421. How to Prevent Another Great Depression

Millions and millions are out of work, with some jobs never coming back. We speak with four economists — and one former presidential candidate — about the best policy options and the lessons (good and bad) from the past.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Stephen J. Dubner?

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• 0:43Stephen J. Dubner?

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• 1:28Stephen J. Dubner?

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• 2:17Stephen J. Dubner?

  Last week on the show, we started a conversation about the massive job loss from COVID-19.

• 2:22Speaker 01

  The true unemployment rate is probably around 19%, 20% right now.

• 2:28Stephen J. Dubner?

  No one was prepared for this.

• 2:30Speaker 02

  If a year ago, the same person had brought me this table of statistics and said, "This is what I calculated," I would have said, "You did something wrong."

• 2:39Stephen J. Dubner?

  So how will reemployment happen? Last week, the US Department of Labor delivered a huge surprise. Its jobs report for the month of May found that the economy, rather than losing another 8 million jobs, as was predicted, actually added back 2.5 million jobs. That said, the unemployment rate is still higher than it's been since the Great Depression, and a lot of the lost jobs in retail and restaurants, for instance, are unlikely to return anytime soon. Many high-income employees, like consultants and lawyers and middle managers, will suffer, but a lot of lower-paying jobs may simply disappear, whether due to lack of demand or the increase in automation.

• 3:22Stephen J. Dubner?

  Last week, we looked at one employment policy that was designed to help a certain category of low-income employee: former prisoners, often young men without a college degree. The policy is called "Ban the Box," and it got rid of the box that job applicants used to check to indicate that they had been in prison. The idea was that employers would be less likely to rule out such an applicant early in the process and give them a better chance of getting hired. But the policy has mostly backfired, punishing applicants who hadn't been to prison but who shared demographic traits with many young men who had.

• 3:59Speaker 03

  So we found that, on average, across the US, in places that banned the box, employment fell by 5% for young black men who didn't have a college degree and by 3% for young Hispanic men who didn't have a college degree.

• 4:13Stephen J. Dubner?

  Making good economic policy is hard, even in a stable economy. In a crisis like the current employment crisis, even harder. Today on Freakonomics Radio, what kind of policies are being considered or should be? What happens if millions and millions of lost jobs never come back? And what kind of lessons, especially terrible lessons, can we learn from the past?

• 4:50Speaker 04

  From Stitcher and Dubner Productions, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

• 5:07Stephen J. Dubner?

  The first half of this episode features our one guest today who is not an economist. Andrew Yang is a former lawyer, turned entrepreneur, turned Democratic presidential candidate, who didn't win many primary votes, but he did win a great deal of attention, primarily for his diagnosis of the US economic malaise and one bold proposal to treat it, a universal basic income, or UBI, of $1,000 per month for every American adult. Yang has been on our show before, episode number 362, if you want to hear it. We also did an episode back in 2016 called, "Is the World Ready for a Guaranteed Basic Income?" Episode number 242.

• 5:51Stephen J. Dubner?

  So let me ask you this, I guess, the big question. You've been preaching a job loss apocalypse due to automation. Instead, we got a job loss apocalypse nationally, globally, due to a pandemic. How does this change your thinking about the diagnosis, the prognosis, and UBI?

• 6:10Speaker 05

  It changes the timeline and the urgency. The reality is that this is accelerating the automation of many of our industries and jobs. Hundreds of thousands of retail jobs are gone for good. And many of the companies that were on the fence about investing in technology to automate work have doubled down during this pandemic for obvious reasons. So we need to adopt universal basic income today, right now. And we need to do it in a much more dramatic way than even what I was championing. In large part because we're facing depression level unemployment statistics that yet understate

• 6:54Speaker 05

  the calamity in our labor markets. Right now, fewer Americans as a portion of the population are working than has ever been recorded in our country. And many of these jobs are gone for good. So we need to get money into people's hands immediately to prevent the unthinkable from happening right here in the United States. And we're already seeing multi-hour-long food lines and material scarcity in communities around the country that is going to get worse, not better.

• 7:25Stephen J. Dubner?

  There's a new working paper by a trio of economists which estimates that forty-two percent of recent COVID-related layoffs will result in permanent job loss and that the loss will be spread very unevenly between industries. So tell me how you see rehiring happening and especially what lessons there might be, good or bad, from rehiring after the Great Recession?

• 7:52Speaker 05

  The Great Recession is a phenomenal reference point where what we did is we bailed out the banks and then said, hey, banks, lend money to small businesses that will then rehire. Obviously, none of that actually happened. And so the danger is that we try the same approach this time. We have to adopt an everything-on-the-table approach to creating jobs in this country. So number one is putting money into people's hands, which will help shore up jobs in people's communities, because if you have money to spend, then the local businesses will get some of that money and will have a better chance of staying open. Number two, we have to put money into state governments and hospitals and nonprofits.

• 8:36Speaker 05

  And schools and healthcare orgs that are firing people right now and say, look, don't fire people. Your finances will be secure. The third thing is the government should start employing people directly for things like contact tracing of infected patients. We're short hundreds of thousands of workers to do that sort of work around the country. Infrastructure, that stuff will take time, but you still should start it immediately because we're going to be short tens of millions of jobs for the foreseeable future. And when someone's out of work, what you want to prevent them from doing is from leaving the workforce entirely, which many people will do after a period of, let's call it,

• 9:20Speaker 05

  three, six, seven months. So that's the time that we have to try and beat. It's like an hourglass and the sand is ticking away for many, many Americans.

• 9:32Stephen J. Dubner?

  What could the federal government do right and wrong in the coming months having to do with reemployment? How could they either really help the tide turn and get more people rehired? How could they turn this into a long lasting depression?

• 9:48Speaker 05

  The simplest way to turn this into a long lasting depression is to not do enough. Right now, our economy is $21 trillion a year pre crisis. If you have a $21 trillion fire, you don't worry about how much water you're putting on the fire. You just put the fire out. So if you want a great depression, all you have to do is do nothing or do not enough. 30% of small businesses may close forever. One thing I think the government should have done more of is to just become the payer of first resort. The big problem right now is that we're trying to get money into the hands of people and businesses and our systems are not designed to do that. And so all of these people and organizations and companies are falling through the cracks.

• 10:32Speaker 05

  Instead, we should have just had the government say, look, don't worry about it. Just send us your bill, send us your rent payment, send us your fuel bill. We'll take care of it. You know, this is something that our government could do rather than adopt this, we're going to get money to use, you can pay your bills and then miss millions of people and millions of businesses.

• 10:53Stephen J. Dubner?

  Let's pretend for a moment that Joe Biden wins the presidency in November. What would be a good position for you in a Biden administration?

• 11:00Speaker 05

  I talked to Joe last week about some of these needs. We need a new Marshall Plan scale initiative to rebuild our country to avoid a new Great Depression. But I want to be contributing in any way I can to help get us out of this historic crisis that we're going to be dealing with for years. The scars from this time will be long and deep. Millions of these jobs are gone for good. And the sooner we accept that reality, the sooner we can start focusing on what we're going to do to help give millions of Americans a path forward. The big change we have to make is we have to start measuring our economy and our progress by how we are doing, how our families are doing.

• 11:45Speaker 05

  Right now, the measurements we use are leading us the wrong direction. Stock market prices go up even when you have record layoffs. GDP will go up, well, it's not going to go up now because we're, you know, entering a deep, deep recession. But GDP and our families' well-being now have very little relationship. What we have to do is we have to start measuring our well-being by our health, our mental health, our kids' success rates, our environmental sustainability. And then you start investing massive levels of resources to try and make it better, which

• 12:24Speaker 05

  would include creating tens, hundreds of thousands of counseling jobs and healthcare and mental health professionals' jobs to try and improve that measurement. That, to me, is our best-case scenario, where we modernize our economy around how we are doing, and then we create millions of new jobs to help improve our way of life.

• 12:52Stephen J. Dubner?

  Much of Yang's energy is still directed at his core campaign issue, the need for a universal basic income. He set up a nonprofit called Humanity Forward, which has helped launch a UBI pilot program in Hudson, New York, a city of fewer than 7,000 people, a couple hours north of Manhattan.

• 13:10Speaker 05

  Hudson, to me, is like every town USA in many, many respects.

• 13:13Stephen J. Dubner?

  How so?

• 13:14Speaker 05

  Well, Hudson's diverse. It's got a lot of poverty. A third of the residents are below the poverty line.

• 13:20Stephen J. Dubner?

  20 families there will each get $500 a month for five years.

• 13:24Speaker 05

  If you know you're getting money for five years, I mean, that could really change your planning in a way that's different from even one or two years.

• 13:32Stephen J. Dubner?

  A two-year UBI pilot program was recently completed in Finland.

• 13:37Speaker 05

  Well, the Finland study, the findings were very positive and exciting. And they said that people feel more positive, more optimistic, more trusting, stronger, healthier, mentally healthier when they're receiving this kind of cash supplement. I do want to share that the biggest trial going on, universal basic income, is the Y Combinator research trial that is $75 million over three years with randomized participants and double-blind studies. So their data is going to be a treasure trove. And I'm super excited about the findings because I'm very optimistic. They're going to be positive.

• 14:17Stephen J. Dubner?

  Tell me about any conversations you've had with Barack Obama about universal basic income.

• 14:24Speaker 05

  I talked to Barack about this issue a number of days ago. And one of the data points he said that drove him to think bigger about this issue was the financial crisis in 2008, where he saw that firms did not rehire on the way out the way that you would hope. They figured out that they could do more with fewer workers. And after that, he said, "We should start thinking about a shorter work week because that would create jobs at the margins and would have other benefits as well."

• 14:59Stephen J. Dubner?

  So we're starting to hear more and more about what sounds like and looks like a UBI coming from Democratic leaders in DC. Talk to me about how involved you've been in those conversations and that proposal.

• 15:14Speaker 05

  I've been in contact with... Maybe a dozen members of Congress, almost all of whom have signed on to the emergency cash relief bill that right now is championing $2,000 a month for every American for the duration of the crisis until we bounce back to pre-pandemic levels of employment.

• 15:34Stephen J. Dubner?

  How much will it cost and where will the money come from?

• 15:37Speaker 05

  If you look at precedent, when we were in exigent circumstances like this during wartime, we spent over 20% of GDP. So if you extrapolate that to today, you're looking at four, five, six trillion dollars over time to help dig us out of what could be another great depression. And as for where the money comes from, the money comes from the same place that the 1.5 trillion in corporate tax cuts came earlier in Trump's term. We produce it. But right now, we have this ability to actually make money and we need to use it and put that money into people's hands as soon as possible.

• 16:21Stephen J. Dubner?

  And what's the purpose in making these payments across the board and not means tested? I mean, I am working fully. I don't need $2,000 a month. My family doesn't need it. So why would it go to everyone? Why would there be no income cutoff?

• 16:38Speaker 05

  Say three things about it, Stephen. Number one, we can send you the money this year. And then if it turns out you didn't need it because when you file your 2020 taxes, you were just fine, then we can just claw it back in that year's taxes or even the following year's taxes. So you'd rather be over inclusive than under inclusive in this circumstance because you can just get the money back. Number two, if you use 2018 tax returns, which is what the government has been using, there are many people who had good years in 2018 that are in desperate circumstances now. The third thing is that many Americans didn't file taxes in 2018. There are many Americans who are falling through the cracks through the current means of distributing money.

• 17:23Stephen J. Dubner?

  Do you think there's a way, if you look down the road, let's say three years, five years now, that the need or the desire for UBI can become a bipartisan endeavor? Or do you think it will, like just about every other economic policy, become riven, you know, split between Republicans and Democrats?

• 17:46Speaker 05

  Right now, the vast majority of Americans agree that this is the right approach. And that's the majority of both Democrats and Republicans. A survey just came out that 76% of all Americans support direct cash payments to everyone. So I'm optimistic it will be bipartisan. Republicans historically are not that against money in people's hands and economic independence and autonomy. Republicans tend to be against large bureaucracies that make a lot of people's decisions for them. And universal basic income does not create any new bureaucracy. It puts the resources into people's hands.

• 18:23Stephen J. Dubner?

  Unless the Democrats capture more power in Washington in this fall's election, Andrew Yang's optimism is unlikely to be rewarded. House Democrats recently passed a $3 trillion aid package, including an extension and expansion of direct cash payments that both chambers passed in the earlier CARES Act. But Mitch McConnell, the Senate Majority Leader, declared this new Democratic package dead on arrival in the Senate. A Republican congressman from Virginia, Ben Klein, called it "a socialist wish list." So assuming the US is not looking at universal basic income anytime soon, what will help keep the pandemic-induced job apocalypse from turning into another Great Depression?

• 19:08Stephen J. Dubner?

  We'll find out right after this.

• 19:19Stephen J. Dubner?

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• 20:00Stephen J. Dubner?

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• 20:21Stephen J. Dubner?

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• 20:54Stephen J. Dubner?

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• 21:32Stephen J. Dubner?

  We recently spoke with Abigail Wozniak, a research economist at the Federal Reserve Bank of Minneapolis. Wozniak sees a tension within the rapid-fire policy moves Washington made to fight the massive job losses from COVID-19.

• 21:47Speaker 02

  So I think if you were trying to pull out two-word summaries around the labor and employer policy conversation, you could pull out two sets of two-word phrases.

• 22:01Stephen J. Dubner?

  The first one?

• 22:02Speaker 02

  The first one is "don't target." And there was a lot of conversation about just get aid out the door. Don't be picky about who is getting it and don't try to evaluate need or fine tune quantities.

• 22:17Stephen J. Dubner?

  This is the same sentiment Andrew Yang was endorsing for a universal basic income. And this is how, under the CARES Act, most Americans under a certain income level were sent checks for $1,200 with no conditions, along with cash payments for their children.

• 22:32Speaker 02

  And then the second two-word summary would be, everybody freeze. The idea was, let's try to preserve what's here and somehow get money out that is going to allow whatever exists now in the economy, you know, at the middle of March, to still be there in July or whenever we thought this was going to resume.

• 22:54Stephen J. Dubner?

  The freezing was meant to slow the spread of the coronavirus itself. One incentive in that direction? A benefit that came to be called unemployment insurance on steroids. Additional $600 weekly unemployment payments for employees who were separated from their employer.

• 23:10Speaker 02

  So even though you think you're not targeting, you're generating perhaps an incentive for people to change what they were doing. But that conflicts with the everybody freeze instinct because you've just encouraged people to change what they're doing. And so the concern is that potentially that don't target impetus led to payments that are so generous that in fact, they encourage separations.

• 23:36Stephen J. Dubner?

  In other words, unemployment payments may be exacerbating unemployment because they are conditional on not being employed.

• 23:45Speaker 02

  Once you give a large amount of money to folks, it potentially changes their behavior.

• 23:50Stephen J. Dubner?

  For instance, an employee who was laid off and who got the unconditional $1,200 benefit and is also receiving unemployment on steroids, may not be so eager to go back to work, especially with the active threat of COVID-19.

• 24:04Speaker 02

  Economists really hold it as a truism that people respond to incentives. And we're not necessarily saying that folks are bad for wanting to receive benefits that they were promised under law that are very generous. We may wish that we hadn't offered that, but that's a different scenario. And so, yeah, if you are strongly incentivizing them to do one thing, it's going to take a special person to kind of leave that money on the table.

• 24:36Stephen J. Dubner?

  And that is where the tension lies between the don't target and everybody freeze.

• 24:41Speaker 02

  And so we probably need to try to understand what the right balance is between preserving matches that we have and making sure that businesses can recover as quickly as possible. But at the same time, we're facing potentially a fundamental shift in what our economy, what we will want it to look like.

• 25:02Stephen J. Dubner?

  What the economy will look like is, of course, impossible to say, prediction being largely a fool's game. But it's a good bet we will see a substantial reallocation of jobs. Some sectors have been seriously damaged, while others have gotten a boost. It's also a good bet we won't return to full employment anytime soon. So are there any ideas to at least spread the pain? Here's the economist Betsy Stevenson.

• 25:29Speaker 01

  We still have time for good public policy choices that will reduce the amount of permanent job loss, that will help workers stay attached to their jobs, that will help businesses stay afloat.

• 25:47Stephen J. Dubner?

  Stevenson teaches at the University of Michigan. She's a former chief economist at the US Department of Labor.

• 25:53Speaker 01

  There are some programs out there that have not been widely promoted, but are there, like work sharing. If more employers filed for work sharing support, they could bring back more workers at part-time hours and part-time pay and let the federal government chip in some of the rest of their pay through unemployment insurance. So if an employer decides to bring back 100% of their workers at 60% hours and 60% pay, they can all get 40% of their unemployment insurance check, plus 100% of that $600 pandemic relief check.

• 26:38Speaker 01

  And the hope would be that The demand that that business faces from their customers will grow. As it grows, they will be able to bring their workers from 60% hours up and eventually reaching 100% of hours. It's the fastest way to reemploy people is to take them back to their old jobs.

• 27:00Stephen J. Dubner?

  And that's because the reallocation of workers is full of friction. Think about someone who used to work in the airline industry or the live entertainment industry, both of which are in terrible shape at the moment. Think of them trying to switch into marketing or logistics. Abigail Wozniak again.

• 27:18Speaker 02

  I would say a couple of years ago, at least, you would often hear as a refrain the idea that people who thought they were going to go into manufacturing should really just change their minds and they should go into medical work and in particular, they should become RNs.

• 27:35Stephen J. Dubner?

  Wozniak, in fact, has written a paper about the influx of men into nursing over the past few decades. It's been a tenfold rise since 1960.

• 27:44Speaker 02

  And I would say the post-Great Recession version of that refrain was learn to code. But both of them were just like these rules of thumb for here's a growing sector. We anticipate that it's going to keep growing and that's probably true. And why aren't more folks who seem connected to sectors that are likely to shrink, making the switch over to these growing sectors? By looking at folks going into RN work and in particular, men moving into RN work, I thought it would be a useful case study of what factors lead to this either non-traditional or less anticipated or new choice of work.

• 28:23Speaker 02

  Unfortunately, what I can't point to is a bunch of ready solutions. So what I mean by that is we found that proximity to two and four-year colleges is something that leads to higher rates of men going into RN work. That's potentially a recipe we could apply. It won't be without its challenges, but it's a policy lever we might pull. Unfortunately, another really big factor we found was that really it's good times that are strongly predictive of the rates of folks switching into these new sectors. And what I mean by that is that in boom times, we saw men going into

• 29:06Speaker 02

  our end work in greater numbers. People make big changes when times are good, when there's a safety net to fall into in that you could go back to your old job. You do not tend to make these big shifts when the sky is falling.

• 29:26Stephen J. Dubner?

  But the sky has been falling with millions of workers unsure what comes next. And it's more than that. There's also the feeling that no one is looking out for them. This is one downside of how the US job market is set up. It is a particularly dynamic system. Firms grow fast, shrink when they need to pivot to another sector if they have to. That's one thing that distinguishes American capitalism from the more regulated and moderated capitalism you see in much of Europe and in Canada. And those countries have responded to pandemic job loss differently. They try to preserve the link between employer

• 30:06Stephen J. Dubner?

  and employee by dispersing financial aid through firms rather than through the unemployment system. These governments have been paying idled employees 60 to 90% of their wages through their employer. Some Americans think this might work well here. Abigail Wozniak does not.

• 30:27Speaker 02

  I think that I'm probably ready to be done making the US-Europe comparisons. I'm not sure that it's helpful to moving policy forward in the US. So in an emergency, you have to work with what you have. And the reason Europe and other countries are able to do things differently, whether it's in the labor market institution side, or it's in the test and trace side, the reason they can do things differently is that they have a different set of institutions in place right now, today, that they're working with. And might those institutions provide better long run outcomes? Maybe. But we don't have those institutions and we're not going to build them in the next week.

• 31:11Speaker 06

  Well, the way I look at it, this crisis has been a Confirmation of the critical role of institutions and how much US institutions have suffered over the last few years.

• 31:27Stephen J. Dubner?

  That's Darren Asimoglu, an economist at MIT and co-author of Why Nations Fail: The Origins of Power, Prosperity, and Poverty.

• 31:37Speaker 06

  We have completely failed in dealing with this crisis. And this is nothing but a colossal failure of our institutions.

• 31:48Stephen J. Dubner?

  Asimoglu points to South Korea, Taiwan, and Germany as places that have used their institutions well on both the public health and economic fronts. The German unemployment rate, for instance, is still below 6%. In his book, Why Nations Fail, Asimoglu writes of another pandemic, the Black Death, the 14th century plague estimated to have wiped out more than half the population of Europe. It was, Asimoglu writes, "a critical juncture in European history. In some countries, it disrupted the existing economic and political balance in society." And as he puts it, "it broke the cycle of extractive institutions while enabling more inclusive ones to emerge," at least in some places.

• 32:33Stephen J. Dubner?

  Covid-19, Asimoglu makes clear, is nothing like the Black Death as far as human suffering.

• 32:39Speaker 06

  But it is a critical juncture because it has really disrupted the existing system, both the global order, national economies, infrastructure, public services. And it has created an environment in which different countries are going to go in different directions.

• 32:57Stephen J. Dubner?

  He sees four directions the US could go in.

• 33:00Speaker 06

  The first one is essentially doubling down on what we have. There will not be a renewal in our efforts to strengthen the healthcare system. It's not going to strengthen autonomous agencies such as CDC, the Fed, EPA, and so on. And this scenario will not solve any of our existing problems.

• 33:22Stephen J. Dubner?

  So option one is status quo-ism, and not very encouraging.

• 33:26Speaker 06

  The second scenario is no less dangerous. We could learn the wrong lessons from the current crisis and we can say, "Look, the countries that have been successful, like China, are the ones that are authoritarian." So we have to become more authoritarian. It's the democracies that are the shackles on our effectiveness. But what enabled those successes is exactly the depth of capacity and expertise in Chinese bureaucracy, which has a history of going back 2,500 years, so to speak. So if we went with the strategy in the United States, for instance, we would be doing not China, but China light.

• 34:01Stephen J. Dubner?

  In other words, we'd get the worst of both worlds, authoritarianism minus the efficiency.

• 34:07Speaker 06

  There's a third path, which I think is no better, which is that we could learn yet another wrong lesson. We could learn that the state has continued to fail and is ineffective. And instead of the state, we have to turn to corporations.

• 34:21Stephen J. Dubner?

  An America run by Google and Facebook and Amazon and Microsoft? It may seem that's already the case, especially since all these firms have actually done well during the pandemic.

• 34:31Speaker 06

  And I think that's not a good future either, because, you know, big companies that are dominating the economy are ultimately responsible for part of the increasing inequality, part of the lessened democratic nature of the system.

• 34:47Stephen J. Dubner?

  So three of the four scenarios Asimoglu envisions are bad ones. But he does see one better option. It's essentially a repeat of how the US responded to the Great Depression.

• 34:59Speaker 06

  The lessons that politicians and experts learned during that period was that in a more dynamic, modern and globalizing economy, not having a strong social safety net, not having the right type of regulation, monetary policy, fiscal policy, all of those were very dangerous. And they opened the door to big crises, to inequality, to poverty, and ultimately to, you know, fascism in the case of Germany and Italy, for instance.

• 35:28Stephen J. Dubner?

  Again, it's important to stress that predicting the future is essentially impossible, especially on issues as complex as these, especially when there's so much volatility and uncertainty. But of course, we are all driven to predict the future, at least our own futures. If you work in a hard hit industry and you're in your 40s or 50s, what's your job future? Is an Amazon fulfillment center the best you can hope for?

• 36:00Stephen J. Dubner?

  What if you just graduated college? This wasn't the job market you thought you'd come into just a few months ago? And what if you just spent a couple of years in prison? Maybe for some minor, nonviolent offense? But still, you're coming out of prison in this job market.

• 36:17Stephen J. Dubner?

  On last week's show, the Texas A&M economist Jennifer Doleac told us how one policy called "Ban the Box" was designed to help former prisoners get jobs and not return to prison. There used to be a box to check on job applications. If you had a criminal record in many states, that box was removed because it was thought to be discriminatory. Now employers were left to guess which applicants had a record. And this, Doleac found, led to a different sort of discrimination. As employers hired fewer young Black and Hispanic men overall, including those without a criminal record.

• 36:56Speaker 03

  Right? They can just say, "Well, I'm just not going to interview any Black men because they might have a criminal record."

• 37:01Stephen J. Dubner?

  Doleac also found that this effect was more pronounced in a down economy.

• 37:05Speaker 03

  We were able to use the 2008 recession as a bit of a natural experiment to look at to what extent the detrimental impacts of "Ban the Box" varied depending on the national unemployment rate. And the idea there is that if employers have 100 job applications for every one spot they have open, they have a lot of power to discriminate.

• 37:26Stephen J. Dubner?

  So according to Doleac, "Ban the Box" is a policy with good intentions and poor outcomes. When she looked at other policies designed to help former prisoners stay out of prison, she saw they often failed too, including job reentry programs and even just placing ex-prisoners in jobs. So has Doleac seen anything that does reduce recidivism?

• 37:49Speaker 03

  So one type of program that I have become particularly interested in is programs or policies that... Just increased financial assistance for people coming out of prison. So just giving them money. It turns out there are a variety of different policies that in some form or another just give people money with no job attached. And a variety of studies have shown really beneficial impacts of that sort of financial assistance. And none of this is, you know, a slam dunk, but it's really promising.

• 38:20Stephen J. Dubner?

  How much money is, you know, proper or useful or maybe even optimal amount? And how long does this money need to keep coming?

• 38:29Speaker 03

  Those are both excellent questions that we don't have great answers to yet. So the studies that I think are most relevant to this, one was a sort of experiment in Chicago where you call into homelessness prevention center and you could apply for emergency financial assistance. And I think that it was up to about a thousand dollars. We're not talking, you know, tens of thousands of dollars.

• 38:52Stephen J. Dubner?

  Let's say I'm feeling a little skeptical or maybe even cynical and I say, well, wait a minute. Okay, that's nice that it works for them, but why should I reward or pay you for having committed a crime?

• 39:02Speaker 03

  So my response as an economist would be that the short run cost of giving someone a thousand dollars when they get out of prison to get on their feet is much lower than the long-term cost of having them cycle back through the prison system in a year or two. And so it could still be a very good investment.

• 39:22Stephen J. Dubner?

  And have there been any programs where there's a long-term cash payment?

• 39:25Speaker 03

  So there were a couple of experiments in like the 1970s where people coming out of prison were given unemployment benefits. The evidence from those is a little bit mixed, but that was also a really long time ago in a very different context. So I think of this as being an area where the current evidence is super promising, but we need a lot more research on this and it's something I'm actually currently working on, so I might have some answers for you sometime.

• 39:52Stephen J. Dubner?

  It sounds like you would probably at least personally support something like a UBI or some kind of extended benefits that are available to all?

• 40:01Speaker 03

  I would be supportive of a program that particularly targeted resources to people who are coming out of jail and prison, which might not be that politically popular with non-economists.

• 40:12Speaker 03

  I would probably be a little bit more skeptical of a UBI-type program. But, you know, I don't know, anything's possible in the current moment.

• 40:27Stephen J. Dubner?

  That's our show for today. As always, we'd love to hear your thoughts. We are at [email protected]. Coming up next week, we want you to hear what we've been up to in the no stupid questions department. We'll get into the science of happiness.

• 40:44Speaker 07

  There's really three aspects of happiness that are widely used.

• 40:47Stephen J. Dubner?

  And we talk sublimation, not the chemical kind, the psychological kind. So let me say first, I did love my mother, but I never wanted to marry her.

• 40:56Speaker 07

  Well, Freud wouldn't believe you, by the way.

• 40:58Stephen J. Dubner?

  I know he wouldn't. And I have my differences with Freud.

• 41:01Speaker 07

  He would say, there he goes coping.

• 41:03Stephen J. Dubner?

  That's next week. Until then, take care of yourself and, if you can, someone else, too.

• 41:13Stephen J. Dubner?

  Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zach Lepinski. Our staff also includes Alison Kreglo, Greg Rippon, Daphne Chen, Matt Hickey, Mary Duke, and Corinne Wallace. Our intern is Emma Terrell, and we had help this week from James Foster. Our theme song is "Mr. Fortune" by The Hitchhikers. All the other music was composed and performed by Luis Guerra. You can get Freakonomics Radio on any podcast app. If you want the entire back catalog, use the Stitcher app or go to Freakonomics.com, where we also publish transcripts and show notes. As always, thanks for listening.

• 42:01Stephen J. Dubner?

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• 42:32Stephen J. Dubner?

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• 43:05Stephen J. Dubner?

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• 43:42Speaker 08

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