Reduction in child poverty

[Caracal]

Recently there has been a couple of stories in the NYT about families in poverty - I wasn't really crazy about the feature on the father wasn't working much while he was getting an online degree in "music production," as I don't think the ROI is very high on that, but in the recent stories low-income working families are described as getting $8,000-$10,000 a year in "refundable tax credits" - that's the Earned Income Tax Credit.  Here is a story about low-income families in West Virginia.

https://www.nytimes.com/2022/09/12/us/politics/child-poverty-families-west-virginia.html

"After welfare reform, the focus of the government's anti-poverty efforts shifted from people who weren't working to people who were — and, thanks partly to the generosity of the new programs, child poverty plummeted. The size of the decline, Dana Thomson, a co-author of the study, said, "is unequaled in the history of poverty measurement."

https://www.nytimes.com/2022/09/14/briefing/child-poverty-plunging-us-economy.html

You might be wrong. This guy may have talents and skills that with a degree and the knowledge it provides, he would be able to put to good use and earn a lot more money. I know a guy who does sound production and design for live performances. He always seems to be in demand and does well financially. Probably better to let this guy and his family make these decisions instead of trying to judge from afar whether his degree will have a good ROI.

Besides,

[mahagonny]

And someone above asked if the tax system could be tweaked to: "to incentivize mothers to work harder to keep the man of the house around.

Mothers need to WORK HARDER to keep the man of the house around? Is this really the policy problem?  My goodness, people.

Yes they do, some. Marital harmony and fulfillment is a collaboration. I think any marriage/relationship counselor would them tell there's work involved.

[jimbogumbo]

Groceries with largest year over year increase by percentage:

Eggs 39.8%
Margarine: 38.3%
Butter: 24.6%
Flour/prepared flour mixes: 23.3%
Olives, pickles, relish: 19.4%

[dismalist]

Groceries with largest year over year increase by percentage:

Eggs 39.8%
Margarine: 38.3%
Butter: 24.6%
Flour/prepared flour mixes: 23.3%
Olives, pickles, relish: 19.4%

And "wine at home" prices increased a mere 2.5% year-on-year. Eat fewer eggs, drink more wine, and feed children with savings. :-)

[Stockmann]

Public discussion of aid to the poor focuses on "how much" to give, how much is fair, and so on. Some want for others to get more, some want to give less. This discussion is human, understandable, and omits something important. What is relevant for incentives is not the money one receives, but the money one loses when one works. With all the benefit losses upon earning one dollar more through means testing, the poor face marginal tax rates that would make the rich blush.

The idea of a UBI, a Universal Basic Income, or Negative Income Tax, is to substitute all the particular benefits the poor are entitled to with a single transfer. If they work more, they would pay some reasonable tax rate on each extra dollar they earned, not lose all their means tested benefits.

The child credit has a lot of the characteristics of the UBI -- if one works more, one doesn't lose the benefit. However, it leaves an incentive to have more children, though that may well be smaller than under the current system.

My guess is that a reform of the welfare system to the UBI would promote additional work more than it would promote having additional children.

UBI universalizes receiving a handout (no strings attached), which reinforces an entitlement mentality. Also, labor supply is down among men, who generally don't receive as much in welfare benefits as women. I'm concerned that the income effect of UBI will dominate among that group of younger men who are averse to work.

The thing with UBI proponents is that they love to move the goalposts, sometimes to the point of full-blown doublespeak. If you define "universal" as "all resident adult citizens" (a pretty narrow definition, as it excludes all minors, green card holders, citizens living abroad (who, in the case of the US, are still liable for taxes), etc) and "basic" as anything resembling the federal minimum wage, then it's basic arithmetic that it's pie-in-the-sky unaffordable by the US - as in, not even in the same order of magnitude as affordable. That's where the moving goalposts come in - "universal" means "a minority" (existing welfare recipients, for example) or "a lottery won by a tiny minority of citizens" ("pilot programs" in Europe); "basic" means "peanuts even compared to the minimum wage," etc.
UBI does exist, kind of - in the Gulf countries. The result hasn't been an explosion in entrepreneurship and creativity - the result has been the entrenching of a parasitic aristocracy reliant on imported labor to do the actual work and the inability to competitively produce anything domestically other than hydrocarbons and terrorists.
Perhaps a better model is Sweden, which apparently has carefully designed its welfare system (and its minimum wage) so that it always pays more to work - yes, you can basically live your whole life there without working, but there are always financial incentives to get a job.

[dismalist]

Public discussion of aid to the poor focuses on "how much" to give, how much is fair, and so on. Some want for others to get more, some want to give less. This discussion is human, understandable, and omits something important. What is relevant for incentives is not the money one receives, but the money one loses when one works. With all the benefit losses upon earning one dollar more through means testing, the poor face marginal tax rates that would make the rich blush.

The idea of a UBI, a Universal Basic Income, or Negative Income Tax, is to substitute all the particular benefits the poor are entitled to with a single transfer. If they work more, they would pay some reasonable tax rate on each extra dollar they earned, not lose all their means tested benefits.

The child credit has a lot of the characteristics of the UBI -- if one works more, one doesn't lose the benefit. However, it leaves an incentive to have more children, though that may well be smaller than under the current system.

My guess is that a reform of the welfare system to the UBI would promote additional work more than it would promote having additional children.

UBI universalizes receiving a handout (no strings attached), which reinforces an entitlement mentality. Also, labor supply is down among men, who generally don't receive as much in welfare benefits as women. I'm concerned that the income effect of UBI will dominate among that group of younger men who are averse to work.

The thing with UBI proponents is that they love to move the goalposts, sometimes to the point of full-blown doublespeak. If you define "universal" as "all resident adult citizens" (a pretty narrow definition, as it excludes all minors, green card holders, citizens living abroad (who, in the case of the US, are still liable for taxes), etc) and "basic" as anything resembling the federal minimum wage, then it's basic arithmetic that it's pie-in-the-sky unaffordable by the US - as in, not even in the same order of magnitude as affordable. That's where the moving goalposts come in - "universal" means "a minority" (existing welfare recipients, for example) or "a lottery won by a tiny minority of citizens" ("pilot programs" in Europe); "basic" means "peanuts even compared to the minimum wage," etc.
UBI does exist, kind of - in the Gulf countries. The result hasn't been an explosion in entrepreneurship and creativity - the result has been the entrenching of a parasitic aristocracy reliant on imported labor to do the actual work and the inability to competitively produce anything domestically other than hydrocarbons and terrorists.
Perhaps a better model is Sweden, which apparently has carefully designed its welfare system (and its minimum wage) so that it always pays more to work - yes, you can basically live your whole life there without working, but there are always financial incentives to get a job.

Methinks the gentleman doth protest too much.

It's only ever about two things, which need not be tradeoffs tradeoffs -- generosity and the incentive to work.

The incentive to work is preserved with a reasonable marginal tax rate, not like losing a benefit 'cause you earned too much.

The generosity of the system is up to our collective taste. A perfectly viable UBI would not spend one dollar more on transfer payments that are already paid.

[Stockmann]

Public discussion of aid to the poor focuses on "how much" to give, how much is fair, and so on. Some want for others to get more, some want to give less. This discussion is human, understandable, and omits something important. What is relevant for incentives is not the money one receives, but the money one loses when one works. With all the benefit losses upon earning one dollar more through means testing, the poor face marginal tax rates that would make the rich blush.

The idea of a UBI, a Universal Basic Income, or Negative Income Tax, is to substitute all the particular benefits the poor are entitled to with a single transfer. If they work more, they would pay some reasonable tax rate on each extra dollar they earned, not lose all their means tested benefits.

The child credit has a lot of the characteristics of the UBI -- if one works more, one doesn't lose the benefit. However, it leaves an incentive to have more children, though that may well be smaller than under the current system.

My guess is that a reform of the welfare system to the UBI would promote additional work more than it would promote having additional children.

UBI universalizes receiving a handout (no strings attached), which reinforces an entitlement mentality. Also, labor supply is down among men, who generally don't receive as much in welfare benefits as women. I'm concerned that the income effect of UBI will dominate among that group of younger men who are averse to work.

The thing with UBI proponents is that they love to move the goalposts, sometimes to the point of full-blown doublespeak. If you define "universal" as "all resident adult citizens" (a pretty narrow definition, as it excludes all minors, green card holders, citizens living abroad (who, in the case of the US, are still liable for taxes), etc) and "basic" as anything resembling the federal minimum wage, then it's basic arithmetic that it's pie-in-the-sky unaffordable by the US - as in, not even in the same order of magnitude as affordable. That's where the moving goalposts come in - "universal" means "a minority" (existing welfare recipients, for example) or "a lottery won by a tiny minority of citizens" ("pilot programs" in Europe); "basic" means "peanuts even compared to the minimum wage," etc.
UBI does exist, kind of - in the Gulf countries. The result hasn't been an explosion in entrepreneurship and creativity - the result has been the entrenching of a parasitic aristocracy reliant on imported labor to do the actual work and the inability to competitively produce anything domestically other than hydrocarbons and terrorists.
Perhaps a better model is Sweden, which apparently has carefully designed its welfare system (and its minimum wage) so that it always pays more to work - yes, you can basically live your whole life there without working, but there are always financial incentives to get a job.

Methinks the gentleman doth protest too much.

It's only ever about two things, which need not be tradeoffs tradeoffs -- generosity and the incentive to work.

The incentive to work is preserved with a reasonable marginal tax rate, not like losing a benefit 'cause you earned too much.

The generosity of the system is up to our collective taste. A perfectly viable UBI would not spend one dollar more on transfer payments that are already paid.

*yawn*
If you spread the existing transfer payments in any way that could plausibly be called "universal" it would amount to peanuts per person, not even in the same ballpark as the minimum wage (so much less than "basic"). if memory serves from when I did the math, it would amount to a few k per year, depending exactly on what you count as welfare - and that's if divided among adult American citizens only, if you include minors, green card holders, etc it works out to be even less. The incentive to work can be maintained by a system of conditional payments, etc, and/or restrictions like a lifetime maximum, etc but that's also not "universal." Even if there is some financial incentive to work, some people will always choose not to work if they can survive without working (as seen in a number of European countries... and the Gulf states, on a much bigger scale). There's a reason the only countries having anything that could plausibly be called UBI have a modest population and are drowning in oil money. Even Venezuela, with the world's largest proven oil reserves, couldn't sustain anything like it.

[dismalist]

That's challenging the label and the generosity, not the analysis of incentives.

The generosity we all have different views about, as I said.

It's better to think of this as a negative income tax. Recipients start paying taxes on the first dollar earned, just not at the absurd rate of 100%. That preserves the incentive to work.

As this is meant to be a substitute for existing welfare programs, there is no automatism to spend a dollar more on transfers than is spent now.

Of course, the political appeal of the word "universal" may well be that we think everybody gets $5K per month and keeps all of it when he starts working! Forgedddabouddit!

[mahagonny]

That's challenging the label and the generosity, not the analysis of incentives.

The generosity we all have different views about, as I said.

It's better to think of this as a negative income tax. Recipients start paying taxes on the first dollar earned, just not at the absurd rate of 100%. That preserves the incentive to work.

As this is meant to be a substitute for existing welfare programs, there is no automatism to spend a dollar more on transfers than is spent now.

Of course, the political appeal of the word "universal" may well be that we think everybody gets $5K per month and keeps all of it when he starts working! Forgedddabouddit!

Eh, don't let me be a bother to anyone. I don't have to work.

[onthefringe]

Public discussion of aid to the poor focuses on "how much" to give, how much is fair, and so on. Some want for others to get more, some want to give less. This discussion is human, understandable, and omits something important. What is relevant for incentives is not the money one receives, but the money one loses when one works. With all the benefit losses upon earning one dollar more through means testing, the poor face marginal tax rates that would make the rich blush.

The idea of a UBI, a Universal Basic Income, or Negative Income Tax, is to substitute all the particular benefits the poor are entitled to with a single transfer. If they work more, they would pay some reasonable tax rate on each extra dollar they earned, not lose all their means tested benefits.

The child credit has a lot of the characteristics of the UBI -- if one works more, one doesn't lose the benefit. However, it leaves an incentive to have more children, though that may well be smaller than under the current system.

My guess is that a reform of the welfare system to the UBI would promote additional work more than it would promote having additional children.

UBI universalizes receiving a handout (no strings attached), which reinforces an entitlement mentality. Also, labor supply is down among men, who generally don't receive as much in welfare benefits as women. I'm concerned that the income effect of UBI will dominate among that group of younger men who are averse to work.

I encourage everyone to look at the effects when the Eastern Band of Cherokees started paying out casino profits to enrolled tribe members who happened to also be part of the ongoing Great Smoky Mountains Study of Youth. (hint — huge decreases in childhood emotional, behavioral, and psychiatric issues, with no impact on labor participation publications here and here and here)

[Anon1787]

That's challenging the label and the generosity, not the analysis of incentives.

The generosity we all have different views about, as I said.

It's better to think of this as a negative income tax. Recipients start paying taxes on the first dollar earned, just not at the absurd rate of 100%. That preserves the incentive to work.

As this is meant to be a substitute for existing welfare programs, there is no automatism to spend a dollar more on transfers than is spent now.

Of course, the political appeal of the word "universal" may well be that we think everybody gets $5K per month and keeps all of it when he starts working! Forgedddabouddit!

What if men averse to working end up with more income under a UBI than under current welfare rules? They won't care about the lower marginal tax rate on work and will just buy more (or more comfortable) leisure.

[dismalist]

Public discussion of aid to the poor focuses on "how much" to give, how much is fair, and so on. Some want for others to get more, some want to give less. This discussion is human, understandable, and omits something important. What is relevant for incentives is not the money one receives, but the money one loses when one works. With all the benefit losses upon earning one dollar more through means testing, the poor face marginal tax rates that would make the rich blush.

The idea of a UBI, a Universal Basic Income, or Negative Income Tax, is to substitute all the particular benefits the poor are entitled to with a single transfer. If they work more, they would pay some reasonable tax rate on each extra dollar they earned, not lose all their means tested benefits.

The child credit has a lot of the characteristics of the UBI -- if one works more, one doesn't lose the benefit. However, it leaves an incentive to have more children, though that may well be smaller than under the current system.

My guess is that a reform of the welfare system to the UBI would promote additional work more than it would promote having additional children.

UBI universalizes receiving a handout (no strings attached), which reinforces an entitlement mentality. Also, labor supply is down among men, who generally don't receive as much in welfare benefits as women. I'm concerned that the income effect of UBI will dominate among that group of younger men who are averse to work.

I encourage everyone to look at the effects when the Eastern Band of Cherokees started paying out casino profits to enrolled tribe members who happened to also be part of the ongoing Great Smoky Mountains Study of Youth. (hint — huge decreases in childhood emotional, behavioral, and psychiatric issues, with no impact on labor participation publications here and here and here)

Lovely, fringe, I like!  If these researchers want to show that having more income is a good thing, that's fine. However,  I never had any doubt that having higher income is a good thing. What is interesting here is in the third link, which mentions the conditions under which the extra income was distributed:

A portion of the profits from this  new  business  operation  is  distributed  every  six  months  on  an  equalized,  per capita basis to all adult tribal members regardless of employment status, income, or other household characteristics.

No conditions! If one works more, the cash is not taken away:

Therefore, it  appears  that  households  affected  by  cash  transfers  are  not  reducing  their  labor force participation.

Wonderful.

[Anon1787]

I encourage everyone to look at the effects when the Eastern Band of Cherokees started paying out casino profits to enrolled tribe members who happened to also be part of the ongoing Great Smoky Mountains Study of Youth. (hint — huge decreases in childhood emotional, behavioral, and psychiatric issues, with no impact on labor participation publications here and here and here)

The third study discusses children, mothers, and fathers. What about single adult men (who behave differently from married men)?

[dismalist]

That's challenging the label and the generosity, not the analysis of incentives.

The generosity we all have different views about, as I said.

It's better to think of this as a negative income tax. Recipients start paying taxes on the first dollar earned, just not at the absurd rate of 100%. That preserves the incentive to work.

As this is meant to be a substitute for existing welfare programs, there is no automatism to spend a dollar more on transfers than is spent now.

Of course, the political appeal of the word "universal" may well be that we think everybody gets $5K per month and keeps all of it when he starts working! Forgedddabouddit!

What if men averse to working end up with more income under a UBI than under current welfare rules? They won't care about the lower marginal tax rate on work and will just buy more (or more comfortable) leisure.

What if men averse to working received the same income under a UBI as under present system. Work an hour more. With UBI you keep something of your extra earnings.  Presently, you keep nothing. It doesn't pay to work if an extra earned dollar is taken away from you.

Now, suppose one gave the poor more money -- under the condition that an extra dollar they earned would not be completely taken away. They would still work more.

The incentive is at the margin received, not the average.

[onthefringe]

I encourage everyone to look at the effects when the Eastern Band of Cherokees started paying out casino profits to enrolled tribe members who happened to also be part of the ongoing Great Smoky Mountains Study of Youth. (hint — huge decreases in childhood emotional, behavioral, and psychiatric issues, with no impact on labor participation publications here and here and here)

Lovely, fringe, I like!  If these researchers want to show that having more income is a good thing, that's fine. However,  I never had any doubt that having higher income is a good thing. What is interesting here is in the third link, which mentions the conditions under which the extra income was distributed:

A portion of the profits from this  new  business  operation  is  distributed  every  six  months  on  an  equalized,  per capita basis to all adult tribal members regardless of employment status, income, or other household characteristics.

No conditions! If one works more, the cash is not taken away:

Therefore, it  appears  that  households  affected  by  cash  transfers  are  not  reducing  their  labor force participation.

Wonderful.

While I realize the outcome that more income is better is in some ways a trivial finding, what impresses me is that a comparatively small amount made this big a difference. Over the course of the study the annual payout ranged from $4000 to $6000 per tribal member, and payments to minors are held in trust and can't be used by their household until they are 18. These aren't amounts big enough to stop working, or even to buy that much more leisure. It's enough money that the transmission going out on your car might not lead to a choice between transportation and heat, or enough that you might be able to turn down one overtime shift to see your kid play soccer sometimes.