Written By: - Date published: 7:44 am, January 22nd, 2014 - 105 comments
Categories: benefits, child welfare, crime, paula bennett, Social issues, welfare - Tags: polity, ubi, unconditional basic income
Do cash grants to the poor mainly feed their sinful desires? The Cherokee will tell us.
Almost everyone agrees it is a problem for the community1 when some members of it do not have enough money to live on. The disagreement of over what to do about it.
Some people oppose simply giving people the remaining money they need to live on. That is because they believe people under pressure make terrible choices and must sometimes be saved from themselves. (Which is odd because, in all other aspects of fiscal policy, those same people proudly declare that individuals inherently make great choices and the government should just get out of the way.)
Their fear / suspicion is that a when a poor person receives a cheque, that simply means they are about to become a poor person with alcoholism and a porn habit. That idea is, of course, not often borne out in reality, as evidenced by Paula Bennett’s embarrassing lack of positive drug tests for beneficiaries.
In the NYT this weekend is a superb report on a natural quasi-experiment about this issue in North Carolina. In the 1980s, the Cherokee opened a casino the area and decided to share the profits evenly among their tribe members, whether they worked at the casino site or not. In effect, the casino gave a whole cohort of previously very poor people an unconditional welfare cheque. So what happened after that?
Minor crimes committed by Cherokee youth declined. On-time high school graduation rates improved. And by 2006, when the supplements had grown to about $9,000 yearly per member, Professor Costello could make another observation: The earlier the supplements arrived in a child’s life, the better that child’s mental health in early adulthood.
She’d started her study with three cohorts, ages 9, 11 and 13. When she caught up with them as 19- and 21-year-olds living on their own, she found that those who were youngest when the supplements began had benefited most. They were roughly one-third less likely to develop substance abuse and psychiatric problems in adulthood, compared with the oldest group of Cherokee children and with neighboring rural whites of the same age.
The message from this study, and the experience of the Cherokee2, is very clear. To make a positive difference in the next generation’s life, we have to be generous and act early. Parental incentives aren’t the issue – the issue is getting those kids what they need to thrive.