A study by Johannes Haushofer Jeremy Shapiro on a program called Give Directly looked at the effects of cash transfers to poor in Africa. One of the findings of the study was that:
Transfers do not increase spending on alcohol and tobacco. We find no evidence of increased expenditure on temptation goods such as alcohol, tobacco and gambling.
There have been numerous study on the effects of cash transfers and they all say essentially the same thing: cash transfers are an effective means of reducing poverty.
When discussing basic income in my ethics classes or with people not familiar with the idea and the research on the topic one of the most common objections is this objection that people would spend all their money on drugs and alcohol.
This is obviously a really bad argument. Look at all the not poor people who don’t wasted all their money on alcohol, right? If you don’t spend all your money on drugs and alcohol why would you assume someone else would?
It would only make any sense to suggest that poor people will spend all their money on drugs and alchohol if they were provided enough money to live on if you thought, on some level, that all poor people were only poor because they wasted all their money on drugs and alcohol.
And that really gets us to one of the biggest problems we have solving the problem of poverty, how poverty and the poor are thought of. There are entire countries where most of the people are dirt poor. Are they all alcoholics and drug addicts? Obviously not so there is no reason to assume that all poor people in the United States are also alcoholics and drug addicts.
Poor people are poor because they don’t have money, not because they are alcoholics and drug addicts!
On the topic of poverty and drug use I think it is worth spending a few words talking about a psychological experiment that has come to be known as Rat Park. The experimenter gave opiate drugs to rats for 57 days and then released them into a rat park. It was a large enclosure with room for the rats to run around in, objects for them to play in, members of the opposite sex for mating, etc. It was a pretty good little rat life. The rats chose to no longer take the drug when given the option. The drug was put in their water and they were given a choice of drug laced water or plain water and they chose the plain water. However the rats that were kept in in isolated cages chose to consume the opiate laced water.
The implications are fairly obvious, I think. Substance abuse doesn’t cause poverty but rather poverty causes substance abuse. It is not an issue we really need to speculate on, there is good empirical evidence that poor people spend money wisely when it is given to them. And there is no evidence to suggest otherwise.
Of course there is some very small percentage of people that are poor and have lots of other problems in their life because they have substance abuse issues, but that is not what is driving poverty and economic inequality. Are entire countries full of substance abusers, the third world countries, and while other entire countries, the first world countries, are full of self-restrained models of good psychological health? Or did substance abuse suddenly plummet in the middle part of the 20th century when economic inequality was greatly reduced and then suddenly become a serious problem again beginning in the early 80s?
Some very small percentage of people are poor because they can’t make responsible decisions. They also are probably mentally ill, by definition. For the vast majority of poor around the world poverty is systematic problem and not one of personal responsibility.
A note on the psychology of this argument: This argument is usually made by conservative white Americans and as we know a large percentage of the poor in the United States are African Americans. Conservatives tend to be affected strongly by in group/out group biases which often amounts to racism, especially in parts of the country with a strong legacy of slave ownership. Yes, I’m saying that much of the problem in way poverty and social welfare programs are viewed can be attributed to racism. Check out Jonathan Haidt’s work on liberal, libertarian and conservative moral psychology.
Here is the link to my moral psychology blog posts.