Month: July 2023

Yesterday saw the launch of our report ‘Treating causes not symptoms: Basic Income as a public health measure’. The report presents the highlights of a recently-ended research project funded by the National Institute for Health and Social Care Research. This has been an interdisciplinary endeavour, involving policy and political science folk, health economists, behavioural scientists, community organizations, and two think tanks.

The public has Manichean intuitions about health. On the one hand, people feel very strongly that an affluent society should compensate and protect its members against the spectre of ill health. This is particularly true in the UK with its strong tradition of socialized care. They will support spending large amounts of money to make good health inequalities. But when you suggest that the best way for society to make good health inequalities is by removing the poverty that lies upstream of them, people often baulk. You can’t do that, surely?

I think there are a few reasons for this reaction. One is that different lay models of causation govern the two domains. Ill health seems to be all about luck, the kind of luck society should insure us against. No one sets out to get ill. Poverty seems, perhaps, to be more about character, effort and intentional action, and hence is a domain where people generally feel that individuals should fend for themselves. If there were financial handouts, some people (it is feared) would set out to live off them; but no-one suggests that because the hospitals are free, people set out to become ill and live in them. In reality, the differences between the domains of health and wealth are not so clear: health outcomes reflect character and choices as well as luck and circumstances; and financial outcomes involve a lot of luck and structural barriers as well as effort. So, some difference in kind between the two domains is not a sufficient reason for limiting policy interventions to just one of them.

Another reason for resistance is that people assume that the cost of reducing poverty is so enormous that trying to intervene at that level is simply unfeasible. Clearing up the mess we might just be able to afford; but the price tag of avoiding the mess in the first place is astronomical. It’s not clear that this is right. If reducing poverty is expensive, not reducing it is really expensive too. Already, around 45% of UK government expenditure is on the National Health Service. That direct cost is so high because the population is so sick. As well as the illnesses that need treating, there is all the work that people cannot do due to ill health. A quarter of working-age adults in the UK have a long-standing illness or condition that affects their productivity. Many of these involve stress, depression and anxiety, conditions where the income gradient is particularly steep.

These considerations raise at least the theoretical possibility that if we reduced poverty directly – via cash transfers – there might not have to be a net increase in government spending. Yes, there would be an outlay. But on the other hand, health would improve; healthcare expenditures would go down; the cost of cleaning up other social pathologies like crimes of desperation would be reduced; people would be more productive; and hence tax takes would increase. And, as I have long argued, there would be a double dividend. As we reduced people’s exposure to the sources of ill health that they cannot control, they would spontaneously take more interest in looking after themselves in the domains they can control, because it would be more worth their whiles to do so. Eliminating poverty is an investment that might not just be affordable, but even profitable.

It’s all summed up in figure 1 (yes, you can tell I am becoming a real social scientist, I have a barely-legible diagram with lots of boxes and many arrows between them). Reducing poverty hits the social determinants of health. It’s cleaning the stream near its source. Downstream, the individual determinants of health are improved; downstream of that, there are better health outcomes; and downstream of that, all the social and economic benefits. Depending on the costs, and on the strengths of the various connections, there might be cash transfer systems that would pay for themselves.

This is the possibility that the NIHR funded us to model. That they would do so gives you some indication of the health crisis times we are living in. The NIHR is a hard-headed funder whose mission is to get the best possible cost-benefit ratio for the UK healthcare pound. Even they – hardly utopian or politically radical by mission – can see that paying for ever-better sticking plasters might not be the only course worthy of serious consideration.

To chunk through the net consequences of a cash transfer scheme as per figure 1 involves a lot of estimates: estimating the effect of the scheme on the distribution of household incomes; estimating the effects of household income on physical and mental health; and estimating the effects of better physical and mental health on economic behaviour and tax revenues. Each of these steps is full of uncertainty of course. It’s been a privilege to work alongside my health economics colleagues who have made serious attempts to estimate these things, as best they can, based on data. There were some things we were not able to estimate and made no attempt to include in the models. For example, I suspect that making people’s lives more predictable, as you would with a basic income, has a positive health value above and beyond the actual amount of income you give them. This is not factored into the calculations. Neither is the likely reduction in crime, and hence in the fear of crime. Thus, if anything, I think our estimates of potential benefits of reducing poverty are pessimistic.

I urge you to have a look at the report to see whether you find the case compelling (and there are more detailed academic papers in the pipeline). We consider three scenarios: a small basic income of £75 a week for adults under 65, with the state pension for over 65s staying as it is now; and then a medium scheme (£185) and a generous scheme (£295). I will focus here on the small scheme since the results here, for me, indicate what a no-brainer this kind of action is. Our small scheme is already fiscally neutral, with just some small changes to tax, means-tested benefits and national insurance. In other words, this scheme would cost the government nothing even without factoring in the population health benefits. Yet, it would be redistributive, with 99% of the poorest decile of households increasing their incomes by more than 5%. And because the poorest households are the ones where there is most ill health, its benefits would be dramatic despite its modest size.

Our model suggests that the small basic income scheme could prevent or postpone 124,000 cases of depressive disorder per year, and 118,000 cases of physical ill-health. The total benefit to UK population health is estimated at 130,000 QALYs per year.  The QALY is a somewhat mysterious entity beloved of health economists. Very roughly, we can think of one QALY an additional year of perfect health for one person, or two extra years in a state of poorer health that they value only half as much. So, if 130,000 people, instead of dying, lived a year in perfect health, then 130,000 QALYs would be gained. That’s a lot. The department of health values a QALY at £30,000 for cost-benefit purposes. That is, if you want to be hard-headed, then it’s worth paying up to £30,000 to achieve an extra QALY of population health. That means it would be worth paying £3.9 billion a year for our basic income scheme, if it were to be evaluated as purely a health policy (imagine it, for example, as a drug, or a type of physical therapy). As I have already stressed, the scheme is fiscally neutral: it costs the government no more than the current system of taxes, allowances, and benefits does. The scheme is, arguably, a healthcare intervention worth £3.9 billion, available today at zero cost using only technologies that already exist. The predicted health benefits of the medium and generous schemes were much larger still; but of course, their upfront cost is larger too.

Naturally, there are many uncertainties in an exercise such as this. We took the observed associations between income and health as causal, assuming that if you boosted income, health would follow. This is an inference, and a contentious one. The way we made it – by looking at within-individual health changes when income declined or increased – is probably about the best way currently possible. But, its validity is something reasonable people could dispute. For me it brings home the serious need for proper trials of cash transfer policies, something we have written about elsewhere. Then the causal basis of the projections could be much stronger. Even accepting the limitations though, I think the case is hard to ignore. This project has made me feel more strongly than ever that there are better societies out there, in a galaxy not at all far from our own; and that we lack only rational and imaginative leaders to guide us there.

Reading descriptions of the lives of people living in adverse economic conditions, something that will strike you over and over again is how often addiction comes up: to alcohol, to tobacco, to other drugs, or to behaviours such as gambling. There is addiction in all strata of society, but, from the novels of Zola to today, it seems specially prevalent where people have the least access to money and power. Is this really true, and, if so, how could we possibly explain it?

Epidemiological evidence confirms that it is really true. In the USA, the prevalence of smoking is about twice as high amongst those in routine/semi-routine occupations compared to managers and professionals. Smokers of all classes try to quit; managers and professionals are more likely to succeed. Addictive substances often show double dissociations with class: people with more money can afford to consume more of the substance, since they have more money; but people with less money are more likely to end up consuming to the point where it causes them life problems. So, for example, higher-SES young people in France consume more cannabis overall; but lower-SES young people are more likely to be frequent users. The double dissociation is particularly clear for alcohol. In many studies, it is people of higher SES who consume more alcohol on average, but people of lower SES who are most likely to die from the consequences of alcohol. As for behavioral addictions, the companies that run gambling machines know where to put them: in the areas of the highest economic deprivation.

Yes, addiction is related to poverty. But so are many other things. The existence of socioeconomic gradients is such a pervasive feature of affluent societies that it extends to almost everything you can measure. Is addiction more steeply related to income than other things? The only evidence for this that I have been able to find comes from the study of alcohol-related mortality. People of lower SES are more likely to die from the consequences of alcohol; but of course they are more likely to die tout court. Probst et al. meta-analysed studies that compared the SES difference in alcohol-attributable mortality to the SES difference in overall mortality in the same populations. They concluded that the high-low SES differences in alcohol-related mortality were typically 1.5-2 fold larger than the high-low SES differences in mortality overall.

Let’s assume that these gradients reflect something about poverty causing increased addictive behaviour (not of course an easy thing to demonstrate, but I’ll come back to that at the end). How can we explain why?

First, we need to characterise what kinds of substances and activities can create addiction. Jim Orford, in his wide-ranging book Power, Powerless and Addiction suggests that things can be addictive if they (a) have the capacity to produce a short-term boost in mood; (b) they can be consumed frequently in small chunks; and (c) they entrain processes that tend to increase their own consumption over time. If you focus on (a) and (b), the socioeconomic gradient seems very intelligible. In the flow of everyday experience, people facing greater economic adversity are often in worse mood (there is abundant evidence that this is true, and there are good reasons for it); and, plausibly, they have less access to alternative mood-boosting inputs that come with affluence and high status.

There are other bodies of thought we can draw on to fill out this idea. There is the ‘rational addiction’ tradition that comes from economics. The essence of this idea is that people might, under some circumstances, choose to consume an addictive substance, even in the full knowledge that this will lead to future dependence. They will do so when it maximises their long-term utility; in other words when the value they place on all the mood boosts they will get outweighs the disutility of the present and future costs of use. The literature on rational addiction has got a bit bogged down in some rather inside-baseball issues, such as whether people reduce consumption in response to price rises that have been announced but not implemented yet. This is an important test because it establishes whether they are considering future consumption, not just present consumption, in their decisions to consume; but it distracts from the more general insights the rational addiction model might provide.

As often with rational actor models, the rational addiction model seems like a kind of useful fiction. On one hand it is obviously false. People usually don’t make those computations, certainly not explicitly. Plus, the rational addiction model in its original form cannot account for the fact that people constantly try to quit, often without success; or that they spend money on having other people force them to stop them from consuming . To explain these phenomena, you need to add something call time-inconsistent preferences, namely that what I value happening at time point t flips as t approaches the present. On the other hand, the rational addiction model is many-fold better than unhelpful and non-explanatory appeals to ‘lack of self-control’ or ‘the culture of poverty’. It sees people who consume as full and normal agents, albeit agents constrained by the option sets available to them. Those option sets are often not great. In poverty, either the marginal benefits of addictive consumption might be higher (because your mood is often worse and this makes it boosting it more valuable), or the opportunity costs of addictive consumption are lower (for example, the job you could lose is awful anyway, or there is no prospect of ever converting the cigarette money into owning a house).

A related and useful literature is that on pain and analgesia. Addictive substances tend to be analgesic: they reduce pain. Much of the drug addiction in the USA and other developed countries involves opioid drugs. These are so effective at pain relief that they have long been used in surgery. Indeed, it was their approved medical use that lies at the root of the iatrogenic addiction crisis. What is less well known is that alcohol, nicotine and cannabis all have fairly well-studied analgesic effects. It is not a metaphor when people say they drink or smoke to ease the pain.

Pain is socioeconomically distributed. There’s evidence of socioeconomic gradients in severe pain in Austria, and dental pain in the UK. Physical pain and emotional pain are on the same continuum (anti-inflammatories like ibuprofen reduce depressive symptoms after all), and I wager that emotional pain shows at least as much of a gradient as physical pain does, probably more. Studies conclude that the socio-economic gradient of pain is currently unexplained; but perhaps, in fact, its explanation is all too obvious. Pain is the unpleasant experience associated with the appraisal that you are being damaged. The ability to feel pain is there for a reason. If you can get out of the painful situation, you will. But if you have no alternative but to go on being damaged, then self-medication looks like the next best thing.

If poverty causes pain and low mood, then really there is no mystery to the fact that people in poverty rely more heavily on mood-boosters. Property (c) of addictive substances – they catalyse their own use – is still a problem. But you can see why it is easier to start and more difficult to stop if you face poverty and adversity. This leads to the simple prediction that increasing people’s incomes will reduce their consumption of analgesic-addictives.

What I love about this prediction is how counter it runs to most people’s intuitions. When Nicaragua introduced an direct cash transfer programme, a senior official predicted that “husbands [would be] waiting for wives to return in order to take the money and spend it on alcohol“. A brake on the introduction of cash transfers in Kenya was “the widespread belief that cash transfers would either be abused or misdirected in alcohol consumption“. Does the evidence back up these intuitions?

Reader, it does not. For the World Bank, David Evans and Anna Popova reviewed all the studies that they could find looking at the impact of a change in income on either consumption of or expenditure on alcohol and tobacco. They concluded that “almost without exception, studies find either no significant impact or a significant negative impact of [cash] transfers.” Restricting the analysis to the 17 estimates that came from randomized control trials, 14 went in the negative direction, and the 3 in the other direction were small. It’s worth thinking about how strong a test this is. Some people, who were generally in low and middle income countries and had strong financial constraints, were suddenly given higher incomes to spend. It’s not just that they did not use it to increase their expenditure on these addictive goods. They more often than not decreased it. Doing social science, I have heard it said, is the search for the small set of things that is both surprising and true. I would add, surprising, true, and makes a difference. It would be good if this were one of that set.