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Social Interaction, Envy, and the Basic Income: Do Remedies to Technological Unemployment Reduce Well-being?
Last modified: 2019-06-14
Abstract
The primary aim of this paper is to discuss the possible consequences exerted on well-being by one among the suggested remedies to technological unemployment, namely the payment of an unconditional basic income. The impact of twenty-first century technological progress on employment has just started and will only be fully realized in the future, but its main novelty is already well known and concerns robots (and artificial intelligence) entering the production process. According to many recent (albeit controversial) contributions such a phenomenon is radically different from past technological revolutions and might generate mass unemployment which will require innovative redistributive public policies. These policies have been deeply scrutinized, but (almost) no contribution has discussed their impact on well-being. This paper, building on Keynes’ 1930 short essay (“Economic Possibilities for our Grandchildren”) and referring to behavioral and happiness economics principles and models, focuses on the most famous among these policies, namely the payment of an unconditional basic income. It is argued that due to social interaction in the form of social envy and to the consequences of loss aversion, implementing this policy may exert a negative impact on well-being. In particular, hedonic adaptation and loss aversion can be used to show that the payment of a basic income can hardly compensate people for the psychological costs of unemployment, that all empirical studies consider as one of the worst experiences in a life. Furthermore, unemployed earners of the basic income will be unable to generate active envy over other people, whereas they will suffer passive envy towards the employed. Finally, they will also be unable to escalate to higher level consumption behaviors, another circumstance which reduces well-being. And raising the money value of the basic income can compensate for the effects of hedonic adaptation and loss aversion, not for the effects of the other forces. On the contrary the employed will enjoy an increase in well-being due to the possibility of both generating envy and escalating to higher level consumption behaviors. In the case in which the system will reach a condition of (close to) full unemployment all citizens will suffer the psychological costs of unemployment, will be unable to generate envy and will be unable to escalate, with the result of a general reduction in well-being only partially compensated by the payment of the basic income. A number of other possible solutions to technological unemployment appear hence preferable to contrast the phenomenon.
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