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Behavioral Economics and the Basic Income Guarantee

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  • Pech Wesley J

    (Wofford College)

Abstract

This article provides a critical discussion of the potential contributions behavioral economics makes to the idea of a Basic Income Guarantee (BIG). Behavioral economics suggests that the consequences of a basic income may be significantly different from the ones predicted by the Standard Economic Model. Three topics from this literature are analyzed and linked to the BIG idea: Prospect Theory, Motivation Crowding Theory, and Conspicuous Consumption. The article argues that a basic income may be efficiency enhancing under some conditions, but at the same time incentives related to positional concerns may increase wasteful expenditure following its implementation.

Suggested Citation

  • Pech Wesley J, 2010. "Behavioral Economics and the Basic Income Guarantee," Basic Income Studies, De Gruyter, vol. 5(2), pages 1-17, December.
    • Handle: RePEc:bpj:bistud:v:5:y:2010:i:2:n:3
    DOI: 10.2202/1932-0183.1167
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    References listed on IDEAS

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    1. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
    2. Gamel, Claude & Balsan, Didier & Vero, Josiane, 2006. "The impact of basic income on the propensity to work: Theoretical issues and micro-econometric results," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(3), pages 476-497, June.
    3. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar Publishing, number 1183.
    4. Bruno Van Der Linden, 2002. "Is Basic Income a Cure for Unemployment in Unionized Economies? A General Equilibrium Analysis," Annals of Economics and Statistics, GENES, issue 66, pages 81-105.
    5. Bruno S. Frey & Matthias Benz, 2004. "From Imperialism to Inspiration: A Survey of Economics and Psychology," Chapters, in: John B. Davis & Alain Marciano & Jochen Runde (ed.), The Elgar Companion To Economics and Philosophy, chapter 4, Edward Elgar Publishing.
    6. Noguera José A. & De Wispelaere Jurgen, 2006. "A Plea for the Use of Laboratory Experiments in Basic Income Research," Basic Income Studies, De Gruyter, vol. 1(2), pages 1-8, December.
    7. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    8. Hopkins, Ed & Kornienko, Tatiana, 2006. "Inequality and growth in the presence of competition for status," Economics Letters, Elsevier, vol. 93(2), pages 291-296, November.
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    13. Van der Linden, Bruno, 1997. "Basic income and unemployment in a unionized economy," LIDAM Discussion Papers IRES 1997014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 10 Jul 1997.
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    Cited by:

    1. Luke Haywood, 2014. "Unconditional Basic Income: An Economic Perspective," DIW Roundup: Politik im Fokus 33, DIW Berlin, German Institute for Economic Research.
    2. Andrea Rucska & Csilla Lakatos, 2021. "Population Stress Reactions in North-East Hungary during the Pandemic," European Journal of Marketing and Economics Articles, Revistia Research and Publishing, vol. 4, ejme_v4_i.
    3. Jokipalo Veera Amanda, 2019. "Basic Income, Wages, and Productivity: A Laboratory Experiment," Basic Income Studies, De Gruyter, vol. 14(2), pages 1-13, December.
    4. Palermo Kuss Ana Helena & Neumärker K. J. Bernhard, 2018. "Modelling the Time Allocation Effects of Basic Income," Basic Income Studies, De Gruyter, vol. 13(2), pages 1-15, December.

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