UBI or the minimum wage?
A UBI may also improve the quality of life for those reliant on social security schemes. It would remove both means testing, something that many argue is a costly, humiliating, and time-consuming process as well as any stigma around welfare schemes, thus improving the life of those reliant on them (Krämer, 2020). Furthermore, by removing means testing, a UBI would prevent welfare traps (when, since welfare schemes are means tested and phase out with increased income, they provide a disincentive for people to enter low paid work in the short run, even though a career would be beneficial for both them and the economy in the long run) (Hoynes and Rothstein, 2019). The most reliable case study to confirm these effects is The Eastern Cherokee Native American Tribe and their casino payments – and there has been detailed research into the benefits these payments have brought. In 1993, Dr Jane Costello was researching the effects of poverty on the likelihood of children developing mental illnesses in the area around Cherokee land, but in 1995 the tribe opened Harrah’s Cherokee Casino Resort and the tribe leaders decided that all tribe members over the age of 18 should receive a cut of the profits each year, with the first payment made in 1996. Due to the area in which Costello’s study was taking place, 25% of the participants began re ceiving these payments. As a result of this, 14% of the total study was lifted out of poverty, while 53% of the total remained in poverty throughout and 32% were never in poverty (the remaining 1% is a result of rounding) (Costello, Compton, Keeler and Angold, 2003). This provided the perfect, natural opportunity to study the effects of permanent, unconditional payments and Costello’s study quickly changed to incorporate this. Before the casino opened, children of families living in poverty (by the official standards of the time) had an average of 4.38 psychiatric symptoms (anxiety, depression, conduct, oppositional disorders and drug addictions or dependencies), whereas children from families not in poverty averaged just 2.75. After the casino opened, the children of families lifted out of poverty saw a drop in psychiatric symptoms to the same level as those who were never poor, whereas the children of families who did not receive the casino payments did not experience any change in the number of symptoms they experienced (Costello et al., 2003). This provides strong evidence for the benefits of unconditional payments, particularly to poor families. Furthermore, while these payments did not replace social security schemes entirely, they did come at a time when they were being cut. In the late 1980s Ronald Reagan was encouraging free-market solutions to the Native Americans’ economic situation, and while this led to the signing of The Indian Gaming Regulatory Act, which essentially allowed the casino to open, it also cut federal programs helping Native Americans drastically. So, unconditional payments had a profoundly positive impact on the mental health of the children of recipient families and did a significantly better job at improving their quality of life than government-run means tested schemes (Lapowsky, 2017). A second paper (published in 2010 – 7 years after the first) outlining the result of the latter part of Costello’s study, which followed the original children into young adulthood , stated that ‘ significantly fewer Indians than non-Indians had a psychiatric disorder [during early-adulthood] ’ (Costello, Erkanli, Copeland and Angold, 2010, p.1954) The children whose families had received casino payments had begun to receive their own bi-annual payments, and 30.2% of recipients were recorded to have a psychiatric disorder in adulthood, compared to 36% of non-recipients involved in the study. Levels of drug misuse, particularly alcohol and cannabis, were noted to be significantly lower among those who received the payments. The study concluded that the payments had a profound impact on the children
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