A Cherokee Tribe's Basic Income Success Story

Moises Velasquez-Manoff has a piece at the New York Times describing what is essentially a universal basic income (UBI) program operated by a tribe of Cherokee Indians in North Carolina. The tribe opened up a casino and used the profits from the casino to finance a flat cash transfer to all tribe members. In 2001, the cash transfers amounted to $6,000 per member and, in 2006, the amount had climbed to $9,000 per member.

Duke's E. Jane Costello, focusing on psychiatric health, kept track of the impact of this new program, publishing at least three studies on it (I, II, III). She, along with other researchers, found the following:

  • Children who were moved out of poverty by the UBI saw their behavioral problems decline by 40 percent.
  • Minor crimes declined.
  • On-time high school graduation rates increased.
  • Children who started receiving the UBI earlier in life had better mental health in early adulthood than those who started receiving it later in life. In particular, they were 33% less likely to develop substance abuse or psychiatric problems.

Velasquez-Manoff also mentions in his piece that forthcoming research from Randall Akee argues that these payments are entirely offset by the reduction in other costs resulting from "reduced criminality, a reduced need for psychiatric care and savings gained from not repeating grades."

Like most pieces written about increasing the cash incomes of poor people, this one has its share of framing about how surprising the effects of such programs are. Surprise, of course, is measured against expectations. It is not the outcomes that are remarkable; it is how low our expectations of poor people are that is remarkable. We so think, for our own comfort no doubt, that the poor are just utterly and constitutionally screwed up that even modest gains from increasing poor people's access to resources blow us away.

This surprise is especially odd when you consider the fact that almost every single anti-poverty effort is supposed to work this exact same way. Consider David Brooks' call on Friday for tackling poverty by increasing so-called human capital. This strategy does not work, as I pointed out in my response to Brooks. But really take a second and drill down hard on how it is supposed to work. Walk yourself through the process that leads from increasing human capital to decreasing poverty. It goes like this: increasing the human capital of poor people will cause them to have a greater productive capacity, which will cause them to get better jobs, which will cause them to get higher pay, which will cause them to have more money, which will cause them to not be poor anymore.

Talking about human capital obscures the mechanism of this conservative approach to poverty reduction, but that mechanism is ultimately increasing the cash incomes of poor people. You cannot consistently believe that 1) increasing human capital will make poor people less poor, and 2) increasing cash transfers will not make poor people less poor. This is an inconsistent belief because they both operate through the same ultimate mechanism. Of course, people like Brooks do not oppose cash transfer programs on coherent policy grounds. They oppose them on normative grounds. They simply do not think the poor deserve that money and therefore do not want them to have it, despite the human wreckage such a stance entails.