As I mentioned in yesterday’s article on my beef with the arguments often made by Basic Income advocates, I don’t consider the “experiments” often cited in support of UBI as very relevant to what would happen if/when UBI is widely instituted in the United States, since we have very different socio-economic institutions and attitudes towards work than other cultures.

So I tried to brainstorm a scenario similar to Basic Income that might already existing already somewhere in the US. I came up with Native American communities who have opened gambling casinos and subsequently shared their windfall with all members of the tribe. While not a perfect parallel to basic income, many tribe do indeed pay tribal members “per capita” share of the casino profits, which range from a few hundred dollars per month for casinos in remote areas to more than $20,000 per month for members of smaller tribes with the most successful casinos.

Based on my admittedly cursory analysis of the impact such payments have on members of Native American communities, the evidence does not appear to serve as a ringing endorsement of Basic Income’s ability to lift people out of poverty who’ve been stuck in a cycle of poverty for an extended period.

Here is a expert from a 1998 episode of This American Life in which the host interviews a several young members of the Mille Lacs band of Ojibwe, whose elders are contemplating whether to invest the casino profits in community infrastructure (e.g. new schools, etc.) or to give money to each member of the tribe — the equivalent of a Basic Income referred to below as a “per capita”.

The young tribe member is clearly conflicted — she would like to receive the money directly as a “per capita”, but realizes she would almost certainly squander it on alcohol.

While the above is purely anecdotal, there is also quantitative evidence from the Mille Lacs band and other casino-owning Minnesota tribes that the windfall profits the members of a community receives from gambling doesn’t necessarily lead to positive outcomes. Here is a table of census data for income of Minnesota tribes running casinos compared with the general population:

As is evident above, between 2000 and 2010 the median income of large, casino-owning tribes in Minnesota fell by 16%, while the income of the average Minnesotan rose by 1%. Clearly not a ringing endorsement of the idea that basic income will turn life around for those stuck near the poverty line.

Here is an excerpt from an article in the MinnPost newspaper about the impact of casino windfalls on Native Americans in Minnesota. Notice the date, it is 14 years after the interview above with the young Native American who was conflicted over wanting the cash while knowing she’d likely squander it:

This relatively large-scale experiment in giving previously poor people in the US a Basic Income has been going for a long time now — nearly 20 years. While I’m not an economist or sociologist, it appears to my eyes that the results support for my pessimistic hypothesis that people who have been stuck in a cycle of poverty for generations may not react to a guaranteed Basic Income in the constructive way many vocal UBI proponents predict, e.g. improving their lives through education, starting businesses, etc.

Unfortunately, it looks like the opposite might be the case, at least for a substantial segment of the population who decide to drop out of high school when they know a living wage awaits them whether or not they work hard to better themselves in school.

Let me make clear — this is not meant to single out Native Americans in any way. I consider the study of casino profit windfall on Native American communities to be a proxy for ANY group of Americans who have been caught in a cycle of poverty for an extended period of time and then suddenly blessed (or cursed) with the equivalent of basic income.

As I explained in my first post, my predict is that instituting a universal basic income would inevitably have the same type of negative impact on a fairly wide swath of the general population in the US as it appears to have on Native Americans tribe members given a share of their casino’s profits.

This supports my thesis that UBI will only have the potential to benefit society at large if/when we change our education system to value lifelong learning, stop valorizing income-producing work & start valuing service to family, community, the nation and the world in ways that don’t necessarily generate income.

Update/Addendum: In the comments below Chris Blaine was incredibly helpful and linked to the following scholarly paper (full text) from the American Journal of Applied Economics:

As you can see from the highlights, this paper is a goldmine for people interested in UBI experiments among poor people in the US. It found kids in families that received the UBI payment were more likely to stay in school & avoid criminal behavior. It also found UBI payments resulted in no lower (or higher) labor participation rate in parents, but a big drop in criminal activity by both fathers and mothers. The rate of criminal behavior by fathers dropped by 50% when the family started receiving the UBI-like cash payments.

In short, it is strong evidence that a significant ($4K/year) UBI-like cash payment to poor people in the US can result in substantial positive changes on important measures of education & criminal behavior.

This positive result for UBI-like casino payments was among Cherokee Indians from North Carolina.

What conclusion can we draw from the seemingly contradictory results between these Cherokee Native Americans, and the Native Americans from Minnesota who seemed to experience not-so-positive results from receiving casino-derived UBI-like payments? I’m not sure. I’m not an expert.

But what it tells me is that there are already natural experiments in Basic Income occurring all over the United States, in the form of casino-profit cash grants to Native Americans from many different socio-economic backgrounds & situations. This seems like a very rich source of data that economists and sociologists interested in Basic Income should be investigating to learn what works and what doesn’t when it comes to implementing a UBI.