Sunday, April 6, 2014

Basic Income: Mincome vs. SIME/DIME

When discussing Universal Basic Income, proponents cite a Canadian study, Mincome, and opponents cite a US study, the Seattle-Denver Income Maintenance Experiment, aka SIME/DIME. When googling for comparisons of the two, I found Evelyn L. Forget's THE TOWN WITH NO POVERTY, which includes this about SIME/DIME (italics dime):
When Nixon came to office, he appointed Donald Rumsfeld to head the poverty programme, and Rumsfeld brought along an assistant named Dick Cheney. Robert Levine, one of the original experimenters who went on to work for the Rand Corporation, credits Rumsfeld for saving the poverty programme by shifting them in a republican direction, towards “experimentation rather than action” (Levine et al. 2005: 98).

The experiments generally found a 13% reduction in work effort from the family as a whole, with one-third of the response coming from the primary earner, one-third from the secondary earner and the final third coming from additional earners in the family (Levine et al. 2005: 99). Since the primary earner generally worked many more hours than the secondary and tertiary earners, this implied a relative small reduction in the number of hours on the part of the primary earner. Female spouses reduced their hours and re-entered the workforce less quickly after a break. Tertiary earners tended to enter the workforce later, which implies that they stayed in school longer. The biggest effects, that is, could be spun as either an economic cost in the form of work disincentives, or an economic benefit in the form of human capital accumulation. The general result that secondary earners tend to take some part of the increased family income in the form of more time for household production, particularly staying home with newborns, was found in all the experiments.

The most damning result came in the form of family dissolution rates in the SIME-DIME experiment. These results seemed to imply that black experimental families had a divorce rate 57% greater than the controls, and white experimental families had a divorce rate 53% greater than the controls. This finding caused Senator Moynihan to withdraw his support for the GAI and was largely responsible for the failure of Jimmy Carter‟s welfare reform scheme. Further analysis of the data, published in 1990, rejected these findings as a statistical error, and no other experiment found any effect on marital stability (Cain 1990).

In North Carolina, children in experimental families showed positive results on elementary school test scores. In New Jersey, data on test scores was not collected, but a positive effect on school continuation rates was found. In SIME-DIME there were positive effects on adult continuing education (Levine et al. 2005: 100). These results are all the more remarkable when juxtaposed to the academic literature that shows it is almost impossible to affect test scores, dropout rates or educational decisions by direct intervention.

Inconsistent attempts were made to collect health data, specifically on issues such as low birth weight which can be associated with significant deficits in later life. The Gary, Indiana study found positive effects on birth weight in the most at-risk groups (Levine et al. 2005: 100).

For a moment, it looked as though the war on poverty might take a new twist. The political right, however, mobilized. Opponents of welfare reform seized upon the results of the experiment to prove that a GAI was impossible. By the late 1970s, results showing very modest effects on work effort were portrayed as disastrous for the labour market. Senator Moynihan, who was initially a strong political advocate for the scheme, dropped his support when the initial (erroneous) effects on family dissolution came in. More extreme reactions came from Senator Williams from New Jersey, an opponent of the FAP, who argued that the experimental families were “double-dipping” and should be prosecuted for welfare fraud. David Kershaw, who was then running the experiments, went to great lengths to protect the confidentiality agreement experimenters had with subjects and prevent the congressional investigators unleashed by the General Accounting Office from seizing the files. Whatever the scientific merit of the experiments, the political moment for a general GAI in the US had passed.