I work with machine learning at Palver, am a research assistant at the Centre for the Governance of AI, and I study economics at the University of São Paulo
t6aguirre
Karma: 91
Thanks for the answer; I think I understood your point better, but I still have a different view. You’re correct that guaranteed income can be described as a UBI with a 100% marginal tax rate on labor income up to a certain threshold. Both these policies are indeed equivalent in terms of incentives and have the same cost. However, this is quite different from the straightforward UBI that the OP was describing!
You also make a good point that most means-tested income programs are incentive-equivalent (or quite similar, though typically with more design details) to a UBI program with a less-than-100% marginal tax rate on labor income up to the threshold. This helps explain why we don’t observe such high substitution effects in practice.
That said, guaranteed income still tends to be much less costly than simple UBI. This becomes evident when comparing a low level of guaranteed income versus a low level of UBI [as defined by OP]. If you offer a guaranteed monthly income of 100 USD [or UBI + 100% marginal tax rate up to 100 USD of labor income] , some people might leave the workforce entirely, but very few would likely do so. This is much less costly than providing 100 USD to every person! The point at which their economic costs [fiscal costs + behavioral costs due to changing incentives] will be similar is largely an empirical question involving labor elasticity, reservation wages, etc.
I’m not sure I follow your argument entirely. While your thought experiment is interesting for considering substitution vs. income effects, I believe UBIs are still far more costly than guaranteed incomes.
Yes, guaranteed, means-tested incomes have some costs due to substitution effects that UBIs don’t. People near the income threshold might work less or even quit the labor force to avoid losing benefits, potentially increasing program costs. UBI avoids this by giving everyone the same amount regardless of work.
However, empirically, these effects seem small. Studies on conditional transfer programs like Brazil’s Bolsa Familia and Mexico’s Progresa/Prospera show modest impacts on labor supply. Most find only slight reductions in work hours, if any. These aren’t strictly guaranteed income programs as they have some strings attached, but they seem to be good indicators of how people might respond to similar cash transfer programs. So while the OP overlooked substitution effects, real-world evidence suggests they do not seem nearly significant enough to make guaranteed income programs comparable in cost to full UBI systems.
For reference, I think these papers from an Annual Review UBI symposium are quite good: https://www.annualreviews.org/content/journals/10.1146/annurev-ec-11
Brazil has been dealing with massive criminal wildfires for the last few weeks, and the air quality is record-breakingly bad. Besides other obvious issues (ineffective government response in going after the criminals setting fires, climate change making everything worse), hardly anyone is talking about how to deal with the immediate air quality problem. It’s a bit bizarre.
People aren’t widely adopting PFF2 masks and air purifiers. These remain somewhat niche topics even though pretty much everyone is suffering. To be fair, there are occasional media reports and government alerts about how to deal with the situation, but these feel too little, and one only gets them if actively looking for them.
It’s affecting tens of millions of people (scale ✓)
Barely anyone is really addressing it (neglectedness ✓)
We have simple solutions that could help a lot (tractability ✓)
It feels like there’s potential for some serious impact if one approaches this right. It may be a severe case of availability bias, but all this is making me value air quality more as an EA cause area.
My guess is that the gains from professional management practices are generally much more limited for micro enterprises or self-employed individuals because: 1) there is less internal friction. If it’s just you, it’s easier to monitor money inflow and outflow even without bookkeeping. This changes significantly when you have around 15 people; and 2) there are fewer economies of scale to achieve. I’d guess the ideal future envisioned by small companies, like those with 15 people, is to grow into a 100-person company, with much more business and new locations. For a self-employed person, the best scenario [as seen by themselves] seems to be to keep the business running, increase some profit but not change things much, or find a new job. Since many professional management practices seem to be somewhat of a fixed cost, there is little incentive for them to adopt these practices if they don’t see growth as their default path to success. I think Duflo and Banerjee wrote a bit about this in their work on microcredit for small companies, but I’m doing guesswork here haha
Fantastic work organizing this event, Leo and Juana =)
“I usually estimate that the U.S. government saves about one life per $10 million that it spends well.”
I’m curious, why do you think this? The value of statistical life (VSL) you linked is about the benefit of saving a life, not about the cost. If we assume the government consistently uses this $10 million VSL threshold for interventions, it could reflect the (marginal) cost of saving a life. But this feels like a weird approach. It might be useful to get a sense of order of magnitude, but I’m somewhat skeptical
[comment crossposted] I agree with the main point of the text. As someone from a developing country (Brazil), I feel people often worry too much about brain drain, overlooking these equilibrium effects you mentioned. That said, I’d still be concerned about friction costs. The supply of many highly skilled professionals, like specialized physicians, is pretty inelastic in the short term. If a substantial part of them suddenly migrates, it could cause a real shortage, leading to significant economic costs during the adjustment period. I think policymakers do have a role here, but it should be more about easing this transition rather than trying to stop migration outright.
Securitization in the international relations sense, that is, framing frontier AI development as a major (international/national) security threat that requires top cybersecurity, people with experience in the department of defense, etc.
I wonder how do they plan to get GPUs at scale while remaining “insulated from short-term commercial pressures”
Securitization is indeed coming
“OpenAI appoints Retired U.S. Army General Paul M. Nakasone to Board of Directors”
https://openai.com/index/openai-appoints-retired-us-army-general/
Hi Peter! I often see the MIT FutureTech positions, and as an economics major who is about to graduate, I would love to apply, but it’s a pity they don’t sponsor visas. From what I understand, this seems to be a common issue across MIT, as I’ve noticed that many of their predoc and similar positions also don’t sponsor visa. I know this might not be something you can change, but it would be great if there could be options for visa sponsorship, or even remote independent contracting. In any case, I think the work you all do is fantastic!