Sharing the Wealth

Would adoption of a Universal Basic Income help America become a healthier, more equitable nation? Studying the impact of tribal per capita payments within reservation communities could help answer this question.

By Randall Akee

Income from the Morongo Casino Resort & Spa allows the Morongo Band of Cahuilla Mission Indians in Cabazon, California to provide monthly per capita payments to all enrolled tribal members. Photo: The Jon B. Lovelace Collection of California Photographs in Carol M. Highsmith’s America Project, Library of Congress, Prints and Photographs Division.

In recent years, there has been increased discussion of Universal Basic Income (UBI) programs for the US. In fact, one of the Democratic candidates for president has championed the UBI program as an important component of his platform. UBI in its simplest form is a cash-transfer program that provides a guaranteed amount of income to recipients without any minimum income conditions, verification of unemployment status, or the presence of household children. Cash-transfer programs such as the Earned Income Tax Credit (EITC), unemployment insurance (UI), and Temporary Assistance for Needy Families (TANF) may require verification of several of those conditions described above. UBI, in contrast, sends government funds to all households regardless of their financial needs, employment conditions, or family composition. The rationale is that a basic level of income will provide households with resources that will allow them to make decisions unconstrained by government bureaucracy. A household may spend the money in areas where it needs it most – childcare, rent, health care, or anything else.

The United States has only a few examples of existing UBI-type programs. One immediate example is the Alaska oil and gas revenues that are paid to state residents through the Alaska Permanent Fund. This fund has paid state residents approximately $1,000-$2,000 per year since the early 1980s. A primary critique of this dividend is that it might deter employment by recipients; however, the amount provided is typically too small to completely compensate for employment earnings. Recent research has verified that there is little evidence that employment in Alaska was reduced as a result of these payments (Jones and Marinescu, 2018).

In American Indian tribal communities, an additional example exists of a UBI-type of program. Per capita payments that are derived from tribal casino revenues resemble UBI-type payments in several ways. These payments typically are provided to tribal members without regard for employment status, income levels, or the presence of children. In most cases, individuals receive their per capita payments even if they reside off of the reservation. These per capita programs often provide a percentage of their annual casino revenue to tribal members. These amounts differ year-to-year due to fluctuations in annual revenues. Additionally, the percentage allocated to the per capita transfers varies by tribe.

Based on existing data, as of 2009, approximately 120 tribes have approved Tribal Revenue Allocation Plans, which is a necessary first step to implement per capita payments to tribal members. Alternatively, tribal governments may use the casino revenues to fund tribal government programs and services and/or per capita payments. There is no comprehensive accounting for the total number of tribal governments that provide actual per capita payments, nor is there information on the size or frequency of tribal government per capita payments.

Randall Akee

Given the diversity of tribal per capita programs across the U.S., these examples should provide a useful prediction of the overall effects if a UBI program were to be implemented at a national level. However, there has been very little research on the impact of per capita payments on employment, educational outcomes and general wellbeing of tribal citizens. This is due to the lack of useful data to conduct the rigorous evaluation of these per capita programs. In fact, there is little data on the frequency, size or even existence of tribal per capita payments. Given tribal sovereignty, these governments are not required to publicly report these payments and often keep that information confidential as it can sometimes reveal tribal casino operations revenues. As a result, it is often difficult to assess the overall impact of these existing UBI-type programs.

The few analyses that exist have primarily looked at the impact of casino operations in total on outcomes. In many cases, it is easier to verify the existence of casino operations than it is to verify the existence of on-going tribal per capita payment programs. Casino operations are often available on tribal websites and other gaming industry-related websites.

Casino operations create a great deal of new economic and social activities in tribal communities. For instance, in counties with casinos, researchers have found reductions in both smoking and heavy drinking over time (Wolfe et al, 2012). It is possible that the casinos improve incomes, which is often associated with reduced smoking and drinking behaviors; alternatively, casino revenues often are associated with the provision of additional programs for problem drinking, gambling and health-related services.

Per capita payments may create additional impacts as well. Isolating each of these effects is often quite difficult when both exist or occur at the same time. Failing to account for one or the other of these programs may well lead to erroneous conclusions about the impact of either casino operations or per capita payment programs on important outcomes. One example of this is the failure to account for a trend of tribal members returning to their communities when casino operations begin in tribal communities. The presence of new employment opportunities as well as the provision of increased government services and programs (such as housing, health and education services) may be an important draw for tribal citizens that previously lived off-reservation.

In recent research, per capita payments are associated with increased poverty levels over time for twenty-four Pacific Northwest tribes. The work collects data on the poverty rate for tribal communities between 2000 and 2010 using U.S. Census and American Community Survey data (Guidel, 2014). In the analysis, the author shows that the average level of poverty actually increased over time as tribal casino revenues increased. The message is that per capita payments create bad incentives and reduce the work activities of tribal citizens. The change in the poverty level recorded in this research, however, is so slight that it could actually be attributed to chance or even year-to-year variation in survey methods and data collection. However, this research merely provides an association between per capita payments and increased poverty rates.

First, the difference in poverty rates between 2000 and 2010 is not statistically significantly different from zero; this means that the recorded poverty rate has not changed over time. While there may be slight differences in the actual numbers, these differences can be attributed to chance and the normal differences that occur in survey methods and data collection. It is not valid to make assessments of change in poverty rates when those differences are statistically insignificant. In essence, one is arguing that zero is a meaningful change in poverty status over time.

Second, the analysis is unable to detect a causal link between per capita payments and poverty. In fact, these results may have more to do with the return of tribal members to their communities discussed earlier, particularly when those who return have lower household incomes. Because the data used in the analysis is merely a cross-section at each point in time, it is unable to identify the incomes of the same individuals over time; the geographic unit remains the same over time but there is a flow of people on and off of reservations over time, especially in response to improved social and economic conditions. Lower income tribal citizens may find it beneficial to return to the reservation given improved housing options, employment opportunities and health programs that were financed through tribal casino revenues. On average, this may increase poverty rates in the short run, but it does not provide evidence that per capita payments deter people from working or cause an increase in poverty.

“Increasing household incomes for the poorest families generally improves both short and long-run conditions in the household”

In order to assess the impact of casino per capita payments, researchers require much more detailed data on the same individuals over time. Specifically, longitudinal data is required which follows people before and after the start of casino operations (and per capita payments). In work that I have conducted with various co-authors, we use the Great Smoky Mountain Study of Youth (GSMS) data which contains information on both American Indians (Eastern Band of Cherokee) and non-American Indians in twelve counties in western North Carolina from 1992 onward. This data follows individual children over time from adolescence into adulthood; the survey follows their parents until the child turns sixteen years old. Importantly, the data spans the opening of a tribal casino and the distribution of per capita payments. Our research design allows us to control for the presence of the casino and to test the differential effect of having additional household income during adolescence on child outcomes. We are also able to test whether parents respond to the additional unearned income from the per capita payments by changing their employment status. In our analysis, we find that parents do not change their employment habits; there is no evidence for statistically significant reduction in employment in full time or part time activities. For the children who reside in higher income households due to the tribal per capita payments (and come from the initially poorest households) we find that they have higher educational attainment at age twenty-one. There is also evidence that they are less likely to miss school during their teenage years as well. We find an improvement in parental and child relationships in households affected by the tribal casino per capita payments (Akee et al, 2010). Finally, we find that children in these households are also more likely to consistently vote as adults than their counterparts who were not exposed to the increased household income as children (Akee et al, 2018). Our findings are statistically significant and indicate a causal relationship between increased household incomes (via per capita payments) and the observed outcomes. Given our specific research design, we are actually able to hold the separate effect of tribal casino operations constant in our analysis; the results that we observe are primarily attributable to the effect of casino transfer payment effects.

Our results, while only for a single tribal government, indicate that increasing household incomes for the poorest families generally improves both short and long-run conditions in the household. An important caveat to this research is that our analysis is based on a single per capita amount. For the community studied, the amount provided was approximately $4,000-$5,000 on average in the early years. We are unable to comment on whether larger or smaller per capita transfers would have similar effects. In fact, there may be critical upper and lower thresholds, outside of which casino per capita payments (and similarly UBI payments) might be less than optimal. For instance, incredibly small payments may have little to no effect on household conditions or decisions. Extremely large payments may create unusual incentives for households to behave in a less than prudent manner with their income or resources. However, it is not possible given the relatively few studies on this topic to accurately describe the range of transfer payments that would result in the most desirable outcomes. Overall, it is quite likely that UBI-type payments may have a positive impact on the poorest households, where incomes are a significant obstacle to optimal investment or to affording household or individual necessities.

References

Akee, R. and J. Costello, W. Copeland, G. Keeler, and A. Angold. “Parents’ Incomes and Children’s Outcomes: A Quasi-Experiment with Casinos on American Indian Reservations.” American Economics Journal: Applied Economics, 2:1 (January 2010): 86-115.

Akee, R., Copeland, W., Costello, E. J., Holbein, J. B., & Simeonova, E. (2018). Family Income and the Intergenerational Transmission of Voting Behavior: Evidence from an Income Intervention (No. w24770). National Bureau of Economic Research.

Guidel, W. Gregor. “Sovereignty, Economic Development, and Human Security in Native American Nations.” American Indian Law Journal, Volume III, Issue 1, Fall 2014.

Jones, Damon and Ioana Marinescu. The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund. NBER Working Paper No. 24312, February 2018.

Wolfe, Bobbi, Jessica Jakubowski, Robert Haveman, and Marissa Courey. 2012. “The Income and Health Effects of Tribal Casino Gaming on American Indians.” Demography 49 (2): 499–524.

Randall Akee is an associate professor in the Department of Public Policy and American Indian Studies at UCLA. He is currently on leave to serve as a David M. Rubenstein Fellow in Economic Studies at the Brookings Institution. A research fellow at the Harvard Project on American Indian Economic Development and the Center for Effective Global Action at UC Berkeley, he is also president-elect of the Association for Economic Research of Indigenous Peoples (AERIP).

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