Smooth transition from Bolsa Família to basic income? Difficulties based on experiments and questionnaires

1. Smooth transition from Bolsa Família to basic income?Difficulties based on experiments and questionnaires Fábio Waltenberg Centro de Estudos sobre Desigualdade e Desenvolvimento Universidade Federal Fluminense 13th BIEN Congress – July 2nd, São Paulo

2. The question • Law 10.835/2004 creates Unconditional Basic Income (UBI) in Brazil… not yet implemented… • Suppose a consensus emerged among researchers around UBI in Brazil: could we then expect it to be implemented? • Hypotheses: • Resistance on moral grounds • To promote the policy: necessary to understand Brazilians’ moral values, beliefs, perceptions  carefully frame the proposal

3. Motivation • Lavinas (2006): skeptical about progressive implementation of UBI from Bolsa Família Program (BFP) • “Lack of tradition in policies of universal protection” in the country  tradition • Kerstenetzky (2009): political economic analysis of recent debate over BFP • Preferences over redistribution are not given, but affected by announced goals and “pedagogy” of the program  perceptions

4. Motivation • Van Parijs (2004 and yesterday here): “cultural diversity” in conflict with “income solidarity”? • Redistribution bounded by emotional motives, such as identification  emotions

5. Methods, instruments • Traditions, perceptions, emotions restricting willingness to redistribute  possible generalization of those constraints? • Experimental economics: games in the lab with monetary rewards (actual behavior) • Questionnaires: opinions about distributive justice • Both: commonsense or uninformed conceptions of justice ≠ from philosophical & normative economics traditions

6. The Ultimatum Game • A ‘proposer’ is allocated a fixed amount of money m • He has to share a proportion of m that he defines with a ‘responder’ • ‘Responder’ knows the amount m and can • Either accept the proposed fraction • Or reject it  both players receive nothing

7. The Ultimatum Game • Behavior expected from Homo economicus: • As a proposer: to offer the smallest possible positive amount of money to the responder • As a responder: to accept any positive offer • Results observed in the lab: • Proposer: few proposers keep a value close to m • Most offers range from 25 to 50% of m • Mean offer around 40%, modal offer: 50% • Responder: small offers (20% or less) usually rejected • Almost 100% of rejection of the smallest possible offer

8. The Ultimatum Game • Responders’ behavior interpreted as: • Concerns for fairness or inequality aversion (both related to distributive justice) • Simply showing importance of reciprocity • Proposer’s behavior viewed as a mixture of: • Self-interest (anticipating responder’s reaction) • Concerns for fairness or inequality aversion • Both: “social preferences” • Controversies… methodological issues… Developments such as Dictator Game…

9. Questionnaires • Direct questions on distributive issues: • E.g., World Values Survey: • 1: “Incomes should be made more equal” • … • 10: “We need larger income differences as incentives for individual effort” • “Problem-sets” involving normative issues (quasi-experimental) • E.g., Yaari & Bar-Hilell (1984): how to split grapefruits and avocados between Jones and Smith • Formally equal problems to different groups, but different stories: needs, talent, effort, tastes, beliefs.. • Different needs (metabolism): 82% choose maximin solution • Different tastes: 35% choose utilitarian solution

10. General findings In what follows: summary of main results from both experimental economics and questionnaire-based research related to redistribution

11. General findings • People exhibit “social preferences” • Individuals’ actions are governed by social norms, e.g., custom, habit, tradition, and also distributive justice concerns • “Mr. Fairmind accepts differences resulting from different contributions; but he generally feels that actual income differences are too large. He is much in favor of introducing a minimum floor, below which no one should fall, and he is sensitive to social deprivation.” (Schokkaert, 1999b) • From 1 and 2  likely to be some demand for redistribution

12. General findings • Cooperation is not unconditional; offered only under appropriate circumstances • People do not like free-riders; do not like to be fooled; do not like to see others are being fooled • People assign importance to processes and not only to outcomes • E.g., Ultimatum Game: original versus with a “quiz” • Needs, desert, talent: taken into account • Schokkaert (1999b) “[Mr. Fairmind] wants to check whether the needy are really needy and is not eager to guarantee an unconditional grant to those able-bodied persons who simply choose not to work.” • From 3 and 4  mild prospect of wide support to UBI

13. General findings • Perceived social distance among participants is a key variable in determining intensity of other-regarding behavior  identification (emotions) • E.g., Ultimatum Game: original versus non-anonymous • Choices are context-dependent and strongly influenced by the way a problem is framed • E.g., Yaari & Bar-Hilell’s example already mentioned • “Depending on the concrete circumstances of the distributional problem, [Mr. Fairmind] will emphasize desert, need or simple equality” (Schokkaert, 1999b) • “Minor manipulations of the social context of interactions may support significant behavioral differences” (Bowles & Gintis, 1998)

14. General findings • Individuals’ preferences are based on (possibly imprecise) beliefs and perceptions, and are endogenous • People show status quo bias  a change is rarely easy • People overevaluate improbable events  e.g., one reported fraud in PBF becomes “widespread fraud” • People learn with experience  and change preferences accordingly

15. Summary of findings • ‘Primitive’ propensity to cooperate and to be sensitive to misfortunes of fellow citizens  demand for redistribution • However, intuitive support for redistributive policies depends on: • How they understand the causes of poverty and inequality • Whether they consider that beneficiaries are deserving or not • casting doubts on the prospects of an intuitive, spontaneous, endorsement of a UBI proposal • … Nevertheless given that: • people’s preferences are not immutable • pro-social behavior depends on the degree of perceived social proximity (which is alterable) • context and framing details matter • there is scope for gaining support for specific redistributive and prima facie counter-to-commonsense policies such as UBI  challenge is then to persuade the average person that it is indeed fair and wise

16. Brazilians views on redistribution • No experimental evidence reviewed • Ultimatum Game at UFF without monetary rewards • Undergraduate and graduate students (pseudo-volunteers) • Results in line with the literature • No distributional “problem-sets” reviewed • We summarize results coming from questionnaires

17. Brazilians views on redistribution • Are the high levels of inequality and poverty considered undesirable by Brazilians? • The evidence is mixed, but there is a tendency for conformism • (Reis, 2000; Scalon, 2007; Rocha & Urani, 2007)

19. Brazilians views on redistribution • Is there a serious misperception of the parameters of income distribution in the country? • The answer is positive • Rocha & Urani (2007) • Many rich Brazilians (highest decile) think they belong to the 5th decile, many poor too… • Actual ≠ perceived income distributions • What are the prospects of Brazilians favouring redistributive policies in such conditions!?

20. Brazilians views on redistribution • What do rich and poor Brazilians consider as the causes of inequality and poverty and what policies could address them? • Causes: vague notion of “ineffectiveness of the State”; individuals’ choices and actions: only to a limited extent; but that view might be changing • Preferred policy options include improving public services and education • (Previous references + Almeida & Young, 2007)

22. Brazilians views on redistribution • What normative criteria do Brazilians think should be used to determine remuneration? • Criteria related to needs are slightly more popular among Brazilians than those related to talent or effort, but both sets are important • Dissociating remuneration from work is not a consensual idea

23. Brazilians views on redistribution • Scalon (2007) reports ISSP-1999 survey results: • How important should be, for determining individuals’ remunerations, individual features such as: • (a) their education and training level (talent/effort) • (b) the fact that they exert a supervisory task (talent/effort) • (c) the fact they have a family and they need to make ends meet (needs) • (d) the presence of children in the household (needs) • Proportion of people who believe that (a) is important or extremely important is 77.4% (“elite”) and 80.1% (“non-elite”) • (b) 74.8% and 74.1% • (c) 85.7% ad 85.3% • (d) 82.0% and 84.4%

26. Brazilians views on redistribution • What is Brazilians’ perception of the BFP? • They are greatly favorable, but address critiques on moral and incentive grounds

27. Brazilians views on redistribution • Castro et al. (2009): representative sample • In all regions: at least 2/3 consider that “the program brings more good things than bad things to the country” • Does BFP helps: fighting poverty, keeping children in schools, improving children’s education, fighting child labor, improving children’s and pregnant women’s health? Also 2/3 of agreement • People who are acquainted to at least one beneficiary are substantially more enthusiastic about the program than individuals who are not acquainted to any beneficiary

28. Brazilians views on redistribution • Castro et al. (2009): representative sample • 80% believe BFP benefit people who are not in need of the transfers • 2/3 agree that program makes people lazier, reducing labor supply • 56% agree that the program makes people want to have more children • 45% show concern for 1,2 and 3 simultaneously

29. The pessimistic conclusions • Brazilians’ conformism • Brazilians not willing to redistribute without certifying ex ante that the causes of misfortunes are ‘acceptable’, and checking ex post that recipients do not change ‘inappropriately’ their behavior • Restrictions to dissociating remuneration from work • Brazilians’ values might be evolving recently towards a more individualistic and effort-centered view • Despite substantial current support to BFP, main critiques are rooted on moral and incentive grounds

30. The optimistic conclusions • Brazilians prone to show solidarity and to demand redistribution • Brazilians blame the State for individuals’ misfortunes and not the individuals themselves • Saliency of needs-related normative criteria regarding determinants of remuneration • Dissociating remuneration from work: while not consensual among Brazilians, rejection rate close to the majority threshold • Possibly people reluctant to dissociation not because of an intrinsic, inevitable, rejection, but due to status quo bias and custom • Preferences evolve over time: the BFP did not exist 10 years ago and now seems to be supported by a considerable majority of Brazilians • Support much higher among those who are acquainted to a beneficiary

31. The challenge for UBI advocates • The challenge is: • subject to the moral, behavioral and perceptional constraints brought up here • to find the appropriate instruments and strategies in order to persuade the average person (including the average researcher and the average politician…) • that UBI is indeed a fair and wise policy

32. Obrigado!