1 smooth transition from bolsa família to basic income? difficulties based on experiments and...

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Smooth transition from Smooth transition from Bolsa Família to basic Bolsa Família to basic

income?income?

Difficulties based on Difficulties based on experiments and experiments and questionnairesquestionnaires

Fábio WaltenbergFábio Waltenberg

Centro de Estudos sobre Desigualdade e Centro de Estudos sobre Desigualdade e Desenvolvimento Desenvolvimento

Universidade Federal FluminenseUniversidade Federal Fluminense

1313thth BIEN Congress – July 2 BIEN Congress – July 2ndnd, São Paulo, São Paulo

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The questionThe question

► Law 10.835/2004 creates Unconditional Law 10.835/2004 creates Unconditional Basic Income (UBI) in Brazil… not yet Basic Income (UBI) in Brazil… not yet implemented…implemented…

► Suppose a consensus emerged among Suppose a consensus emerged among researchers around UBI in Brazil: could we researchers around UBI in Brazil: could we then expect it to be implemented?then expect it to be implemented?

► Hypotheses:Hypotheses:1.1. Resistance on moral groundsResistance on moral grounds

2.2. To promote the policy: necessary to understand To promote the policy: necessary to understand Brazilians’ moral values, beliefs, perceptions Brazilians’ moral values, beliefs, perceptions carefully frame the proposalcarefully frame the proposal

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MotivationMotivation

►Lavinas (2006): skeptical about Lavinas (2006): skeptical about progressive implementation of UBI from progressive implementation of UBI from Bolsa Família Program (BFP)Bolsa Família Program (BFP) ““Lack of tradition in policies of universal Lack of tradition in policies of universal

protection” in the country protection” in the country traditiontradition ►Kerstenetzky (2009): political economic Kerstenetzky (2009): political economic

analysis of recent debate over BFP analysis of recent debate over BFP Preferences over redistribution are not Preferences over redistribution are not

given, but affected by announced goals and given, but affected by announced goals and “pedagogy” of the program “pedagogy” of the program perceptionsperceptions

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MotivationMotivation

►Van Parijs (2004 and yesterday here): Van Parijs (2004 and yesterday here): “cultural diversity” in conflict with “cultural diversity” in conflict with “income solidarity”? “income solidarity”? Redistribution bounded by emotional Redistribution bounded by emotional

motives, such as identification motives, such as identification emotionsemotions

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Methods, instrumentsMethods, instruments► TraditionsTraditions, , perceptionsperceptions, , emotions emotions

restricting willingness to redistribute restricting willingness to redistribute possible generalization of those possible generalization of those constraints?constraints?

1.1. Experimental economics: games in the lab Experimental economics: games in the lab with monetary rewards (actual behavior)with monetary rewards (actual behavior)

2.2. Questionnaires: opinions about distributive Questionnaires: opinions about distributive justicejustice

► Both: Both: commonsense or uninformed commonsense or uninformed conceptions of justice conceptions of justice ≠ ≠ from philosophical from philosophical & normative economics traditions& normative economics traditions

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The Ultimatum GameThe Ultimatum Game

►A ‘proposer’ is allocated a fixed A ‘proposer’ is allocated a fixed amount of money amount of money mm

►He has to share a proportion of He has to share a proportion of m m that that he defines with a ‘responder’he defines with a ‘responder’

► ‘‘Responder’ knows the amount Responder’ knows the amount mm and and can can Either accept the proposed fractionEither accept the proposed fraction Or reject it Or reject it both players receive nothing both players receive nothing

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► Behavior expected from Behavior expected from Homo economicusHomo economicus:: As a proposer: to offer the smallest possible As a proposer: to offer the smallest possible

positive amount of money to the responderpositive amount of money to the responder As a responder: to accept any positive offerAs a responder: to accept any positive offer

► Results observed in the lab:Results observed in the lab: Proposer: few proposers keep a value close to Proposer: few proposers keep a value close to mm

►Most offers range from 25 to 50% of Most offers range from 25 to 50% of mm►Mean offer around 40%, modal offer: 50%Mean offer around 40%, modal offer: 50%

Responder: small offers (20% or less) usually Responder: small offers (20% or less) usually rejectedrejected►Almost 100% of rejection of the smallest possible offerAlmost 100% of rejection of the smallest possible offer

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► Responders’ behavior interpreted as:Responders’ behavior interpreted as: Concerns for fairness or inequality aversion (both Concerns for fairness or inequality aversion (both

related to distributive justice)related to distributive justice) Simply showing importance of reciprocitySimply showing importance of reciprocity

► Proposer’s behavior viewed as a mixture of:Proposer’s behavior viewed as a mixture of: Self-interest (anticipating responder’s reaction) Self-interest (anticipating responder’s reaction) Concerns for fairness or inequality aversionConcerns for fairness or inequality aversion

► Both: “social preferences”Both: “social preferences”► Controversies… methodological issues… Controversies… methodological issues…

Developments such as Dictator Game…Developments such as Dictator Game…

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QuestionnairesQuestionnaires1.1. Direct questions on distributive issues: Direct questions on distributive issues:

E.g., World Values Survey: E.g., World Values Survey: ► 1: “Incomes should be made more equal” 1: “Incomes should be made more equal” ► ……► 10: “We need larger income differences as incentives 10: “We need larger income differences as incentives

for individual effort”for individual effort”

2.2. ““Problem-sets” involving normative issues Problem-sets” involving normative issues (quasi-experimental)(quasi-experimental)

E.g., Yaari & Bar-Hilell (1984): how to split E.g., Yaari & Bar-Hilell (1984): how to split grapefruits and avocados between Jones and grapefruits and avocados between Jones and SmithSmith► Formally equal problems to different groups, but Formally equal problems to different groups, but

different stories: needs, talent, effort, tastes, beliefs..different stories: needs, talent, effort, tastes, beliefs..► Different needs (metabolism): 82% choose maximin Different needs (metabolism): 82% choose maximin

solutionsolution► Different tastes: 35% choose utilitarian solutionDifferent tastes: 35% choose utilitarian solution

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General findingsGeneral findings

In what follows: In what follows:

summary of main results from both summary of main results from both

experimental economicsexperimental economics

andand

questionnaire-based researchquestionnaire-based research

related to redistributionrelated to redistribution

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General findingsGeneral findings1.1. People exhibit “social preferences”People exhibit “social preferences”

2.2. Individuals’ actions are governed by social Individuals’ actions are governed by social norms, e.g., custom, habit, norms, e.g., custom, habit, traditiontradition, and , and also distributive justice concernsalso distributive justice concerns

““Mr. Fairmind accepts differences resulting Mr. Fairmind accepts differences resulting from different contributions; but he generally from different contributions; but he generally feels that actual income differences are too feels that actual income differences are too large. He is much in favor of introducing a large. He is much in favor of introducing a minimum floor, below which no one should fall, minimum floor, below which no one should fall, and he is sensitive to social deprivation.” and he is sensitive to social deprivation.” (Schokkaert, 1999b)(Schokkaert, 1999b)

► From 1 and 2 From 1 and 2 likely to be some demand likely to be some demand for redistributionfor redistribution

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3.3. Cooperation is not unconditional; offered only Cooperation is not unconditional; offered only under appropriate circumstancesunder appropriate circumstances

People do not like free-riders; do not like to be fooled; do People do not like free-riders; do not like to be fooled; do not like to see others are being foolednot like to see others are being fooled

4.4. People assign importance to processes and not People assign importance to processes and not only to outcomesonly to outcomes

E.g., Ultimatum Game: original E.g., Ultimatum Game: original versus versus with a “quiz”with a “quiz” Needs, desert, talent: taken into accountNeeds, desert, talent: taken into account Schokkaert (1999b) “[Mr. Fairmind] wants to check Schokkaert (1999b) “[Mr. Fairmind] wants to check

whether the needy are really needy and is not eager to whether the needy are really needy and is not eager to guarantee an unconditional grant to those able-bodied guarantee an unconditional grant to those able-bodied persons who simply choose not to work.”persons who simply choose not to work.”

► From 3 and 4 From 3 and 4 mild prospect of wide support to mild prospect of wide support to UBIUBI

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5.5. Perceived social distance among participants is a Perceived social distance among participants is a key variable in determining intensity of other-key variable in determining intensity of other-regarding behavior regarding behavior identification ( identification (emotionsemotions) )

E.g., Ultimatum Game: original E.g., Ultimatum Game: original versus versus non-anonymous non-anonymous

6.6. Choices are context-dependent and strongly Choices are context-dependent and strongly influenced by the way a problem is framedinfluenced by the way a problem is framed

E.g., Yaari & Bar-Hilell’s example already mentionedE.g., Yaari & Bar-Hilell’s example already mentioned ““Depending on the concrete circumstances of the Depending on the concrete circumstances of the

distributional problem, [Mr. Fairmind] will emphasize distributional problem, [Mr. Fairmind] will emphasize desert, need or simple equality” (Schokkaert, 1999b)desert, need or simple equality” (Schokkaert, 1999b)

““Minor manipulations of the social context of interactions Minor manipulations of the social context of interactions may support significant behavioral differences” (Bowles may support significant behavioral differences” (Bowles & Gintis, 1998)& Gintis, 1998)

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7.7. Individuals’ preferences are based on Individuals’ preferences are based on (possibly imprecise) beliefs and (possibly imprecise) beliefs and perceptionsperceptions, and are endogenous, and are endogenous

1.1. People show status quo bias People show status quo bias a change a change is rarely easyis rarely easy

2.2. People overevaluate improbable events People overevaluate improbable events e.g., one reported fraud in PBF e.g., one reported fraud in PBF becomes “widespread fraud”becomes “widespread fraud”

3.3. People learn with experience People learn with experience and and change preferences accordinglychange preferences accordingly

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Summary of findingsSummary of findings► ‘‘Primitive’ propensity to cooperate and to be sensitive to Primitive’ propensity to cooperate and to be sensitive to

misfortunes of fellow citizens misfortunes of fellow citizens demand for demand for redistributionredistribution

► However, intuitive support for redistributive policies However, intuitive support for redistributive policies depends on:depends on: How they understand the causes of poverty and inequalityHow they understand the causes of poverty and inequality Whether they consider that beneficiaries are deserving or Whether they consider that beneficiaries are deserving or

notnot casting doubts on the prospects of an intuitive, casting doubts on the prospects of an intuitive,

spontaneous, endorsement of a UBI proposalspontaneous, endorsement of a UBI proposal► … … Nevertheless given that:Nevertheless given that:

people’s preferences are not immutablepeople’s preferences are not immutable pro-social behavior depends on the degree of perceived pro-social behavior depends on the degree of perceived

social proximity (which is alterable)social proximity (which is alterable) context and framing details mattercontext and framing details matter there is scope for gaining support for specific redistributive there is scope for gaining support for specific redistributive

and and prima facieprima facie counter-to-commonsense policies such as counter-to-commonsense policies such as UBI UBI challenge is then to persuade the average person challenge is then to persuade the average person that it is indeed fair and wisethat it is indeed fair and wise

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Brazilians views on Brazilians views on redistributionredistribution

►No experimental evidence reviewedNo experimental evidence reviewed►Ultimatum Game at UFF without monetary Ultimatum Game at UFF without monetary

rewardsrewards►Undergraduate and graduate students (pseudo-Undergraduate and graduate students (pseudo-

volunteers)volunteers)►Results in line with the literatureResults in line with the literature

►No distributional “problem-sets” No distributional “problem-sets” reviewedreviewed

►We summarize results coming from We summarize results coming from questionnairesquestionnaires

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1.1. Are the high levels of inequality and Are the high levels of inequality and poverty considered undesirable by poverty considered undesirable by Brazilians? Brazilians?

The evidence is mixed, but there is a The evidence is mixed, but there is a tendency for conformismtendency for conformism

(Reis, 2000; Scalon, 2007; Rocha & (Reis, 2000; Scalon, 2007; Rocha & Urani, 2007)Urani, 2007)

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2.2. Is there a serious misperception of the Is there a serious misperception of the parameters of income distribution in the parameters of income distribution in the country? country?

The answer is positive The answer is positive ► Rocha & Urani (2007)Rocha & Urani (2007)

Many rich Brazilians (highest decile) think they Many rich Brazilians (highest decile) think they belong to the 5th decile, many poor too… belong to the 5th decile, many poor too…

Actual Actual ≠ ≠ perceived income distributionsperceived income distributions► What are the prospects of Brazilians What are the prospects of Brazilians

favouring redistributive policies in such favouring redistributive policies in such conditions!?conditions!?

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3.3. What do rich and poor Brazilians consider What do rich and poor Brazilians consider as the causes of inequality and poverty as the causes of inequality and poverty and what policies could address them? and what policies could address them?

Causes: vague notion of “ineffectiveness of the Causes: vague notion of “ineffectiveness of the State”; individuals’ choices and actions: only to State”; individuals’ choices and actions: only to a limited extent; but that view might be a limited extent; but that view might be changingchanging

Preferred policy options include improving Preferred policy options include improving public services and educationpublic services and education

► (Previous references + Almeida & Young, (Previous references + Almeida & Young, 2007)2007)

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4.4. What normative criteria do Brazilians What normative criteria do Brazilians think should be used to determine think should be used to determine remuneration? remuneration?

Criteria related to needs are slightly Criteria related to needs are slightly more popular among Brazilians than more popular among Brazilians than those related to talent or effort, but both those related to talent or effort, but both sets are importantsets are important

Dissociating remuneration from work is Dissociating remuneration from work is not a consensual ideanot a consensual idea

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► Scalon (2007) reports ISSP-1999 survey results:Scalon (2007) reports ISSP-1999 survey results:► How important should be, for determining individuals’ How important should be, for determining individuals’

remunerations, individual features such as: remunerations, individual features such as: ► (a) their education and training level ((a) their education and training level (talent/efforttalent/effort))► (b) the fact that they exert a supervisory task ((b) the fact that they exert a supervisory task (talent/efforttalent/effort))► (c) the fact they have a family and they need to make ends (c) the fact they have a family and they need to make ends

meet (meet (needsneeds))► (d) the presence of children in the household ((d) the presence of children in the household (needsneeds))

► Proportion of people who believe that (a) is important or Proportion of people who believe that (a) is important or extremely important is 77.4% (“elite”) and 80.1% (“non-elite”)extremely important is 77.4% (“elite”) and 80.1% (“non-elite”)

► (b) 74.8% and 74.1%(b) 74.8% and 74.1%► (c) 85.7% ad 85.3%(c) 85.7% ad 85.3%► (d) 82.0% and 84.4%(d) 82.0% and 84.4%

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5.5. What is Brazilians’ perception of the What is Brazilians’ perception of the BFP? BFP?

They are greatly favorable, but address They are greatly favorable, but address critiques on moral and incentive groundscritiques on moral and incentive grounds

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► Castro et al. (2009): representative sampleCastro et al. (2009): representative sample► In all regions: at least 2/3 consider that “the In all regions: at least 2/3 consider that “the

program brings more good things than bad program brings more good things than bad things to the country”things to the country”

► Does BFP helps: Does BFP helps: fighting poverty, keeping fighting poverty, keeping children in schools, improving children’s children in schools, improving children’s education, fighting child labor, improving education, fighting child labor, improving children’s and pregnant women’s health? children’s and pregnant women’s health? Also Also 2/3 of agreement2/3 of agreement

► People who are acquainted to at least one People who are acquainted to at least one beneficiary are substantially more enthusiastic beneficiary are substantially more enthusiastic about the program than individuals who are not about the program than individuals who are not acquainted to any beneficiary acquainted to any beneficiary

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► Castro et al. (2009): representative sampleCastro et al. (2009): representative sample1.1. 80% believe BFP benefit people who are not in 80% believe BFP benefit people who are not in

need of the transfersneed of the transfers2.2. 2/3 agree that program makes people lazier, 2/3 agree that program makes people lazier,

reducing labor supplyreducing labor supply3.3. 56% agree that the program makes people 56% agree that the program makes people

want to have more childrenwant to have more children► 45% show concern for 1,2 and 3 45% show concern for 1,2 and 3

simultaneouslysimultaneously

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The pessimistic conclusionsThe pessimistic conclusions

► Brazilians’ conformismBrazilians’ conformism► Brazilians not willing to redistribute without Brazilians not willing to redistribute without

certifying certifying ex ante ex ante that the causes of misfortunes that the causes of misfortunes are ‘acceptable’, and checking are ‘acceptable’, and checking ex post ex post that that recipients do not change ‘inappropriately’ their recipients do not change ‘inappropriately’ their behaviorbehavior

► Restrictions to dissociating remuneration from Restrictions to dissociating remuneration from workwork

► Brazilians’ values might be evolving recently Brazilians’ values might be evolving recently towards a more individualistic and effort-centered towards a more individualistic and effort-centered viewview

► Despite substantial current support to BFP, main Despite substantial current support to BFP, main critiques are rooted on moral and incentive critiques are rooted on moral and incentive groundsgrounds

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The optimistic conclusionsThe optimistic conclusions► Brazilians prone to show solidarity and to demand Brazilians prone to show solidarity and to demand

redistributionredistribution► Brazilians blame the State for individuals’ misfortunes Brazilians blame the State for individuals’ misfortunes

and not the individuals themselvesand not the individuals themselves► Saliency of needs-related normative criteria regarding Saliency of needs-related normative criteria regarding

determinants of remunerationdeterminants of remuneration► Dissociating remuneration from work: while not Dissociating remuneration from work: while not

consensual among Brazilians, rejection rate close to consensual among Brazilians, rejection rate close to the majority thresholdthe majority threshold Possibly people reluctant to dissociation not because of an Possibly people reluctant to dissociation not because of an

intrinsic, inevitable, rejection, but due to intrinsic, inevitable, rejection, but due to status quo bias status quo bias and customand custom

► Preferences evolve over time: the BFP did not exist 10 Preferences evolve over time: the BFP did not exist 10 years ago and now seems to be supported by a years ago and now seems to be supported by a considerable majority of Braziliansconsiderable majority of Brazilians Support much higher among those who are acquainted to Support much higher among those who are acquainted to

a beneficiarya beneficiary

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The challenge for UBI The challenge for UBI advocatesadvocates

►The challenge is:The challenge is: subject to the moral, behavioral and subject to the moral, behavioral and

perceptional constraints brought up hereperceptional constraints brought up here to find the appropriate instruments and to find the appropriate instruments and

strategies strategies in order to persuade the in order to persuade the average personaverage person (including the average (including the average researcher and the average politician…)researcher and the average politician…)

that UBI is indeed a fair and wise policythat UBI is indeed a fair and wise policy

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Obrigado!Obrigado!

1 smooth transition from bolsa família to basic income? difficulties based on experiments and...

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