving more money to poor people has pretty much nothing but positive results.
Is there a point at which too much welfare becomes a bad thing? I'm honestly not sure. We don't have good enough data on the subject to know. Switzerland is going to vote next year on whether to have a "universal basic income", which means a living wage paid to each and every adult in the country. I am hoping that they vote 'yes' just so everyone can observe the outcome, and we can find out whether it works or not.
Comment