[gavazzy]

This is a tragedy of the commons problem. If there are 100 individuals, then if one individual stops working, average UBI payout would only decrease 1%. So, a rational actor would stop working.

Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.

This is the opposite of a negative feedback loop.

[dllthomas]

I'm not sure which of the two cases you're addressing; I'll respond with one comment assuming each.

If you are talking about case 2 (fixed UBI, fixed tax rate, making up the difference - when there is one - by printing money or borrowing), then when one individual stops working the UBI payment does not decrease. If productivity falls when that worker stops working (presumably the case for most workers), then we would expect to eventually see some inflation. It may work out to 1%, with the proper assumptions; I'm not certain.

Still I don't see why it follows that "a rational actor would stop working" - some may, but only if they decide the small decrease in UBI and large decrease in earned income is worth it.

At sufficiently high UBI level relative to earned income, that's pretty likely to be the case. At sufficiently low UBI level ($1?) that's pretty unlikely to be the case.

> Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.

The same chunk of their income as ever is going directly to fund everyone else. A bigger portion of their income is being diluted by the money printed to make up the rest of the UBI. But as the currency devalues, presuming they are doing things people want, they are able to demand more money for their production. The UBI is diluted toward meaningless. At some point, other workers decide to get back in the game, because the (nominally constant but really much lower) UBI will not fund the lifestyle they want, slowing the inflating.

This is a negative feedback loop.

[dllthomas]

I'm not sure which of the two cases you're addressing; I'll respond with one comment assuming each.

If we are talking about case 1 (a fixed BI tax rate with all proceeds distributed), then when one individual stops working the basic income goes down by 1% as you say.

> So, a rational actor would stop working.

I don't see how this follows. A rational actor weighs the 1% decrease in BI plus the 100% decrease in earned income, and whatever that means for quality of life, against their preference not to work.

> Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.

This is not case 1 anymore. In this scenario, one of the other 5 quitting reduces the BI by 20%... of the remaining 5% of the original level. It has no effect on how much any individual is paying in. Meanwhile, with the BI amount being 1/20th its original level, some of the other potential workers are probably getting interested in working again.

This is exactly a negative feedback loop.

[runamok]

It depends on how generous BI is. And if we tied it to the revenues it is funded by this percentage would balance out.

Additionally, remember this amount is enough to live on with 6 roommates and eating beans and rice. It's by no means extravagant. Most people like having stuff. Especially more and better stuff than their neighbors.

[dllthomas]

It's none of the cases dragonwriter described, but what seems to be closest to what you're analyzing:

If you have a fixed UBI, paid for with a variable tax that splits the total burden of the UBI across all workers in proportion to their productivity, then you would see dynamics like you describe. This is, indeed, the opposite of a negative feedback loop. Don't do this, either.

If UBI is set high enough that more people drop out of the labor force than we can manage, the (real) UBI must fall by some mechanism.