UBI is one of the solutions to poverty
UBI is important to improving the lives of the poor because it helps eradicate the “scarcity mindset.”
To understand the scarcity mindset, let us look at the experiment conducted by the psychologist
Eldar Shafir of Princeton University, and Sendhil Mullainathan, an economist at Harvard. They
studied sugar cane farmers in rural India. Since the farmers collect 60% of their annual income
all at once after harvest, they are flush with money one part of the year and poor the other.
Shafir and Mullainathan found out that when they have money, the farmers score better on
cognitive tests, and are wiser by 13 to 14 IQ points.
It’s not that the farmers became less intelligent when they had no money, but their mental bandwidth became compromised. They made less smart decisions because their focus narrowed: all they could focus on was their immediate lack — the bills that needed to be paid, or where to get the next meal.
This brings us to one of the positive effects of UBI. When people worry less about money, their long-term mental outlook improves, and they make better and creative decisions about improving their lives.
Solving poverty also lessens inequality in society. It closes the gap between the rich and the poor. According to studies, less inequality means less societal problems. There is improved life expectancy, literacy, and social trust. Meanwhile, the following decline: child mortality, murder rate, inmate population, teenage pregnancy, depression, obesity and drug and alcohol abuse. There is also better social mobility when there is less inequality.
A country does not need to be wealthy to have less inequality. What matters is closing the gap, and UBI can help address this.
For the historian Rutger Bregman — author of Utopia for Realists, a book which discusses UBI — going to the root of the problem, which is giving cash to the poor is the most direct way of solving poverty and inequality. It is analogous to installing extra memory into the computer. With
the extra money, you acquire more brain power to solve your problems.
