Universal Basic Income and Poverty

Note: I crossposted this for Eliezer, after asking him for permission, because I thought it was a good essay. It was originally written for Twitter, so is not centrally aimed at a LW audience, but I still think it's a good essay ot have on the site.

I am not much of an economist, but the two thoughts that spring to mind:

1. The change you want to see, of people not needing to do as much work, is in fact happening (even if not as fast as you might like). The first clean chart I could find for US data was here, showing a gradual fall since 1950 from ~2k hours/year to ~1760 hours/year worked.  This may actually understate the amount of reduction in poverty-in-the-sense-of-needing-to-work-hard-at-an-unpleasant-job:
   1. I think there has also been a trend towards these jobs being much nicer.  The fact that what you're referring to as a 'miserable condition' is working a retail job where customers sometimes yell at you, rather than working in the coal mines and getting blacklung, is a substantial improvement!
   2. I think there has also been a trend towards the longest-hours-worked being for wealthier people rather than poorer people.  "Banker's hours" used to be an unusually short workday, which the wealthy bankers could get away with - while bankers still have a lot more money than poor people, I think there's been a substantial shift in who works longer hours.

2. The change you want to see, viewed through the right lens, is actually somewhat depressing.  I would phrase what you are looking for as a world where society has nothing to offer people that is nice enough they are willing to work an unpleasant job to produce it.  

   If you have the choice between 'work long hours to get enough food to live' or 'work short hours and starve', it makes sense to call that 'poverty'.  If you have the choice between 'work long hours to be able to have a smartphone, internet, and cable TV' or 'work short hours, still have shelter, clothing and food, but not have as much nice stuff', I would call that 'work is producing nice enough stuff that people are willing to do the work to produce it'. 

   On your definition of 'poverty', Disneyland makes the world poorer.  Every time someone takes on extra hours at work so they can take their kids to Disneyland, you account the unpleasant overtime work as an increase in poverty, and do not account the Disneyland trip on the other side of the ledger.  This seems wrong.

I think this post would be much stronger if it tried to back up more of its empirical claims with evidence. For example, the post mentions people working 60 hours a week many times throughout, but my understanding is that <10% of American workers work 60 hours a week, and people who do tend to have much higher wages than average.

EDIT to add more:  This post reads to me as making interesting and probably-somewhat-important valid-in-principle points, paired with the totally unjustified speculation that these points are important considerations for reasoning about poverty as it actually exists; it might be the case that this is right, but I don't see any way to check easily or any particular evidence that Eliezer's beliefs here are based on fact.

Over at Astral Codex Ten is a book review of Progress and Poverty with three follow-up blog posts by Lars Doucet. The link goes to the first blog post because it has links to the rest right up front.

I think it is relevant because Progress and Poverty is the book about:

...strange and immense and terrible forces behind the Poverty Equilibrium.

The pitch of the book is that the fundamental problem is economic rents deriving from private ownership over natural resources, which in the book means land. As a practical matter the focus on land rents in the book heavily overlaps the modern discussion around housing. The canonical example of the problem is what a landlord charges to rent an apartment.

One interesting point is that while UBI is suggested (here called a Citizen's Dividend), it is for justice reasons, and is not proposed as a solution to poverty. I expect Henry George would agree that a UBI would not eliminate poverty, and would predict it mostly gets gobbled up by the immense and terrible forces behind the Poverty Equilibrium.

In many parts of Europe nobody has to work 60-hour weeks just to send their kids to a school with low level of violence.  A bunch of people don't work at all and still their kids seem to have all teeth in place and get some schooling. Not sure what we did here that the US is failing to do, but I notice that the described problem of school violence is a cultural problem -- it's related to poverty, but is not directly caused by it.

There was an excellent study on the effect of Universal Basic Income (UBI) in the US that came out recently. OpenResearch calls it their Unconditional Cash Study. 1000$ per month unconditional tax-free, RCT. There are two papers that came out shortly after @ESYudkowsky's post:

The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States by Eva Vivalt et al (this one refers to the study as OpenResearch Unconditional Income Study (ORUS), but I assume it is the same).

Does Income Affect Health? Evidence from a Randomized Controlled Trial of a Guaranteed Income by Sarah Miller et al.

Eva Vivalt has both listed on her blog.

My takeaway is:

• reduction of labor by 2h per week, replaced by leisure
  • I think this is fine, actually. Less "by the sweat of your brow."
• reduction of (non UBI) income by 0.2$ per each $ UBI
  • I think this is fine and to be expected, at least in the "short" run of the study. Where else would more money come from? 
• no better quality jobs
  • this is the sad result from the study that hints at the "poverty equilibrium" - UBI didn't help people avoid bad bosses.
• a little bit more education, a little bit of precursors to entrepreneurship
• no other relevant significant effects
• doesn't improve mental or physical health beyond year one.
  • I do wonder whether the stress in year three results from knowing that the UBI will run out.
     

I think the answer is simply that the modern world allows people to live with poverty rather than dying from it. It’s directly analogous to, possibly caused by, the larger increase in lifespan over healthspan and consequent failure of medicine to eliminate sickness. We have a lot of sick people who’d be dead if it weren’t for modern medicine.

I'm not sure the “poverty equilibrium” is real. Poverty varies a lot by country and time period, various policies in various places have helped with poverty, so UBI might help as well. Though I think other policies (like free healthcare, or fixing housing laws) might help more per dollar.

↑ comment by Kaj_Sotala · 2024-07-26T15:25:08.675Z · LW(p) · GW(p)

Agree; also this post doesn't seem to address e.g. the fact that the relative sizes of the social classes used to be quite different, and that today there exists a sizeable middle class rather than society being much more starkly divided into the poor vs. the wealthy. 

[EDIT: replaced Claude's estimate of social class sizes with the following:]

E.g. this paper cites economist Thomas Piketty's research as the original source, shows the share of property owned by the middle 40% of the population in Britain going from 10% to 40% between 1780 and 2015, with the top 10% of the population had 85-90% of the property up to around 1940.

Piketty (2020) has also been able to provide more distributional detail for the two most recent centuries, as shown in his Figure 5.4, reproduced here with permission (Piketty, 2020, p. 195). His estimates show that 1780–1800 saw a slight decline (from 89% to 86%) in the wealth proportion of the top 10% of private property holders, and an equivalent significant rise (from 10% to 13%) in the wealth held by the ‘middle 40%’, with the bottom 50% remaining at little more than 1% [...]

From [1910], however, the wealth of the top 10% began a gradual (1910–42) and then precipitate (1942–90) decline. By 1990, their share of national wealth had been almost cut in half to 48%, while the share of the ‘patrimonial middle class’ – the next 40% – had risen to 42%. Even the lowest 50% now had a 10% share in the nation’s wealth, while the top 1% had ‘only’ 18%.

So even if you buy the argument that there's a meaningful sense in which poverty hasn't been eliminated, the fraction of people who are middle class rather than poor has gone drastically up. And maybe a UBI won't be able to push poverty down to 0%, just as past progress hasn't, but it could quite possibly contribute another significant reduction.

Replies from: Vaniver, Seth Herd

↑ comment by Vaniver · 2024-07-26T16:03:43.963Z · LW(p) · GW(p)

I wasn't sure what search term to use to find a good source on this but Claude gave me this:

I... wish people wouldn't do this? Or, like, maybe you should ask Claude for the search terms to use, but going to a grounded source seems pretty important to staying grounded.

Replies from: Kaj_Sotala

↑ comment by Kaj_Sotala · 2024-07-26T16:47:55.580Z · LW(p) · GW(p)

Agree that a real source would be better but I think a Claude-source is better than nothing at all, especially in a case where the point is just to get the rough magnitudes and the details don't need to be exact. I'm not sure if editing my comment to just the first paragraph would be an improvement.

We've all seen the reports on how LLMs get good results on standardized exams and tests of general knowledge, so on this kind of question I'd presume it to be basically reliable (again, as long as we're talking just rough estimates and magnitudes, and take care not to ask leading questions). If my comment had instead included my own Fermi calculation or a random Wikipedia link, I'm guessing that that would have been more accepted, even though I doubt it would have been more reliable.

↑ comment by Seth Herd · 2024-07-26T16:04:38.606Z · LW(p) · GW(p)

Excellent point. But these changes are much less than the 100x wealth increase, which implies that there is a very strong poverty-inducing force, it's just not completely negating progress.

Replies from: Kaj_Sotala

↑ comment by Kaj_Sotala · 2024-07-30T13:42:58.841Z · LW(p) · GW(p)

Hmm, I don't feel like I have a good intuition for what a 100x wealth increase should look like. 

On the one hand, you could imagine a 100x wealth increase that didn't grow the size of the middle class at all, and just preserved existing proportions, so that 90% of the wealth still remained with the top 10%.

I imagine you mean something like "if the poorest 10% of 1700 had their wealth go up by 100x, then they should still be much better off than the poorest 10% of today are now". Then an obvious question is, how much has the wealth of the poorest 10% of today gone up relative to the poorest 10% of 1700? 

This source, which says it's maintained by the University of Sheffield, mentions that "During the eighteenth century wages could be as low as two or three pounds per year for a domestic servant, plus food, lodging and clothing. A beggar would normally hope to be given between a farthing and two pence in alms, while a parish pauper could hope for a weekly pension of between a few pence and a few shillings".

One farthing and two pennies is apparently 9/960ths of a pound, and at the same time it mentions that A man’s suit could easily cost £8, while even the uniform of a child looked after by the Foundling Hospital cost £1 12s. 10 ½d. So (rounding the cost of that uniform down to one pound to avoid dealing with old British units), that implies that a beggar would have needed to beg 106 years to afford one child's uniform, assuming that they didn't spend any of that money on anything else. 

I do find that a little hard to believe - what did the beggars wear, then? (Maybe the number was supposed to be weekly not yearly?) But even if we assume that the beggar had 100x the income implied here, it seems to me plausible to assume that ownership of a smartphone alone - that many homeless people of today do own - would represent a 100x increase in wealth compared to that, given the complex international supply networks and high-end chip manufacturing that goes into building a smartphone.

Poverty equilibrium keep existing despite the increases in productivity due to economic rents. Every time there is some slack in the system, renters raise their prices and capture the wealth. UBI itself is not enough, but UBI+LVT combo is what will allow to move to a much better equilibrium in our world. In Anoxistan, likewise, there would be needed an Air Value Tax, working by the same Georgist principles to erradicate their brand of poverty.

As someone coming from a "poor" European immigrant family, I have always found it interesting that in the U.S. people with big cars can be considered poor.

These U.S. people, the "poor" Anoxan and I know that the abundance of something does not mean having the opportunity to live life. Ask King Midas.

An N-fold increase in selected productivity, like in the number of winter socks or the amount of gold you have, does not mean your life opportunities are going to drastically increase allowing you to gain momentum towards an escape velocity from your miserable situation.

Obviously, many other things, e.g. housing, has still not properly scaled.^[1] And so rent can be high in many parts of the world (in particular cities, where there are plenty of juicy opportunities). This makes life miserable to many people (cause your pay does not cover enough rent, so or you go far from work, but then you need to commute, or you keep peeling your check). But flipping the argument about a UBI increasing the average costs, or profits made by the police, a decrease in rent might also bring unintended consequences.

So. Is this about goods? Are goods the answer to overcome poverty? Maybe. I do not know. They certainly play a role. Especially in societies where sharing your riches is uncommon. 

Why sharing? I mean, for many of us with riches the reason we are well off is probably because we were born in families. And why we were born in these families? 

Even if you believe in fate, genetics, or pure randomness, imagine repeating the event of your birth (without knowing the prior on your birth geography, social status, etc..). In which kind of world would you like to live? In a world where resources are shared across humans, or one where each one is for themselves?

I would argue that in a resource sharing environment I can higher the probabilities to choose different kinds of sufferings in my life, ending poverty. While in a more individualistic society you can have concepts like the poverty-barrier.

I am quite agnostic about the correct method to end poverty. But in my opinion, this is something a UBI could potentially address.^{[2] [3] [4]}Now, if some people end up living the same life even with a UBI, so be it. If others find the way to embrace a new path, so be it. It is not that a Poverty-Restoring force will just come from a UBI.

I am a bit proud, so maybe I would not have taken a UBI. I had food, and a place to sleep. But in an individualistic society, a UBI would have allowed me to buy the books that made me the scientist I am today (instead of going to work to buy them (though temporarily working can teach you good lessons)). Or think less about which kind of path I can take because I want to help my family (so being more selfish and follow a passion). Or to go to vacation. Or allow many of my friends and family to go to art school or university.^[5] 

A UBI would allow certain people to change the probabilities of their future.

Then, if I really need to think in economic terms, a nurtured human creativity can easily bring you a (M*N)xfold increase in productivity.

1. ^{^}

   For whatever reasons.

2. ^{^}

   Which is the correct way of implementing a UBI? I do not know. But I think we would not need a UBI if from childhood we were taught the value of sharing.

3. ^{^}

   I am personally more for nurturing sharing values in people and rely more on communities rather than big governments/organizations. A lot of people I know unfortunately are not used to these values, but hopefully this will change in the future.

4. ^{^}

   I also would like a UBI or similar to be implemented by a mix of experts with poor/non-poor backgrounds. This is because I discovered that a lot of the agencies that want to mitigate suffering (e.g. FAO ) are filled with rich background people, from many countries, that are well paid to solve problems they do not understand IMHO.

5. ^{^}

   I mean, there are countries that offer something like UBIs to their entire (small) population, and it seems to more or less work, though in this cases other people have to suffer (probably because we still did not scale jobs like construction).

6. ^{^}

   Now, if some people end up living the same life even with a UBI, so be it. If others find the way to embrace a new path, so be it. 

You give the constraints of the middle class worried they'll slip down, not the poorest Americans directly.  If 12% of Americans live in poverty, then the example concerns are those of the 12-50th percentiles.  You say the lumpen-proletariat will always exist, but prove that the lives of the proletariat won't improve much.

"credentialist colleges that raise their prices to capture more and more of the returns to the credential, until huge portions of the former middle class's early-life earnings" - Explicitly not the poorest.

"Like working 60-hour weeks to afford rent somewhere the school districts will damage your child less" - but a lot of people's kids do go to the worst school districts. I'd say if your kid goes to a bad school that's poverty, not the person who sends their kid to a better school.

"rents in San Francisco would almost instantly rise by the amount of the UBI; no janitors in the Bay Area would be better off as a result" - But housing prices over all of the US won't rise by the amount of UBI.  Some would move out of SF to cheaper areas.  They've been given an option they preferred so their lives have improved. UBI only does them no good if everyone choose to stay in SF,  but why would they?

"maybe the Ferguson police departments of the world, just raise their annual quota for fines per capita by the per capita UBI." - This assumes the policing level is set by the wealth of the poor. I think it's set by the level that generates political opposition. Claims there's on 12% as many arrest warrants after 6 years, clearly a political decision not a reduction in wealth. The Police in Beverly Hills are not stationary bandits nor are SF Cops making more in fines. I don't think it's a law of history that governments automatically grind down any surplus the poorest have.

The example of Anoxistan relies on the people not being able to afford the most necessary Oxygen, if they had to work 60 hour weeks to get cars, and some people choose to forgo cars, then that's clearly an improvement. 

The idea that poverty is squeeze from the tightest constraint, not the average of constraints is interesting, but you don't talk about the tightest constraint on the poorest. I suspect those have eased up: look at average hours worked, or the labor participation rate, or stories of the voluntarily homeless who work 3 months a year.  All indicate that some people choose not to work much, thus their constraints are smaller. 

This relates to my favorite question of economics: are graduate students poor or rich? This post suggests an answer I hadn’t thought of before: it depends on the attitudes of the graduate advisor, and almost nothing else.

There are rich people pushing themselves work 60+ hour days struggling to keep a smile on their face while people insult and demean them. And there are poor people who live as happy ascetics, enjoying the company of their fellows and eating simple meals, choosing to work few hours even if it means forgoing many things the middle class would call necessities.

There are more rich people that choose to give up the grind than poor people. It's tougher to accept a specific form of suffering if you see that 90% of your peers are able to solve the suffering with work than if 1% of your peers can. Right now, accepting your own mortality is normal even for rich people, but as soon as the 20% richest can live forever, suddenly everyone who isn't immortal will feel poor for lacking it. Maybe some will still embrace death rather than endure professional abuse 60 hours per week, but that is suddenly a much harder decision.

My first order guess for the mental definition of poverty would be if >X% of the population in your polity is able to afford a solution to various intense forms of suffering, but you can't. (Where X seems to be around 50-80%)

A rich 5th century BCE Athenian was a man for who any illness was very likely fatal, who loses half his children between ages ½ and 18, whose teeth are slowly ground down to the roots by milldust, who lived one bad harvest away from famine, and more. But now we characterize poor people by their desperate struggle to escape the things the Athenian rich person accepted as normal and inevitable.

I can see two ways UBI may solve poverty:

1. Given UBI makes up a sufficiently high fraction of all income, the poorest person does not feel like their wealth differs enough from that of everyone else to conceptualize their suffering as poverty.
2. Given sufficiently advanced technology, the UBI is enough to solve all major forms of suffering, from death to emotional abuse trauma, and even those with less stuff don't feel like they're missing out.

Option (1) may be possible already, especially in more laid-back cultures, but if not then UBI won't solve poverty yet.

All of that said, why is this the standard you choose to measure it by? Even if UBI doesn't solve poverty it can relieve suffering. And while other anxieties might take the place of the old on the hedonic treadmill, it does feel like life is better when sources of suffering are taken away. If you offered me $5000 but if I get depressed a child gets eaten alive by wolves before my eyes, I would say no, so apparently I do prefer my worst days over a hunter-gatherer's worst days.

Quality of life is what matters. UBI can take out financial anxiety and poverty traps, and likely improve exercise and physical health and nutrition and social satisfaction (assuming the economy doesn't collapse). Those are all things anyone could recognize as valuable, even if they have more urgent matters themselves.

[...] somehow humanity's 100-fold productivity increase (since the days of agriculture) didn't eliminate poverty.

That feels to me about as convincing as saying: "Chemical fertilizers have not eliminated hunger, just the other weekend I was stuck on a campus with a broken vending machine." 

I mean, sure, both the broken vending machine and actual starvation can be called hunger, just as both working 60h/week to make ends meet or sending your surviving kids into the mines or prostituting them could be called poverty, but the implication that either scourge of humankind has not lost most of its terror seems clearly false. 

Sure, being poor in the US sucks, but I would rather spend a year living the life of someone in the bottom 10% income bracket in the 2024 US than spending a month living the life of a poor person during the English industrial revolution.

I am also not convinced that 60h/week is what it actually takes to survive in the US. I can totally believe that this amount of unskilled labor might be required to rent accommodations in cities, though. 

What would it be like for people to not be poor?

I reply:  You wouldn't see people working 60-hour weeks, at jobs where they have to smile and bear it when their bosses abuse them.

I appreciate the concrete, illustrative examples used in this discussion, but I also want to recognize that they are only the beginnings of a "real" answer to the question of what it would be like to not be poor.

In other words, in an attempt to describe what he sees as poverty, I think Eliezer has taken the strategy of pointing to a few points in Thingspace [? · GW] and saying "here are some points; the stuff over here around these points is roughly what I'm trying to gesture at". He hasn't taken too much of a stab at drawing the boundaries. I'd like to take a small stab at drawing some boundaries.

It seems to me that poverty is about QALYs. Let's wave our hands a bit and say that QALYs are a function of 1) the "cards you're dealt" and 2) how you "play your hand". With that, I think that we can think about poverty as happening when someone is dealt cards that make it "difficult" for them to have "enough" QALYs.

This happens in our world when you have to spend 40 hours a week smiling and bearing it. It happens in Anoxan when you take shallow breaths to conserve oxygen for your kids. And it happened to hunter-gatherers in times of scarcity.

There are many circumstances that can make it difficult to live a happy life. And as Eliezer calls out, it is quite possible for one "bad apple circumstance", like an Anoxan resident not having enough oxygen, to spoil the bunch. For you to enjoy abundance in a lot of areas but scarcity in one/few other areas, and for the scarcity to be enough to drive poverty despite the abundance. I suppose then that poverty is driven in large part by the strength of the "weakest link".

Thanks for this post! I have always been annoyed when on Reddit or even here, the response to poverty always goes back to, "but poor people have cell phones!" It all comes down to freedom -- the amount of meaningfully distinct actions one person can take in the world to accomplish their goals. If there are few real alternatives, and one's best options all involve working until exhaustion, it is not true freedom.

I agree, the poverty restoring equilibrium is more complex than probably UBI -- maybe it's part of Moloch. I think the rents increasing by the UBI amount has something to do with demand inelasticity -- people will rent the same regardless of price -- so the price can rise until the breaking point once again. 

Nonetheless, UBI may still help. Also, I do think there are other concrete steps that can be taken. One cannot leave a horrible job for several reasons: (a) health insurance, (b) having a place to live, (c) having food, (d) school & giving children their best chance; but each of these can be tackled one by one. It may not solve the problem once and for all, but good quality public education (not funded by zip code), universal health insurance, and an adequate supply of housing, are all steps towards reducing the bottleneck imposed by one resource at a time. 

The bottom line in my personal philosophy is this -- take direct actions against those forces of poverty and Moloch. If there are unintended consequences, take direct action against them.  Propose policy, and try them out. Cynicism about any interventions working, is really wishful thinking by the wealthy elites. It's not coordinated, as you say. They want to believe the systems we have are really the best we can do, because what we have makes them powerful. Acknowledging the possibility that there is a better way would be uncomfortable for them both financially and psychologically!

I think something like this is true:

• For humans, quality of life depends on various inputs.
• Material wealth is one input among many, alongside e.g., genetic predisposition to depression, or other mental health issues.
• Being relatively poor is correlated with having lots of bad inputs, not merely low material wealth.
• Having more money doesn't necessarily let you raise your other inputs to quality of life besides material wealth.
• Therefore, giving poor people money won't necessarily make their quality of life excellent, since they'll often still be deficient in other things that provide value to life.

However, I think this is a different and narrower thesis from what is posited in this essay. By contrast to the essay, I think the "poverty equilibrium" is likely not very important in explaining the basic story here. It is sufficient to say that being poor is correlated with having bad luck across other axes. One does not need to posit a story in which certain socially entrenched forces keep poor people down, and I find that theory pretty dubious in any case.

I have known some rich people.  They don't act as a coordinated group almost ever; and the group they don't form, is flatly not capable of accurately predicting and deliberately directing world-historical equilibria over centuries.

Beg to differ. Rich people congregate, populate, and settle in areas, and form orgs and egregore that push away and hide the poor and the problems that make them uncomfortable, and this happens largely unconsciously - phenomenologically - yet there is organizational agency in it. And this kind of wealth phenomena has certainly steered world-historical equilibria over centuries. My point is: it's not a "conspiracy" of rich people, it's a phenomenon of rich people, and I think you should include the phenomenology of wealthy populations in your modeling.

Your writing sounds like someone put you under pressure to finance UBI and combat poverty. I think that’s not good. If they want you to pay for something, then it’s their job to explain to you why it’s ultimately good for you. Of course, in case the difference is too big, they also have the right to cut tie with you — a threat which is only effective if they are doing it better than you or you are doing better in the community with them than outside.

If you are not under pressure but want to hinder others in implementing UBI and combatting poverty, then you have trespassed. As you said, the definition of poverty can vary from place to place and from time to time, so without looking into the specific case, you can’t actually know for sure if it is productive or not. I heard that Christianity rose as a religion for the poor, which united and empowered them so much that a Roman emperor found it good to adopt this religion. I’m no Christ, so if I’m wrong you can correct me. And even if I’m right in this point, it still doesn’t say much about your specific case which I don’t know.

My point is: everyone has the right to implement UBI and combat poverty if they gather the resources for it on a voluntary basis (forcing in debt doesn’t violate the voluntary principle as long as the debt was made by free will, so if you have received benefit then you have to somehow repay someday) and they can do it in the way they see it fit. In the example about Christianity, the UBI was not designed as a certain amount of money but enough food to avoid starvation and shelter to avoid freezing to death. Of course, one can also do it differently.

Independently of the other parts, I like this notion of poverty. I head-chunk the idea as any external thing a person lacks, of which they are struggling to keep the minimum; that is poverty.

This seems very flexible, because it isn't a fixed bar like an income level. It also seems very actionable, because it is asking questions of the object-level reality instead of hand-wavily abstracting everything into money.

Eg, rents in San Francisco would almost instantly rise by the amount of the UBI; no janitors in the Bay Area would be better off as a result.

Side point, but this... doesn't seem to comply with basic supply and demand? 

The amount by which the rents would rise would likely depend very heavily on the ratio of price elasticities of supply & demand^[1], and in cases where we have neither a perfectly elastic supply^[2] nor a perfectly inelastic demand^[3], increasing the income of individuals (which could function as, say, an indirect subsidy of sorts for them to pay housing costs) predictably would not lead to a situation where rents instantly^[4] rise by that amount such that no poor person is made better off.

1. ^{^}

   Which is borne out by empirical studies as well, see for example "Why is the rent so darn high?" and Matt Yglesias's analysis here.

2. ^{^}

   Which we do not, in real life, as we can see, for example, by the fact that construction of new buildings is heavily dependent on expectations about future rent cash flows, so policies like rent control (which reduce that expectation) predictably cause landlords to significantly reduce rental housing supply. More directly, see this 2009 report by Rand that tries to estimate it numerically, as well as CEPR's statement that the 10th-90th percentiles of the numerical elasticity were 0.4 and 2.6, respectively, in the 2012-2017 period.

3. ^{^}

   Note that "housing" alone is made up of many inhomogeneous goods, there is always the possibility of living in a different city, etc. Numerical estimates for demand elasticity seem relatively more difficult to find by my cursory internet search; this 1980 paper puts price elasticity of demand for housing at between -0.4 and -0.6.

4. ^{^}

   Also note that the short-run supply elasticity of housing is predictably smaller than the long-run supply elasticity, which only further decreases the percentage of the UBI that is "wasted" on increased rent (this is not unique to housing, and is in fact true for most goods or services).

We can imagine two versions of the mysterious-poverty-restoring-force hypothesis:

Weak: Despite changes in overall productivity, poverty persists.
Strong: Despite changes in overall productivity, the proportion of the population in poverty remains constant. 

I think weak is almost certainly true, you're right that UBI won't eliminate poverty. But I think strong is likely false - people desperately struggling: people living relatively comfortably, with slack for hobbies and "fun spending" of time and money doesn't seem constant over history. 

I suspect UBI, because the gains are evenly spread (unlike gains from technological development, many of which are disproportionately allocated to the top 10%), would have a pretty sizable impact on the ratio of people living in poverty to people living in comfort.

I feel that one of the key elements of the problem is misplaced anxiety. If the ancient farmer stops working hard he will not not get enough food. So all his family will be dead.  In modern Western society, the risk of being dead from not working is nearly zero. (You are way more likely to die from exhausting yourself and working too hard).  When someone works too hard, usually it is not fear of dying too earlier, or that kids will die. It is a fear of failure, being the underdog, not doing what you are supposed to, and plenty of other constructs that ancient people simply did not reach - first they needed to survive. In this sense, we are way better than even one hundred years ago. 
Can UBI eliminate this fear? Maybe partially it can help, but people will still likely work hard to preserve their future and the future of their children. Maybe making psychotherapy (t address the fear itself) more available for those with low income is a better solution. I understand that it would require training way more specialists than we have now. However, some people report a benefit from talking with GPT as a therapist https://x.com/Kat__Woods/status/1644021980948201473 , maybe it can help. 

I honestly don't know if I understand what Eliezer is getting at so might be far off. If the premise is that increased real income (that 100-fold increase) has not really decreased what is undertood as poverty in human existance then income related factors (a UBI) seem definitionally ineffective as well.

But I'm not sure that he is subtly trying to say the whole UBI effort is essentially a fool's errand.

But I'm far from sure that his suggestion is that a UBI, at some level of abundance, can eliminate poverty because all the basic necessities (not sure how one defines that in a world where people do seem to care about relative outcomes over absolute outcomes) are guaranteed.

On the whole, however, a UBI strikes me as a much less powerful change than a 100-fold productivity increase.  If that didn't prevent a huge underclass that has to desperately scrabble for scraps, I expect UBI can't prevent it either.

This is a system problem.

While the current system of money, property rights, and paid work has been hugely beneficial for many people, it has suffered from a major problem: if you could not earn money (and had no savings or family support)... you were forced into charity, or crime... or you starved and died.

Over the last century, it was recognised that this state of affairs is immoral.

Unfortunately, the solution, namely 'welfare', is itself flawed.

The problem is that welfare is offered as an alternative to a job.  In this case, if welfare is set at or above the poverty rate, it would be rational for an able-bodied person to take the benefit in lieu of the low paid job.

As a result, welfare is usually set below the poverty line to force those who can work to take the available jobs. This has the unfortunate side effect of forcing those who (for a time) cannot do paid work, into poverty.  This is called the 'welfare trap'.

It traps our young, sick and injured, disabled, aged, their unpaid carers and those between jobs who have no savings or family support.  This is around 12-14% of the population, including 17% of ALL children.  It's not a static group.  The young grow up, the sick and injured recover, the disabled age, and the age die, and their unpaid carers and those between jobs find new paid work... only to be replaced by a new group.

A UBI offers a system solution.

Basic Income Australia has developed a proposal that can pay every adult $500/week (the poverty line) to meet their basic needs.
 
People are free to earn what they can on top... to better themselves and their family. Removing the 'welfare trap'.

Our short policy paper explains in more detail, why we need a UBI, how it would solve the fundamental system problem, and how it would be administered and funded, without increasing taxes or causing undue inflation:

https://basicincomeaustralia.com/policy_short/





 

My rough first attempt at explaining the apparent paradox of poverty continuing to exist despite a ~100x increase in productivity:

Humanity as a whole may have gotten 100x more productive, but most people aren't able to individually contribute 100x more value to the economy (at least not in a way that they are monetarily compensated for).  It seems like the increase in productivity largely takes the form of finding more efficient ways to coordinate the efforts of many people (e.g. factories) rather than individuals being able to produce more value on their own, and that the few people doing the coordinating are reaping the benefits of this much more than the many people being coordinated.  Even in areas where the potential for individual productivity has greatly increased (e.g. digitally producing games, videos, music, etc.), attention remains scarce, people largely pay attention to things that already have attention, and again only a small number of people are able to produce such content and have a large number of people consume and pay for it.

If humanity's 100x productivity increase took the form of 100% of people becoming 100x more productive, and poverty persisted, that would indeed be pretty strong evidence for some sort of Poverty Restoring Force, but my sense is that it's a closer approximation of what actually happened to say that 1% of people became 10,000x more productive, in which case observing that many of the other 99% who were previously in poverty continue to be in poverty is not surprising - it's not an observation that requires one to postulate Poverty Restoring Forces in order to explain.  For this reason, I continue to lean towards optimism about UBI being an effective means of reducing poverty.

UBI strikes me as a much less powerful change than a 100-fold productivity increase.

This statement encapsulates what, IMHO, is the evident shortcoming of the article. UBI is a policy addressing inequality; 100-fold productivity isn't. Poverty is a social construct; inequality is not.

The social construct of poverty is built differently for every niche. The effects of wealth/income distribution directly affect the construction of the concept. Furthermore, it directly affects the health of individuals.

Where does the Poverty Equilibrium come from? How do its restoring forces act?

I can’t claim to know the answer, but let’s spend a few minutes trying to figure it out.

Let’s stick with Eliezer’s definition of poverty as extreme difficulty accessing the necessities of life. That is, if it’s very hard for you to afford, say, housing, you’re in poverty.

It is not difficulties affording luxuries; just necessities. Obviously this is a little tricky because “necessity” is a spectrum, not a binary (is a school for your kids where they’re safe from violence a luxury or a necessity?). But let’s ignore that for now and pretend we can 100% accurately classify goods as either necessities or not (“luxuries”).

Imagine all the necessities are free and plentiful. You can have as much oxygen as you want, plenty of food, clothing, a 1000 meter house, etc. Is there any poverty in such a world? Obviously not.*

Now increase the price of those things to one ($1) dollar. Is there poverty? Very likely.

Consider for example someone who is extremely mentally ill, so much so that they are unemployable. They cannot scrape together even $1 for these necessities. Maybe mental illness (or addiction) is a special case, you say. Ok; there are other classes of people who can’t work: the disabled and the elderly.

These cases are easy enough to deal with; they are what welfare states are for. The government provides either money or resources directly to people who cannot afford them. (Family, charitable donations, or mutual aid societies could play a similar role)

Simple enough, but that was with the cost of necessities fixed at a very low price. What if we increase the price and/or let it vary based on market forces?

Not much actually changes except the classes of people who can’t afford necessities expands to include some who can work but either can’t work enough (e.g. some disabled people who can work, just not very much) or don’t have valuable enough skills, so they can’t afford the prices.

This group could be larger or smaller depending on factors like overall workforce quality/skills and how expensive the necessities become. We can reduce its size by various strategies such as education/job training to improve skills or supplying more of the necessities to reduce their prices. But fundamentally there will always be some people in a market economy who can’t afford the basics.

Not all hope is lost! The government can extend its welfare programs to cover these people too. It is possible there can be logistical issues with this (for example, the country is too poor to actually do so; or government subsidies increase prices so much that even more people cannot afford the necessities). But these are separate empirical questions. Fundamentally, in a market economy, there will always be some poverty unless the government intervenes, and possibly even after the government does.

Large groups of people can only live together by forming social hierarchies.
The people at the top of the hierarchy want to maintain their position both for themselves AND for their children (It's a pretty good definition of a good parent).
Fundamentally the problem is that it is not really about resources - It's a zero sum game for status and money is just the main indicator of status in the modern world.
 

This article made me reflect on the two alternative definitions of poverty. One, relative poverty, and two, what I call lifestyle poverty. The latter being split into ascending levels starting from $2.15 a day (below which you eventually die), with the next level reached at roughly a factor of 4. The factor of 4 making a qualitative difference in lifestyle in a practical non theoretical way.

Relative poverty has a social element which we will probably never escape. But, level 0 poverty below $2.15, also known as absolute poverty is down from 90% before the industrial revolution to about 8% today. I believe we will eliminate it entirely.

The next step is to eliminate the following level 1 poverty at incomes of $2.15 to $8.60. Then as we continue to grow over hundreds of years, we'll continue to eliminate the higher levels one at a time. Perhaps one day Level 31 in said lifestyle poverty index will be the future relative poverty, but i'd still count that as a success.

Standard of living or lifestyle poverty is real and we can make progress on it. We will escape it one level at a time.

Relative poverty has more to do with status and our limitless wants that expand over time. From two pairs of clothes as a luxury to a need. For cars as a luxury to a need. From an internet connection as a luxury to a need. This relative poverty seems less important as it's social and not physical.

Your Anoxistan argument seems valid as far as it goes - if one critical input is extremely hard to get, you're poor, regardless of whatever else you have. 

But that doesn't seem to describe 1st world societies. What's the analog to oxygen?

My sense is that "poor people" in 1st world countries struggle because they don't know how to, or find it culturally difficult to, live within their means. Some combination of culture, family breakdown, and competitive social pressures (to impress potential mates, always a zero-sum game) cause them to live in a fashion that stretches their resources to the limit.

Low income people who struggle insist on living alone when having roommates would be cheaper. On buying pre-made food, or eating out, instead of cooking. On paying for cable TV. On attending colleges to obtain degrees that don't result in enough income increase to pay the borrowing costs. On buying clothing they can't really afford. On purchasing things in tiny quantities (at high per-unit prices) instead of making do without until they can afford to buy a quantity that's sold at a reasonable price. And on borrowing and paying interest for consumption goods.

These are bad strategies. For the most part, they do it because they don't know any better. It's how their parents did it, and how the people they know do it. People at the bottom of the income scale are rarely brilliant innovative thinkers who can puzzle their way out of crippling cultural practices - like most sensible (and non-brilliant) people, they take clues from those around them, avoiding moving Chesterson's fences.

Note: there is an AI audio version of this text over here: https://askwhocastsai.substack.com/p/eliezer-yudkowsky-tweet-jul-21-2024

I find the AI narrations offered by askwho generally ok, worse than what a skilled narrator (or team) could do but much better than what I could accomplish. 

I do not see what there is in a continued existence of 60-hour weeks that cannot be explained by the relative strength of the income and substitution effects. This doesn’t need to tell us about a poverty equilibrium, it can just tell us about people’s preferences?

it only takes a life lacking in one resource needed to survive, to produce some quality that I think ancient poor people would also recognize as 'poverty'.

Reminds me of Material Deprivation Index metrics for poverty - what needed things can they not afford? - as distinct from standard income-based poverty lines.

But to regard these as a series of isolated accidents is, I think, not warranted by the number of events which they all seem to point in mysteriously a similar direction.  My own sense is more that there are strange and immense and terrible forces behind the Poverty Equilibrium.

Reminded me of The Hero With A Thousand Chances [LW · GW]

May be societies with less poverty are less competitive

Yes. Trying to make up a new way to redistribute the products among the whole society is pointless, if the means of production are still owned privately.

New here. Forgive me. Must confess, feel the sense of emerging from a time warp that transfigured apples to apples, to apples to oxygen, for comparison sake. Not trying to ruffle feathers, step on toes, or be told to kick rocks, barefoot, but….

Oxygen is totally dissimilar to apples, making the task of comparison feel not unlike comparing spaghetti code to moms traditional recipe. Time, availability, space, and more - all dissimilarities of form - both in consumption and regeneration. In the interest of time, and for due consideration, therein, I will focus on consumption (?Time consumption?)

As a peasant from Irish peasant decent, I with great honor, skip meals regularly to feed my daughter; wouldn’t do that with oxygen. I even heard - some “elite men” ( :-/ ) do this for status, “toughness” (whatever that means) or other vain purpose - wouldn’t dare do that with oxygen. Is some sort of ungrounding, and re-grounding, to a conception of flattened time necessary for this hypothetical to produce fruit ripe for comparison? I’m probably missing something, or not yet up to speed.

To the premise, I agree that most value is relative, including the label ‘poverty’, and, that, the devolution of value systems, usually results in seeking distinction elsewhere. ice baths and bench press, or street creed on Crenshaw, seem two sides of the same coin. But, for better or worse, that same coin, brought, or bought, the beauty of romanticism. Maybe the throwedness into life as the child of a hippie misled me, but I believe in love! and without time can love exist, that is, “giving without the expectation of receiving”. That’s a huge loss, no?

Dovbt thou the stars are fire; dovbt truth to be a liar;

But don’t doubt, I love. Either/or. Friends?

Great post! Really. I used to be a picky reader and even if you show me the tweet of a Nobel laureate, I can immediately pick out a few points to criticize, which, of course, doesn’t mean that they aren’t way better than me in economics. A few tweets doesn’t say much about someone’s achievement, if you read my tweets, you can certainly find more to pick on. That you’ve achieved a lot in life, doesn’t even need to be mentioned by me, all know it.

Although I don’t agree with every point in this post, I quite like its philosophical touch, which possibly explains why you, unlike many other non-economists, can directly see through the veil of money and from start on addressed the crucial point (of goods and productivity). I don’t want to list here the points I would pick on, it’s not productive. I don’t need to say what you can improve on either, as the highly rated comments have already said all possible things. Because I‘m not well informed about UBI, I only have one question: why does it have to be paid out in dollar, and not e.g. as coupons for some goods with near zero variable cost?

The LessWrong Review [? · GW] runs every year to select the posts that have most stood the test of time. This post is not yet eligible for review, but will be at the end of 2025. The top fifty or so posts are featured prominently on the site throughout the year.

Hopefully, the review is better than karma at judging enduring value. If we have accurate prediction markets on the review results, maybe we can have better incentives on LessWrong today. Will this post make the top fifty?

You are right to say that money alone is not enough to eliminate poverty, although that’s no sufficient argument to disprove the effectiveness of UBI, because you only distinguish between poverty and no-poverty, but not between more-poverty and less-poverty. I don’t know if UBI can reduce poverty, but if you want to disprove it then you need to say more.

It’s amazing that you addressed various aspects of poverty and not reduced it to more shirts vs fewer shirts, but you somehow mingled everything up so that it’s difficult to see your point. In the story about the lacking oxygen, it’s an example of absolute poverty. As you wrote later, oxygen can be produced, actually market economy always works to produce the most needed goods. I guess for someone to survive, a finite number of goods would survive, then market economy would only fail to fix absolute poverty ultimately if itself produces new scarcity, like of oxygen. Yes, it’s known that production can cause environmental problems and pollute air, due to the phenomenon called externality. Government is actually one possible actor who could intervene and fix this market failure, but then you said governments ALWAYS destroy wealth without specifying what you mean. Is the action of getting more fresh air the destroying of wealth because the action costs while air doesn’t? Or for some reason the government insists to do it in a stupid and costly way and forbids you to do it in a more clever way?

You also wrote something about the necessity of sending kids to a better school district so that they won’t be bullied. That’s an example of relative poverty, and as your friends said, relative poverty will always exist, UBI won’t help, nor would market economy. It doesn’t mean that bullying relatively poor kids should be tolerated or even praised, but that’s not the topic here either, I guess.

@Eliezer Yudkowsky [LW · GW] have you seen this paper? 

- Following a barrage of down-votes and outright dismissal, I've decided to retract the rephrased outline of the paper.

- It's hard for me to engage with anyone discussing poverty who isn’t cognizant of the historical context and the data issues that often get overlooked. That’s why I felt compelled to share this.