Andrew Yang, Democratic candidate for President, is running largely on a platform of the “Freedom Dividend“. The Freedom Dividend is a $1000 monthly payment to ever American adult. The goal is to reduce inequality and provide some liquidity for low-income individuals to start a business, or have more work-life flexibility.
This approach–a form of Universal Basic Income–has a number of positives. It will reduce inequality. If it is funded in part by reducing payments for other social programs, there could be significant savings in government administrative costs. And receipients would have a lot more flexibility in how they spend money compared to other programs like health insurance benefits or food stamps.
On the other hand, the Freedom Dividend could dis-incentivize work. Further, it would be expensive. Additionally, many social programs are valuable. For individuals with severe physical or mental disabilities, the Freedom Dividend would not be enough for support their needs.
One potential benefit of the Freedom Dividend may be better health. In particular, lower rates of suicide. At least that could be one conclusions by Lenhart (2019) when looking at increases in the Earned Income Tax Credit.
Following findings in previous work showing that the EITC is associated with lower depression rates and reduced number of risky biomarkers, I estimated the effects of state EITC generosity on suicide rates. Using data for the years 1996 to 2016, a period with 74 state‐level EITC policy changes, I find that introducing a high state EITC rate reduces suicide rates for adults aged 25 or above by 3.91%. The results are consistent across four different measures of EITC generosity.
While this represents some suggestive evidence, note that EITC requires people to work to get the financial benefit whereas the Freedom Dividend does not. As work is likely to reduce depression, it is not clear whether the reduced suicide rate would also apply to the Freedom Dividend. Further research is needed.
Source:
- Lenhart, Otto. “The effects of state‐level earned income tax credits on suicides.” Health economics (2019).