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The Almighty Buck United States

Here's What Happens When You Give People Free Money (wired.com) 293

OpenResearch, a lab funded by OpenAI CEO Sam Altman, has released initial findings from a comprehensive study on unconditional cash transfers. The experiment, conducted from 2020 to 2023, provided $1,000 monthly to 1,000 low-income Americans across Illinois and Texas. Results showed recipients primarily used the funds for basic needs and increased spending on healthcare and leisure activities.

While the cash boost led to some positive outcomes, including increased business startups among Black recipients and women, it did not significantly improve long-term financial health or physical well-being. The study also noted a reduction in work hours among participants, with earnings dropping by at least 12 cents for every dollar received.
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Here's What Happens When You Give People Free Money

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  • by Cnox ( 6973744 ) on Monday July 22, 2024 @09:51AM (#64645698)

    ...those people receiving this free money have no idea how to make more of it.

    • This.

      Give a person a fish and they are fed for a day ....

    • by ArchieBunker ( 132337 ) on Monday July 22, 2024 @10:15AM (#64645802)

      What a shocker. You give a poor person money and they use it to pay bills.

      Let's check in on the millionaire who became homeless as a social experiment to see just how easy it is to be a millionaire again.

      https://www.ladbible.com/lifes... [ladbible.com]

      Turns out not that easy and he had to stop because of his failing health.

      • Who ever thought it should be "easy" to become a millionaire?

        Now, to go from poverty to being able to pay rent and buy groceries, that's an attainable goal. I know first hand, I went from free school lunches, to owning a home in a nice neighborhood. Was it handouts that got me there? No, just hard work.

        • What do you the the free school meals were if not handouts?

      • by J-1000 ( 869558 )

        Let's check in on the millionaire who became homeless as a social experiment to see just how easy it is to be a millionaire again.

        I'd never heard of this guy till you mentioned him, and after watching his followup video [youtube.com] I gotta say your take is a bit reductive.

        • He wasn't trying to make any commentary on homelessness, rather he wanted to play out a "what if" scenario to explore starting over and to give people a blueprint. He seems to be one of those motivational types.
        • His health issue was a continuation of an autoimmune disease he was diagnosed with in 2018.
        • It sounds like he wasn't homeless for long; he made some money.
        • Midway thr
    • by Ol Olsoc ( 1175323 ) on Monday July 22, 2024 @10:19AM (#64645818)

      ...those people receiving this free money have no idea how to make more of it.

      I guess you pissed someone off. Because what you wrote was true. A lot of people have no idea how to manage money.

      It is welfare by a different name, apparently for people that are working, and "it did not significantly improve long-term financial health or physical well-being. The study also noted a reduction in work hours among participants..."

      Which is not surprising. Also FTA: "The increased debt brought down participants’ net worth over the three years. Combined with little change in credit access, bankruptcies, and foreclosures, researchers concluded that “the transfer did not improve participant’s long-run financial position.” People did put more money into savings and initially felt better about their financial situation. But they also slightly cut back on work and let the free cash fill in the gap." Now say, if I were in a three year program that gave me 1Kilobuck per month - a total of 36 thousand dollars, every cent would go in the bank, and not be touched. Of course, I'm not in their financial position, but it sounds like many were in section 8 housing, and receiving other assistance, and were getting by before getting the money.

      Waiting for the "troll mods"

      • Interesting. Because of the subject line ("Here's one thing that didn't happen...") I read the rest of the post ("...those people receiving this free money have no idea how to make more of it.") with a big "negate" in front of it, and came to the opposite conclusion as to what the post meant as you (apparently) did.
        The moderators of the post may have done the same thing.

        • Re: (Score:3, Insightful)

          by Ol Olsoc ( 1175323 )

          Interesting. Because of the subject line ("Here's one thing that didn't happen...") I read the rest of the post ("...those people receiving this free money have no idea how to make more of it.") with a big "negate" in front of it, and came to the opposite conclusion as to what the post meant as you (apparently) did. The moderators of the post may have done the same thing.

          I'd never make the claim that all poor people are poor because they deserve it. Most poverty comes from a multitude of reasons. Like lack of drive, Drug use, the trap of single motherhood, some times laziness, some times shitty luck. And yes, many are terrible at handling money.

          It does trigger many people if we suggest that there are multiple reasons that some people fall off the bottom rung of the ladder. I'm convinced that we'll never make inroads on the issue unless we stop with the "society is bad a

          • Single motherhood is a real problem, and those children are victims of their mother's decisions

            Wait, what? It's all the mother's fault? The dad has nothing to do with this? Stop the presses! Someone needs to know about these miraculous births without a father.
            • by dgatwood ( 11270 ) on Monday July 22, 2024 @12:08PM (#64646338) Homepage Journal

              Single motherhood is a real problem, and those children are victims of their mother's decisions

              Wait, what? It's all the mother's fault? The dad has nothing to do with this? Stop the presses! Someone needs to know about these miraculous births without a father.

              I think the implication is that they chose the father poorly, and in situations where that is the case, it goes without saying that it is also the father's fault.

              The real problem is that they're ignoring situations where the relationship just didn't work out, where the father dies, where the father becomes an addict and self destructs, where the woman is gay and living in a state/country that doesn't support her not being single, and any number of other life circumstances that may have nothing to do with anyone's poor decisions.

              It also ignores the harsh reality that being with the wrong person for the sake of a child can actually be way worse for the child than being a single parent, particularly in situations involving abuse or addiction or both.

              Basically, the people saying things like this have never actually spent any significant amount of time getting to know a single parent and learning about their situation. Their high-and-mighty moralistic attitude is based entirely on theory that is completely detached from reality, and their reasoning completely falls apart under more careful scrutiny.

          • The problem with ladders is that the Grim Reaper always climbs as high as anyone can. Yeah, you might be living large and in the total lap of luxury for a while, but the Grim Reaper will always climb up to get you. Some people feel that always climbing the ladder is not the best use of their limited time, and are content being on the lower rungs.
            • The problem with ladders is that the Grim Reaper always climbs as high as anyone can. Yeah, you might be living large and in the total lap of luxury for a while, but the Grim Reaper will always climb up to get you. Some people feel that always climbing the ladder is not the best use of their limited time, and are content being on the lower rungs.

              But so many complain. If they are happy while they are where they are at - that's great. That is the drive thing I wrote about. It's like a friend of the wife's who is educated as a pharmacist, yet works as a waitress, and gets section 8 housing assistance, free cell phone and laptop, and greatly reduced internet access. Her life and her choices. She is actually a rather brilliant and intelligent woman, just very little drive.

              Of course we all die. Both this woman and myself. As noted, if she is happy, m

      • by ranton ( 36917 )

        I guess you pissed someone off. Because what you wrote was true.

        What he wrote was too ambiguous to make any claims which could be proven true or false, but I think he is clearly implying that giving these individuals $1k per month would lower the chances that they would find ways to increase their income when compared to the control group. If that is what he is claiming, he is wrong. These individuals were more likely to receive education, job training, and start businesses.

        • I guess you pissed someone off. Because what you wrote was true.

          What he wrote was too ambiguous to make any claims which could be proven true or false, but I think he is clearly implying that giving these individuals $1k per month would lower the chances that they would find ways to increase their income when compared to the control group. If that is what he is claiming, he is wrong. These individuals were more likely to receive education, job training, and start businesses.

          Their net worth was brought down by the end of the experiment. That is very interesting. Many went more into debt.

          So would we not expect that by getting education, job training and starting a business would make their net worth be higher rather than lower. With an education, they could get work with higher renumeration, Job training the same.

          Starting a business - Speaking of vague, they gave some percentages of being more likely to start a business by "race", with so called "blacks" being 9 percent m

    • by Targon ( 17348 )

      At $1000 per month, that's a nice supplement to help pay the bills, but it doesn't provide enough to invest with the cost of living being as high as it is. Many people with limited financial resources but who understand how things work would also have been saving money, rather than investing it to "make more money". Many people view the stock market as gambling, so, would you take the $1000 per month and just go to the casino to risk it? Some people would, most would look for a better use for the mone

    • by Rei ( 128717 ) on Monday July 22, 2024 @10:48AM (#64645968) Homepage

      The article literally says that it led to an increased number of startups among black people and women. So the only way you can reach that conclusion is if you declare that "black people and women are incapable of running a startup business", which is just plain unadulterated racism and sexism.

      On average there was a small (12%) reduction in working hours - however, note that this doesn't mean (and is unlikely to mean) the same people launching more startups. But this has been studied in more detail in some of the (many) other experiments on this topic, and usually the people who reduce working hours do so to do things like take care of children, care for sick loved ones, etc - things that one would hardly consider socially detrimental.

    • by AmiMoJo ( 196126 ) on Monday July 22, 2024 @10:49AM (#64645976) Homepage Journal

      It's a shame the money didn't come with some advice. We know from other experiments with things like start-up loans that it can work very well for that. It does say some of them used the money to start businesses.

      I suspect though that the main issue was more immediate problems that needed addressing, and which provided benefits that were not measured. For example, reducing work hours to provide better childcare and opportunities for their kids. Paying off debts, e.g. medical.

      Look at the dates too. 2020 was the pandemic, up to 2023 when inflation was coming back down. How much worse would things have been for them if it wasn't for that money?

      • by ranton ( 36917 )

        It's a shame the money didn't come with some advice.

        If it came with advice and other services it likely wouldn't have been a very good study of the effect of UBI, because it's unlikely everyone receiving UBI would also get those extra services. This study's purpose appears to be understanding how UBI would effect people if done on a larger scale so it makes sense that they limited their involvement to just giving them the money.

      • by GoTeam ( 5042081 )

        Look at the dates too. 2020 was the pandemic, up to 2023 when inflation was coming back down.

        By saying "inflation was coming back down", you do mean "not rising as fast", right? Inflation [usinflatio...ulator.com] is still alive and well at 3%. We haven't seen any deflation since April 2015.

    • by dirk ( 87083 )

      It's not even in the article, bu tint he summary - "including increased business startups among Black recipients and women". So if starting businesses isn't the way to make more money, what exactly is? Maybe it could have included a seminar on how to inherit money from rich relatives I guess.

    • by XXongo ( 3986865 )

      ...those people receiving this free money have no idea how to make more of it.

      "Some began considering or pursuing startups. By year three of the payments, 'Black recipients were 9 percentage points more likely to report starting or helping to start a business than control participants, and women were 5 percentage points more likely,” according to one of the studies'."

      Sounds like at least some of them had ideas of how to make more of it.

  • Many More Studdies (Score:5, Informative)

    by Thelasko ( 1196535 ) on Monday July 22, 2024 @10:01AM (#64645738) Journal
    There are many studies on the topic. Here [vox.com] are [vox.com] some [vox.com] examples [worldbank.org] (Vox due to lack of paywall)

    Don't rely on just the latest one.
    • by Junta ( 36770 )

      Broadly speaking, I think the studies and meta-analysis have concluded that giving a small portion of the population means-tested short term modest amount of cash benefit tends to have good outcomes. About the only actionable policy change compared to status quo is that perhaps you don't need to micromanage that sort of benefit. That instead of forcing them to spend it one way or another or making sure the benefit stops the second they 'shouldn't have it' anymore, just give the cash value of the benefit fo

      • by dvice ( 6309704 )

        In some studies in Africa people used the money to get for example a better roof.

        I think the outcome is pretty hard to study, because more money to a single mother might mean that she can spend more time with the kid, which means that the kid has better chance to succeed in life. But if you study the income of the mother, there is only negative change as she works less, because she can.

        But I really think we should just forget UBI and instead focus on UBS. Free education, healthcare for everyone. Free housin

    • by gtall ( 79522 ) on Monday July 22, 2024 @10:33AM (#64645894)

      There is something wonky about checking after three years and then claiming that it does not improve their long term financial health. Three years is not long term.

  • Pilgrims (Score:5, Interesting)

    by hierofalcon ( 1233282 ) on Monday July 22, 2024 @10:03AM (#64645748)

    Early settlers to this continent found this out as well. Early Pilgrims tried to do shared work and results for the first couple of years. Only after they allocated land to each person and they kept what they grew did production increase enough to survive.

    That isn't to say that the whole business C-Suite versus everyone else hasn't gotten way out of whack.

    • Re: (Score:2, Flamebait)

      Lol this is the socialism=bad parable that talk radio likes to read before Thanksgiving.

      Early pilgrims were morons who kept getting scammed and kicked out of places for their dumb religious practices.

    • Nonsense. The first settlers wondered why so much of the environment was edible. They could not understand that the Indians cared for their environment with a kind of "environment agriculture".

      (Source: the book 1491 [wikipedia.org])

    • Comment removed based on user account deletion
  • Some people just get a lot more of it than others.
  • by Pseudonymous Powers ( 4097097 ) on Monday July 22, 2024 @10:14AM (#64645796)

    "OpenResearch found that when it gave some of the poorest Americans $1,000 a month for three years with no strings attached, they put much of the money toward basic needs such as food, housing, and transportation. But what amounted to $36,000 wasn’t enough to significantly improve their physical well-being or long-term financial health, researchers concluded."

    So, to summarize, giving broke Americans slightly less than they would earn working a full-time minimum-wage job in did not make them independently wealthy. If they had paid me just one-hundredth of that money, I could have told them what that, without waiting three years.

    • by Junta ( 36770 )

      Note that commonly the studies highlight scenarios where they take advantage of the relief to get out of the wrong end of a runaway financial problem.

      Having a bit of persistent credit card debt balloons to an untenable debt. A short term boost has them dig out.

      Stuck continuously working two jobs to get buy without having time to get some courses to get ahead, they get a break from the second job to take some evening classes and get a bit ahead.

      However, note the 'get a bit ahead' implies *someone* to get ah

    • by irchans ( 527097 )

      ....If they had paid me just one-hundredth of that money, I could have told them what that, without waiting three years.

      Is $36,000 just too little money to help a family?

      • Yeah, and it's worth emphasizing that that's $36k over 3 years. The median rent in Texas is about $2k/month and in Louisiana it's around $1.5k/month. That $1k/month is certainly helpful for people, but it's not like it's going to free up many primary wage-earners to go back to school or to start their own businesses or make some other investment in their long-term success.
  • Hookers and blow count as leisure, right?

    Anyway, the first click on the link shows this is advocacy, not study.

    Let's look at some of the eligibility requiremnets

    Not currently receive Supplemental Security Income (SSI) or live in public housing, as the unconditional cash could put benefits in jeopardy

    They later say Section 8 disqualifies too. Oh, yeah, leaving out people getting major forms of welfare couldn't bias things at all, could it?

    3. Have a total household income that did not exceed 300% of the fede

    • "Says nothing about what happens when you give dysfuncitonal people cash." If America does get UBI, this will just have to be counted as "predicted waste or loss". Most people wouldn't be going out and using it to commit the vices that people get worked up about whenever this type of subject is brought up. I predict most people will still be working to augment this because they want to do stuff besides watching TV all day in a 'cheap' apartment, and they don't want to feel useless So UBI is really just a
    • Hookers and blow count as leisure, right?

      So is buying lottery tickets.

  • by sdinfoserv ( 1793266 ) on Monday July 22, 2024 @10:24AM (#64645842)
    To see what happens when you give people "free money", look no further than native reservations. American Native Reservations are the poorest, highest suicide, lowest life expectancy places in America. Despite the fact they receive monthly payouts, healthcare for life and free college education - if they choose to go. Some with casino's are doing ok financially, but I would argue that addiction to gambling (the funds) is hardly a success story. To those who believe reparations would actually solve any problems, history tells a different story.
    • Comment removed based on user account deletion
    • If someone came to my land and destroyed my culture, slaughtered most of the ancestors, of my nation, forced their kids to attend abusive boarding schools where they are taught why they are inferior, and the conquers are superior, and started telling us what to do and where we could and could not go, I'd be grumpy and depressed too.
  • Earnings dropped? (Score:5, Insightful)

    by Comboman ( 895500 ) on Monday July 22, 2024 @10:28AM (#64645860)

    >>The study also noted a reduction in work hours among participants, with earnings dropping by at least 12 cents for every dollar received.

    So if you give people extra money they cut back on their side gigs and spend more time with their family? Shocking!

  • by CEC-P ( 10248912 ) on Monday July 22, 2024 @10:29AM (#64645868)
    I really have to weigh in on this. All these "See, socialist UBI is actually good" studies should be called "Self-presentation bias, the study."
    They basically tell the people "We're going to track how responsibly you spend free money we're giving you," what the hell do you think they're going to do.

    You ever hear of tribal casino payouts. It typically pays down to 1/4 genetically native american and it's several thousand per month for most tribes. What do we get? A lot of responsible people with extra spending money and A LOT of deadbeats who just pool their money, have a roommate, and never work, contributing nothing to society from a production standpoint. We have decades of data to use but they refuse because they don't like the results.
  • by groobly ( 6155920 ) on Monday July 22, 2024 @10:39AM (#64645926)

    I suggest giving everyone $1 million and being done with it.

    Of course, in a few months there will be enough inflation and drop in productivity to get us right back where we started from.

  • by MindPrison ( 864299 ) on Monday July 22, 2024 @10:45AM (#64645954) Journal

    Anyone who has worked HARD for their money can tell you about the value of saving up vs spending it.

    There has been numerous studies of lottery winners how they got broke within 2 years of winning big because of their newfound riches and spending habits. If you didn't make it to the big cash, there's a reason for it - of course you could be the exception and had a series of unfortunate events in your life, but you're not the rule, you're the exception.

    The thing is, if you teach your kids to value hard work and how they get rewarded for it, like teaching your kids to mow the lawn, do chores, and they earn their pay, the brains reward system will be programmed with it and they will have a much easier time adapting to the real world out there, and find ways to earn money. It's also more rewarding for them to share their spoils with others because they know they worked for it. They can literally feel how expensive things really is.

    If you were given the cash, and you never truly worked hard for anything, then money has very little value. You want it, sure - but you don't want to put the effort in when you can get it so easily. If you're not used to good financial sense, it's also too easy to "reward" yourself with a little extra at the end of the day, and that little extra accumulates over time and shortly it will be all gone.

    But if you worked hard for it, you will soon know the value of that money and it's not so easy to accumulate. When you save up (and invest too) you'll be more mindful of what you purchase, how you invest, and how you spend.

    I've come to learn over time that it's often not about how much you earn, it's how you spend, and how much you spend. I'm not super rich, but people that are my friends and people that I know often ask me, how come you always have so much? You literally have half the salary I have and yet your house, car, phones, hobby stuff is paid off while I earn twice as much and I am always up to my ears in debt? How Is that even possible? Do you have side gigs?

    Nope - the answer might surprise you, I purchase second hand, I don't buy the latest and greatest - but I may wait 6 or more months, save up till I can afford it, and by that time the price has gone down, since I bought it with cash - I saved on interest and the price even went down. Add to the fact I bought it second hand. And the price can be reduced by over 50 percent of the cost you'd be spending on buying it on release date.

    If you do this with everything, your mind will be constructed differently, you'll be richer, have zero debt, and you will know the true value of money.

    It's no surprise gamblers, addicts, and people who got to quick cash by either dumb luck or rich parents will be no better off after a while, because they were never trained in how to handle it.

    • by whitroth ( 9367 )

      Bull. Serious sectors of the population work hard, and two and three jobs, and can't get ahead, because a) outright racism in the school systems means the kids don't learn crap [1], and b) racism and classism [2].

      You say you were given money by your folks. A hell of a lot of people weren't. I remember 2013, when that lying PoS Ryan had his hissyfit, and shut down the US government for 2 weeks[3]. The Democrats had a rally outside Congress in the middle of that, and one of the speakers was a black guy who wa

      • by dgatwood ( 11270 )

        Bull. Serious sectors of the population work hard, and two and three jobs, and can't get ahead, because a) outright racism in the school systems means the kids don't learn crap [1], and b) racism and classism [2].

        To be fair, I'm pretty sure most of the kids don't learn crap anyway, regardless of race or class. The people with money can just afford to buy their way into college and fake it 'til they make it.

        The Democrats had a rally outside Congress in the middle of that, and one of the speakers was a black guy who was a 2nd chef at the African-American Museum. They outsourced the food, and he was getting paid so little that there were days when he had to decide whether to feed his 16 yr old, living with him, or give him money to go to school. Tell us all how he should get rich.

        Move out of D.C.?

        If everyone who found that the cost of living made it unaffordable to live and work in a city moved away, there wouldn't be enough people to keep the businesses open, and businesses would start offering higher and higher wages to steal people, and eventually people would start moving back in, bec

  • This is the equivalent of a part time minimum wage job. Would anyone really expect measurable life altering changes from that?
    • Re:A pittance (Score:4, Insightful)

      by Baron_Yam ( 643147 ) on Monday July 22, 2024 @11:35AM (#64646188)

      If you've ever been poor - I have not, but I've been in debt in a dead end job so I have at least some clue - when you have no hope of climbing out you don't see the point in trying.

      A little money doesn't solve the long-term issue, that their potential income is insufficient to provide a reliable and reasonably comfortable lifestyle. When the test period is over, I'd expect almost everyone in a program like this to start sliding financially right back to where they started.

  • by C0L0PH0N ( 613595 ) on Monday July 22, 2024 @11:33AM (#64646172)
    I read accounts of the slums in Mumbai. After the movie, Slum Dog Millionaire, the director Boyle was criticized for using slum kids and then dumping them. So he did the ONLY THING that had any chance ever of getting those two kids out of the slums...he financed their education. He didn't give money to their families directly...they would just spend it and gone. Instead, he promised them housing and a steady income IF AND ONLY IF their kids attended school regularly. As soon as the kids drop out of school, the housing and the income stop. It worked, and both kids went all the way thru school. So, if the US invested in free education, that would be teaching people to fish, instead of giving them a fish.
    • Education, decent diet, and access to an appropriate peer group. There is plenty you learn outside of the classroom by being around the people who will be in the workplace with you and who have families in those workplaces already.

      And of course enough money to dress appropriately, to be able to get to an interview, to have communications access like a phone, the Internet, and even a physical mailbox.

      Education and diet are the first two big ones, though.

    • "So, if the US invested in free education, "

      There is no such thing as free education and I have the property tax bill to prove it. And besides, the US does have "free" education. I went to public schools, my daughter went to public school.

      If you want "free" college education, then you need to pay for it as well and in a way that doesn't provide four years of unrestricted partying for some while those who go to trade school are actually working at something useful have to pay for the party crowd. Just like m

      • Education doesn't need to be 100% free, but at least, low cost. I'm older, and when I went to college back in the day, it was cheap enough that I could work my way through college, which I did. But the costs have risen so much that you can't do that much any more. So if not free, at least within range of a poor working stiff, which is what I was. And I'm grateful I could do that, it gave me a much richer life, in many ways more than money.
  • Billionaires' "research group" pays a small amount to implement UBI *wrong* to "prove" that it won't help, so please don't raise their taxes to do it right. Well, I'm just staggered at those results, don't know about you. lol.

  • It's no surprise people tend to spend on things that improve quality of life and take extra time off from jobs that detract from that when given the chance.
  • Hungry people buy food, they're not going to get themselves a Nobel prize with $1000.

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