Encyclopedia of Opinion
Question
Is Universal Basic Income a good idea?
Position1 of 3›
No, UBI is a bad idea
Argument‹4 of 4

UBI reduces the marginal utility of work

Giving people a basic income will mean that the first dollar that they work for will go to a lesser-valued purpose than the dollars in the UBI. That in itself means that work will be less-valued and leading to a greater number of people who do not work.

The argument

Giving UBI to all citizens will starkly reduce the marginal utility of work and will thus discourage people to take jobs, especially in the low-wage sector. “Marginal utility quantifies the added satisfaction that a consumer garners from consuming additional units of goods or services”. With regards to money that means that the first dollar someone will work for will compare to a lesser-valued purpose than the dollars in the UBI. This is because the model of marginal utility has a high initial utility which decreases with every additional unit (in our case, it’s money). With such a decreased marginal utility of work, it becomes less attractive for people who have been formerly jobless to seek employment. The additional effort and time they would have to put into finding and having a new job will only return a lower utility in form of income. UBI could thus have the inverse effect of what it aims to: recipients could stop searching for jobs and rely solely on UBI. This would have several devastating effects on the job market and overall social cohesion.

Context

Universal Basic Income is controversially discussed and has most recently gained new attention with the promise of presidential candidate Andre Yang to provide UBI to all American citizens if he was elected.

Premises

[P1]The marginal utility of money diminishes with each additional unit received, so dollars earned on top of a guaranteed income are worth less to the recipient than the first dollars of that income. [P2] When the added utility of wages is low relative to the effort required, people are discouraged from seeking or accepting work, especially in low-wage jobs. [P3] UBI would supply those initial high-utility dollars to everyone unconditionally, leaving paid work to provide only lower-utility marginal income. [C] Therefore, UBI is a bad idea because it undermines the incentive to work and would shrink labor force participation.

Counter-arguments

1. Even if marginal utility of work is decreased, people will still pursue their jobs or seek new ones. UBI is not high enough to discourage further employment and still offers marginal utility incentives. 2. Studies and pilot project on UBI have shown that it doesn’t make people lazy or discourage work.

Rejecting the premises

[P1]Human behaviour unfolds differently than predicted with economic models.
[P2]Marginal utility is not the major incentive for work.

Framing

Economic principles and theories manifest in real life.