What Would Happen If Everyone Got $1,000 a Month? (UBI Theory Explained)

Summary

This video delves into the concept of Universal Basic Income (UBI), exploring its history and potential impact on society as automation threatens jobs. It reviews various experiments worldwide, revealing mixed results on UBI's effectiveness in alleviating poverty and improving well-being. The discussion also touches on the philosophical and practical challenges of implementing UBI, including funding and its effect on work ethic, concluding that while UBI may not be a magic solution, it remains a crucial topic for future societal and economic discussions.

Takeaways

• 🤖 Automation and AI are predicted to take over 40-50% of jobs, prompting discussions on Universal Basic Income (UBI) as a potential solution for future unemployment.
• 💡 The concept of UBI, where the government provides a base income to all citizens, has been debated for centuries, with early mentions by Sir Thomas More in 'Utopia' and later by figures like Thomas Paine and Milton Friedman.
• 💰 UBI is seen as a way to combat poverty and provide a financial safety net, with the potential to allow individuals to focus on skills and careers rather than basic survival.
• 🌐 Various countries have experimented with UBI, showing mixed results in terms of its impact on work motivation, mental health, and overall well-being.
• 📊 Studies have shown that UBI can lead to increased spending on essentials like food and rent, which could stimulate economic growth, but also raises questions about the sustainability of funding such a program.
• 💼 The idea of UBI is controversial and complex, with concerns about its cost and the potential for it to disincentivize work, despite evidence suggesting only a modest reduction in work hours.
• 🧘‍♂️ The psychological benefits of UBI, such as reduced anxiety and increased happiness, have been observed in some studies, highlighting the potential for improving quality of life beyond just financial stability.
• 🏥 Access to healthcare improved in UBI experiments, with recipients visiting medical professionals more frequently and spending slightly more on healthcare.
• 📉 Physical health improvements were not significant in UBI studies, with any benefits being small or temporary, suggesting that the impact on health may not be a primary outcome of such programs.
• 🏛️ The historical close call for UBI in the U.S. in 1969, with a bill nearly passing, illustrates the recurring interest in and political challenges of implementing a national UBI program.
• 💭 The presenter's personal perspective on UBI reflects a nuanced view, acknowledging the potential benefits while also recognizing the limitations and complexities of the concept in practice.

Q & A

What is the concept of Universal Basic Income (UBI)?

Universal Basic Income (UBI) is the idea that the government pays every citizen a base income that is above the poverty line, regardless of their employment status or other income sources, to ensure a minimum standard of living.

When was the concept of UBI first introduced?

The concept of UBI was first introduced by Sir Thomas More in his book 'Utopia' published in 1516, where he imagined a society that provided a basic income to all its citizens.

What was Thomas Paine's contribution to the idea of basic income?

Thomas Paine, one of the founding fathers of the United States, proposed the idea of basic income in his pamphlet 'Agrarian Justice' in 1797. He suggested paying every citizen some amount of money to compensate for the loss of their natural inheritance, which refers to the idea that every person should be entitled to some part of Earth's natural resources.

What was Milton Friedman's variation of UBI known as?

Milton Friedman proposed a variation of UBI known as the negative income tax. His idea was to provide cash payments to anyone whose income fell below a certain level.

What was Martin Luther King Jr.'s stance on UBI?

Martin Luther King Jr. supported the idea of UBI. In his book 'Where Do We Go From Here: Chaos or Community' published in 1967, he stated that the solution to poverty is to abolish it directly through a guaranteed income.

What was Andrew Yang's proposal during his political campaign?

Andrew Yang, during his political campaign, proposed a flagship policy called the Freedom Dividend, which involved giving every American adult over the age of 18 $1,000 a month.

What were the findings of the most comprehensive randomized study of UBI conducted in the United States?

The study found that on average, people receiving UBI spent $310 more per month on essentials like food, rent, and car expenses. However, their average income went down by $125 a month, and the average work week decreased by 1.3 hours. The study also found no significant improvements in physical health but noted that recipients visited medical professionals more frequently and spent more on medical care.

How did the UBI experiments in different countries affect people's willingness to work?

The experiments generally showed that while UBI recipients worked slightly less, it was not to the extent that they became lazy. The reduction in work hours was relatively small, indicating that the provision of UBI did not significantly deter people from working.

What was the main benefit of UBI according to the United States' unconditional income study?

The main benefit of UBI, as concluded by the study, was that it allowed people to prioritize their spending. Recipients were not constantly forced to prioritize necessities like food, giving them more financial flexibility and reducing financial stress.

What is the 'Easterlin Paradox' mentioned in the script, and how does it relate to UBI?

The 'Easterlin Paradox' suggests that happiness increases with income up to a certain point, after which further increases in income do not significantly affect happiness. This paradox is relevant to UBI as it suggests that the impact of UBI on happiness may be limited to those below a certain income threshold, beyond which additional income has diminishing returns on happiness.

What is the speaker's personal opinion on UBI after researching and analyzing various studies and perspectives?

The speaker expresses a nuanced view on UBI. While initially supportive and hopeful about its potential benefits, they found that the measurable benefits were mostly temporary and limited to those at the poverty line. They suggest that happiness is found in the journey between reality and expectation, and that UBI might be more effective if targeted differently or if it provided for basic needs beyond just cash.

Outlines

00:00

🤖 The Future of Work and Universal Basic Income

The script discusses the imminent automation of jobs and the concept of Universal Basic Income (UBI) as a potential solution. It delves into the history of UBI, from Sir Thomas More's 'Utopia' to modern proposals like Andrew Yang's 'Freedom Dividend'. The video promises to explore the impact of UBI on society, work, and the economy, citing past experiments and recent studies in the United States.

05:03

💰 The Philosophical and Practical Debates on UBI

This paragraph examines the philosophical underpinnings and practical implications of providing a basic income to all citizens. It discusses the potential benefits of UBI in alleviating poverty and the challenges of mass unemployment due to automation. The script mentions various successful individuals advocating for UBI and the financial burden it would place on governments, highlighting the complexity and the ongoing global experiments to assess its effectiveness.

10:03

🌍 International Perspectives on UBI and Its Impact

The script reviews UBI experiments conducted in various countries, including Canada, Brazil, Finland, Germany, Spain, and Japan. It summarizes the outcomes of these experiments, which indicate improvements in mental health, reduced anxiety, and increased happiness among recipients, but mixed results regarding the effect on employment and physical health. The paragraph emphasizes the need for further exploration of UBI as a global solution to poverty and economic inequality.

15:04

🔮 Reflections on UBI's Potential and the Pursuit of Happiness

In the final paragraph, the script offers a personal perspective on UBI, expressing initial optimism followed by a nuanced understanding of its limitations. It references the Easterlin Paradox and discusses the relationship between happiness, relative income, and income growth. The author suggests that UBI might be more effective if targeted differently or if it provided basic needs rather than cash. The paragraph concludes with an open question about the future of UBI and an invitation for viewers to share their thoughts on its implementation and funding.

Keywords

💡Universal Basic Income (UBI)

Universal Basic Income (UBI) is a concept where every citizen receives a set amount of money from the government on a regular basis, regardless of their employment status or income level. It is central to the video's theme, exploring its potential as a solution to job displacement due to AI and automation. The script discusses various historical and contemporary UBI proposals, including those by Thomas Paine, Milton Friedman, and Andrew Yang, as well as recent experiments conducted in different countries.

💡Automation

Automation refers to the use of technology to perform tasks that were previously done by humans. In the video, it is mentioned as a significant factor that could lead to job displacement, thereby necessitating the discussion of UBI. The script suggests that 40 to 50% of jobs may soon be automated, which raises questions about the future of work and the need for alternative income sources like UBI.

💡Poverty Line

The poverty line is the minimum level of income deemed adequate in a particular country. The video uses the poverty line, defined by the Census Bureau as almost $5,000 a year, to discuss the inadequacy of current income levels for many and the potential role of UBI in lifting people above this threshold.

💡Economic Stimulus

Economic stimulus refers to policies enacted to boost a country's economy. The script suggests that UBI could act as an economic stimulus by increasing consumer spending, as people with more disposable income are likely to spend on goods and services, thereby promoting economic growth.

💡Maslow's Hierarchy of Needs

Maslow's Hierarchy of Needs is a psychological theory that prioritizes human needs into a hierarchical order, with basic physiological needs at the bottom. The video mentions this theory to argue that UBI could help satisfy the basic needs of individuals, such as food, shelter, and clothing, potentially leading to a better quality of life.

💡Job Displacement

Job displacement occurs when jobs are eliminated, often due to technological advancements or other economic factors. The video discusses the potential for AI and automation to cause job displacement, which could make UBI a necessary policy to ensure people have a stable income even if they lose their jobs.

💡Income Inequality

Income inequality refers to the uneven distribution of income within a population. The script cites the Bolsa Familia program in Brazil as an example of how UBI can help reduce income inequality by providing financial support to those in poverty.

💡Mental Health

Mental health is the state of an individual's psychological and emotional well-being. The video highlights studies showing that UBI can improve mental health by reducing stress and anxiety, as recipients have a financial safety net that allows them to focus on other aspects of life.

💡Happiness

Happiness, in the context of the video, is related to the subjective well-being of individuals. The script explores the idea that UBI could contribute to happiness by providing financial security, but also discusses the paradox that happiness is not solely determined by absolute income levels but also by relative income and income growth.

💡Experiment

In the video, 'experiment' refers to the various trials and studies conducted around the world to test the effects of UBI. These experiments, such as those in Canada, Finland, and the United States, provide insights into how UBI impacts work habits, health, and overall well-being, and are crucial in understanding the potential benefits and drawbacks of implementing a UBI program.

💡Easterlin Paradox

The Easterlin Paradox is a concept in economics that suggests that happiness does not increase with income beyond a certain point. The video mentions this paradox to explain why UBI might not have a significant impact on happiness for those already above the poverty line, as happiness is more closely tied to relative income and income growth rather than absolute income levels.

Highlights

Open research published the results of a significant monetary experiment on universal basic income (UBI).

The concept of UBI is to provide a base income above the poverty line to everyone, regardless of employment status.

Automation is predicted to take over 40-50% of jobs, prompting discussions on the necessity of UBI.

UBI has been debated for over 500 years, with early mentions by Sir Thomas More in his book 'Utopia'.

Thomas Paine proposed a basic income to compensate for the loss of natural inheritance due to resource depletion.

Milton Friedman suggested a negative income tax as a form of UBI to support those with incomes below a certain level.

Martin Luther King Jr. advocated for a guaranteed income to abolish poverty.

Andrew Yang's political campaign included a 'Freedom Dividend' of $1,000 a month for every American adult.

The US government's stimulus check of $1,200 was a form of UBI.

UBI experiments have been conducted worldwide, with varying results on health, education, and employment.

Finland's UBI experiment found no significant effect on employment but increased happiness and reduced stress.

Germany's experiment showed recipients felt less anxious and more motivated to continue their education.

Spain's UBI experiment in Barcelona reported improved mental health but no significant change in work willingness.

A Japanese billionaire's private UBI experiment resulted in decreased divorce rates and increased happiness.

The US unconditional income study found that UBI allowed people to prioritize spending but did not significantly improve physical health.

The biggest benefit of UBI observed in the study was the reduction in stress and increased access to medical care.

The discussion on UBI is gaining importance as society evolves with technology and faces the challenge of mass unemployment.

The video creator expresses personal disappointment in the limited measurable benefits of UBI, suggesting a need for further exploration.

Transcripts

all right so open research just

published the results to one of the most

important monetary experiments in human

history free money from the government

because what happens to society when our

jobs are taken over by Ai and robots

what would we do for work how would we

make money and I know this sounds like

science fiction but research shows we're

just a couple years away from that

reality because 40 to 50% of all jobs

will soon be automated this wave of

automation is coming and it hasn't

crashed over society yet but it's going

to and that's bad unless of course

you're the one building all the robots

but one of the solutions Economist have

come up with is what if we gave everyone

free money from the government boom

every single year it's yours no

questions asked it's a concept called

Universal basic income the idea that the

government pays everyone a base income

that is above the poverty line right now

the poverty line as defined by the

Census Bureau is almost at $5,000 a year

or a little over $1,200 a month now this

is an extremely controversial idea and

everyone has an opinion about it because

we've been arguing about this for 500

years now literally since the year 1516

that's when Sir Thomas Moore introduced

the idea in his book called Utopia

that's where he imagined a society that

provided a basic income to all its

citizens as long as they showed a

willingness to work and and as we go

forward through history you're going to

see variant of this idea over and over

again in 1797 for example there was

Thomas Payne one of the founding fathers

of the United States and he came up with

an idea for basic income in a pamphlet

he called agrarian Justice he wanted to

pay every citizen some amount of money

to compensate for What's called the loss

of their natural

inheritance and the natural inheritance

is an idea that every person born on

Earth should be entitled to some part of

its natural resources because think

about it people born way into the future

will have less stuff to pick from as

more and more of Earth's resources are

used up and privatized so to compensate

Thomas Payne wanted to pay them some

amount of money and in the 20th century

there was another variation proposed by

Economist Milton fredman in the form of

a negative income tax fredman's idea was

to provide cash payments to anyone whose

income fell below a certain level Milton

Friedman by the way was an OG loved by

everyone he was a Nobel prizewinning

Economist that fun fact predicted

bitcoin's existence way before it

happened in 1999 look it up but not

before you watch this video please now

in 1967 in a book called Where Do We Go

From Here chaos or Community Martin

Luther King Jr had his own idea when he

said the solution to Poverty is to

abolish it directly by a now widely

discussed measure the guaranteed income

and one of the more recent examples is a

political candidate Andrew Yang with his

freedom dividend when he proposed giving

anyone over the age of 18 $1,000 a month

my Flagship proposal is a freedom

dividend of $11,000 a month for every

American adult starting at age 18 and

most recently you probably had a taste

of Ubi when the government started to

give everyone a stimulus check of

$1,200 all of these are variations of

the universal basic income idea and it's

only going to get more important to

figure out as Society evolves thanks to

technology but here's where it gets

super interesting we've been running

this money experiment All Around the

World in different countries and just a

couple weeks ago we got the results to

the United States and what's considered

to be the most comprehensive randomized

study of Ubi ever conducted and in

today's video I want to show you the

history of Ubi the arguments for it some

of the arguments that are against it and

what the test results showed I think

this is going to be a huge part of our

conversation

really soon and I want you to know about

it so let's get into it hi my name is h

j hope you're doing well come for the

finance and stay for Universal basic

income one of my favorite videos on

YouTube was a video by Casey neistat

where he talked about money and how it

solves all the problems money won't

solve your problems what a Croc of sh

and I think I do have like a unique

perspective on this because you know I

spent a a good part of my life being

very very poor I qualify very poor is

like zero in my bank account zero

savings zero safety net nowhere I could

turn to for money and you know there was

definitely a time in my life when my my

son own was very small where if I didn't

get free diapers and milk and money from

the government I'm not sure I could have

make made ends meet as a as a parent or

as an individual fast forward a bit

though in Casey goes on to have one of

the most successful careers on social

media he makes millions of dollars goes

on to become famous and then he says

money will solve your problems this idea

that money won't solve problems it's

when I was dirt poor money

would have solved every one of my

problems so if money does solve all the

problems then why doesn't the government

just pay everyone some amount of basic

income what if the government was able

to solve the bottom of maso's hierarchy

of needs physiology the idea that

everyone could be able to afford the

basics like food shelter and clothing

would the world become a better place if

people had more time to do what they

love and become creative or with the

absence of a financial struggle make

everybody lazy artificial intelligence

and automation is getting us there

faster every single day and I think we

could be on the edge of this future

really soon and if robots will soon be

able to do our jobs faster and better

than we can Will Jobs still be a core

part of our Identity or will we have to

find new purpose in life in his video

Casey says that after a certain point

money doesn't really solve the problems

that all of us will face throughout our

lives so all of these questions are very

philosophical and we're finally starting

to get some of the answers and the more

I looked into them the more I regretted

picking this video because it's

extremely complicated so here's what I

learned so here are the arguments in

support of Ubi economists say that some

kind of a basic income can help us solve

one of the hardest challenges that

humanity is facing poverty right now

there's over 30 8 million Americans

alone that are living in poverty they

make less than $112,000 a year and that

leaves them very little for anything

beyond the basics and a study by the

Roosevelt Institute found that a Ubi of

just $1,000 a month could help a lot of

those people out of poverty by allowing

them to focus on their skills and their

career rather than just worrying about

how they're going to eat and according

to the World Bank over 700 million

people live in extreme poverty worldwide

so this is a huge problem on a global

scale but in theory Ubi could act like

an economic stimulus to boost consumer

spending because when people have more

money they tend to spend it on things

like food and rent which helps with

economic growth but I also learned that

some of the most successful and richest

people in the world who are working to

solve poverty say that Ubi could be one

of the better ways to fix it what to do

about mass unemployment every single

field is going to be touched by autom

this is going to be a massive social

challenge um and I think ultimately we

will have to have some kind of universal

basic income and Ubi to me represented a

floor a floor that people who could

stand on so it mean that unemployed

people will be paid across the globe

yeah and really have the the the

knowledge and peace of mind ultimately

that they could survive

and eat and feed their children while

they are learning how to transition into

this new world I don't think we're going

to have a choice so the main benefit of

Ubi is to fight against poverty and

automation which is going to become very

real this decade but the downside is

who's going to pay for it because it's

extremely

expensive if we were to give every just

$11,000 a month it would cost the US

economy about $4 trillion a year now for

context in 2024 the entire United States

federal budget was $6.5 trillion and

that includes spending on Social

Security the entire military Medicare

Medicaid and other essential services so

Ubbi at just $1,000 a month costs more

than half of what the country spends in

a single year which means funding it

would be really really hard but let's

assume we cut out a bunch of bloated

government programs we got rid of tax

loopholes we tax the rich even more and

we found a way to make this work the

next question is does it actually work

and it turns out we've been running

these tests all over the world to see

how people would react when they're

given money for free and here's what we

found in the 1970s for example Canada

was running the mincom test where they

gave the whole town of dolphin Manitoba

a basic income and what they found was

an improvement to health care and higher

graduation rates unfortunately the

program was cancelled after 4 years

because of politics but in 2017 Ontario

tried again with another program to help

4,000 low-income residents but again the

experiment was ended early because of a

new government so the results were

inconclusive but Brazil has been running

an experiment of their own for decades

called the Bolsa Familia or PBF which

helped around 20 million people out of

poverty from 2002 to 2012 the percentage

of Brazilians living on very little

money dropped from 8.8 to

3.6% and income inequality was lowered

as well in 2017 Finland which is

considered to be one of the most

advanced welfare states in the world

tried their own experiment for a whole 2

years they gave 2,000 unemployed

citizens a monthly income and what

Finland discovered was that their

program didn't really have much of an

effect on people's desire to work l less

or work more but it did increase their

happiness and it lowered their stress

levels now Germany also tried their own

experiment in 2014 where they gave

people $1,100 a month for one whole year

and the result was 80% of recipients

said the income made them less anxious

more than half said it allowed them to

continue their education and 35% said

they now felt more motivated at

work in 2017 Spain also o tried this for

Barcelona's poorest households and they

gave people almost $2,000 a month and

the results again showed not much of an

effect on people's willingness to work

but people did report feeling an

improvement to their mental health now

in Japan there was a billionaire who ran

his own private experiment he gave out

$9 million spread out amongst a thousand

people the results a decrease in divorce

rates and More than 70% of recipients

saying they experienced a significant

increase and happiness now as I looked

across the world at more and more

countries running their own experiments

I found that their results were more or

less the same so the last place that I

looked at was the United States because

just a couple weeks ago we got the

results to one of the bigger tests

called the unconditional income study

run by Sam Altman and open research and

here's what happened the study ran from

November 2020 to October 2023 and it

split people into two different groups

the first group group was given $1,000

every single month and the other group

known as the control group was given $50

a month now the average household income

of people that got any money was about

$30,000 a year and after 3 years of

running this experiment the results are

in and here's what people did with their

money on average people spent

$310 more per month mostly on food rent

and car expenses but surprisingly the

average income went down by

$125 a month the average work week also

went down by 1.3 hours which adds up to

about 8 days per year so yes studies

showed that anyone who received an

income on average did decide to work a

little less but it wasn't to the point

where they all got lazy and they all

became aspiring Yu-Gi-Oh players or

Worse bad magicians and the effects of

free money on people's Health was also

not that noticeable after doing blood

tests the study concluded that we find

essentially no evidence of improvements

in physical health any benefits in

nutrition and blood samples that they

measured were so small that they had to

rule them out because they were also

temporary for example stress went away

in the first year of receiving money but

in the second year it came back the only

real measurable health benefit that the

paper reported was that recipients went

to hospitals doctors and dentists more

often and they spent about $20 more a

month on Medical Care at the end and the

study concluded saying that the biggest

benefit of a basic income is that it

allowed people to prioritize how they

spent their money instead of always

having to prioritize something like food

now right now we are still running these

free money experiments in over 24 States

and dozens of cities but as of now we

don't have a national Ubi program but at

one point in history we got really close

to it in 1969

that's when President Nixon was on the

edge of accepting a basic income bill

that would have given a family of four

about $1,200 a month in today's money it

got so close to becoming law that it was

passed by the Senate but it was then

rejected by the

house now throughout the video I've

given you a lot of data and a lot to

think about but if you made it this far

here's my personal opinion have you ever

found the answer to something that you

were really disappointed in if I showed

you one of my magic traits on how it was

done you You' probably be pretty upset

by the time you see how it actually

works like if I took this two of clubs

and I magically changed it into another

card looks cool until I showed you how

it was done well that's not magic is it

and that's how I feel about Ubi I was

rooting for it to work I wanted to make

this video and tell you that the studies

show that if you pay these people this

amount of money it solves everything and

on paper it really does it's amazing but

the only measurable benefit where we see

real good things happening is for those

at the very bottom anything above that

line of poverty becomes a temporary

benefit and there are theories that

predicted this exactly like the

easterland Paradox which showed that

worldwide among all people of all

countries happiness does go up with

money but it only goes up to a certain

point and subsequent studies show that

the bigger indicator of happiness is not

absolute income it's relative income and

income growth I have this weird crazy

Theory that happiness can be found

between reality and expectation we can

find happiness on the journey between

two spaces of where we are today and

where we want to be so if you gave

someone $112,000 who wasn't making

anything you would make their life if

you gave that same 12,000 to someone

making 50k a year you'd make them

happier as well but not as happy as the

person who wasn't making anything and if

you gave that same 12,000 to a person

making a million a year You' have no

effect on their happiness at all and

that's because as we make more money our

reality improves and that closes the gap

between itself and expectation that's

why I think a lot of Rich successful

people can be so miserable it's because

their lives are so far ahead and so

utopian that there's no reasonable

reachable expectation that can be

achievable because if your life is

already perfect where can you go from

from there that Gap is closed and so

what you're left with is just comparison

to others feeling like you're behind or

setting unattainable unreachable goals I

was watching this guy who was on a yacht

he rented the yacht but he was worth

hundreds of millions of dollars and he

was complaining that he couldn't afford

the yacht yet and I thought how are you

not happy with where you are you're

worth hundreds of millions of dollars

you think that yacht's going to do it

for you find something else else to

close the gap with don't make it money

and if it's money make it something

attainable or make it something else

happiness is that Journey between where

we are and where we want to be that's

why it's not absolute income that

measures happiness it's the growth of

income that's longer lasting and

actually measurable but I'm not giving

up on the idea just yet because maybe

the experiment itself was wrong maybe

instead of giving 12,000 a year to

people that are making 30,000 wasn't the

right answer maybe it was supposed to go

to the people that weren't making any

income or people that are homeless or

maybe it wasn't supposed to come in the

form of money at all maybe it should

have been basic needs like affordable

housing shelter Health Care food and

education a circumstance a reality that

set people up on a good path to chase

that gap between their reality and their

future expectation and their goals

whatever the answer is I hope you didn't

think you going to find it on a YouTube

video so I don't know why you're still

watching but I'm just glad that there's

welfare programs that exist that gave

people like Casey neistat the security

to pursue their dreams and make the

videos that I've enjoyed that's why I'm

not giving up on the idea yet but I'd

love to hear your thoughts do you

support Universal basic income and if

you do how do you think we should go

about it and how should we fund it I

think it's a really interesting

conversation that we're about to have a

lot more of in the future but in the

meantime I hope you have a wonderful

rest of your day smash the like button

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you so much for watching this video I'd

love to see you back here next week I'll

see you soon bye-bye