November 13, 2017

MONEY FOR NOTHIN', DECLINES IN SOCIAL PATHOLOGY FOR FREE:

FREE MONEY: THE SURPRISING EFFECTS OF A BASIC INCOME SUPPLIED BY GOVERNMENT (Issie Lapowsky, 11/12/17, Wired)

Just months before Spencer was born, the Eastern Band of Cherokee Indians opened a casino near McCoy's home, and promised every one of its roughly 15,000 tribal members--among them Skooter and Michelle--an equal cut of the profits. The first payouts came to $595 each--a nice little bonus, McCoy says, just for being. "That was the first time we ever took a vacation," McCoy remembers. "We went to Myrtle Beach."

Once Spencer arrived, the checks covered the family's car payments and other bills. "It was huge," McCoy says. He graduated college and went on to coach football at the local high school for 11 years. Two decades later, McCoy still sets aside some of the money the tribe gives out twice a year to take his children--three of them, now--on vacation. (He and Michelle are separated.) And as the casino revenue has grown, so have the checks. In 2016, every tribal member received roughly $12,000. McCoy's kids, and all children in the community, have been accruing payments since the day they were born. The tribe sets the money aside and invests it, so the children cash out a substantial nest egg when they're 18. When Spencer's 18th birthday came three years ago, his so-called "minor's fund" amounted to $105,000 after taxes. His 12-year-old sister is projected to receive roughly twice that.

McCoy is now general manager of the Cherokee Boys Club, a nonprofit that provides day care, foster care, and other services to the tribe. At 41, he has a shaved head and wears a gray Under Armour T-shirt over his sturdy frame, along with a rubber bracelet around his wrist that reads, "I can do all things through Christ who strengthens me."

The casino money made it possible for him to support his young family, but the money his children will receive is potentially life-altering on a different scale. "If you've lived in a small rural community and never saw anybody leave, never saw anyone with a white-collar job or leading any organization, you always kind of keep your mindset right here," he says, forming a little circle with his hands in front of his face. "Our kids today? The kids at the high school?" He throws his arms out wide. "They believe the sky's the limit. It's really changed the entire mindset of the community these past 20 years."

These biannual, unconditional cash disbursements go by different names among the members of the tribe. Officially, they're called "per capita payments." McCoy's kids call it their "big money." But a certain kind of Silicon Valley idealist might call it something else: a universal basic income. [...]

It was here, in the quiet shadow of the mountain range, that a team of researchers including Jane Costello, a professor of psychiatry and behavioral sciences at the Duke Institute for Brain Sciences, decided to ground the Great Smoky Mountains Study of Youth. Costello wanted to find out about the need for mental health and psychiatric services for children in rural America, and in 1993 the researchers began studying 1,420 children, 350 of whom were members of the Eastern Band of Cherokee Indians. They divided the group into three age cohorts--9-year-olds, 11-year-olds, and 13-year-olds--and gave their parents thick, detailed personality surveys called the Child and Adolescent Psychiatric Assessment, which were completed every year until the kids turned 16 and then again every few years until they turned 30. Looking for indicators of behavioral or emotional troubles, the researchers asked questions about whether the children ever engaged in physical fights and whether they had trouble being away from home.

Costello and her team also recorded household data like parents' occupations, history of domestic violence, and, crucially, income. When the study began, about 67 percent of the American Indian kids were living below the poverty line. It wasn't until after the casino opened that Costello began to notice that household income among the Cherokee families was going up. It was subtle at first, but the trend turned sharply upward as time went on, eventually lifting 14 percent of the Cherokee children in the study above the poverty line. Household income for those families who were not Cherokee, meanwhile, grew at a slower rate.

It was an awakening for Costello, who had accidentally stumbled onto an entirely new line of inquiry on the impact of unconditional cash transfers on the poor. "I suddenly thought, 'Oh my god,'" Costello remembers. [...]

The Eastern Band's change in fortunes also shifted the course of Costello's research. "We thought it'd be interesting to see if it made any difference" to the children's mental health, she says. They also started comparing the younger Cherokee children, whose families started accruing money earlier in their lives, to the older ones. They wanted to answer a simple question: Would the cash infusion benefit these kids in measurable ways?

The answer defied Costello's initial hypothesis. "I thought, 'There's such a pit of poverty there that this isn't going to make any difference; it's trivial,'" she remembers. "But it wasn't." Now the body of research that she and other academics have built has become a favorite point of reference for universal basic income advocates, providing some of the most compelling evidence yet of the positive effects of bestowing unconditional sums of cash on the poor.

In two studies, one published in 2003 and a follow-up in 2010, Costello compared children who were lifted out of poverty after the casino opened to those who had never been poor. She scored them based on the presence of what researchers referred to as emotional disorders, like depression and anxiety, as well as behavioral disorders, including attention deficit hyperactivity disorder (ADHD).

Before the casino opened, Costello found that poor children scored twice as high as those who were not poor for symptoms of psychiatric disorders. But after the casino opened, the children whose families' income rose above the poverty rate showed a 40 percent decrease in behavioral problems. Just four years after the casino opened, they were, behaviorally at least, no different from the kids who had never been poor at all. By the time the youngest cohort of children was at least 21, she found something else: The younger the Cherokee children were when the casino opened, the better they fared compared to the older Cherokee children and to rural whites. This was true for emotional and behavioral problems as well as drug and alcohol addiction.

Other researchers have used Costello's data to look at different effects of the casino payments. One fear about basic income is that people will be content living on their subsidies and stop working. But a 2010 analysis of the data, led by Randall Akee, who researches labor economics at the University of Southern California, found no impact on overall labor participation.

Of course, the casino also brought jobs to the area, and the majority of the roughly 2,500 people the casino employs are tribal members. This would seem to confound the question of whether the tribal payment or casino income made the difference in the children's lives, but Akee looked into this too. He found that, among the parents in Costello's study, employment didn't go up or down after the opening of the casino.

Akee also looked at the effects of the money on education and found that more money in the household meant children stayed in school longer. The impact on crime was just as profound: A $4,000 increase in household income reduced the poorest kids' chances of committing a minor crime by 22 percent.

All of this amounted to substantial financial benefits for the community as a whole. "This translates to fewer kids in jail, fewer kids in in-patient care," Costello says. "Then there are the other costs you can't calculate. The cost of people not killing themselves? That's a hard one."

Posted by at November 13, 2017 4:46 AM

  

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