Experiment: The effect of unconditional basic income and human capital accumulation on lifetime consumption and leisure pathways

2023-11-13

2023-11-16

The experiment yields key outcome variables in tokens (experimental currency units) and euro cents. At period level, we consider leisure in terms of utility (=eurocent), effort in terms of fraction of capacity, consumption in tokens and utility (eurocents), and whether participants decided to invest in human capital (Yes/No). At the lifetime level, we consider lifetime income (in tokens), lifetime utility (leisure + consumption), and human capital stock (level of human capital achieved). We contrast these empirical variables with the conditional and unconditional optimal decisions.

Next to absolute measures as taken from the experiments, we will consider measures to be different from theoretical conditional and unconditional consumption benchmarks following Duffy and Li (2019) in the first case but invent a new benchmark in the second case.

To control misunderstandings, we ask for self-reported abilities to speak English (we have a subject pool with mostly Dutch students), do mathematical calculations, and understand the instructions. In addition, we ask about the general willingness to take risks, as part of the tasks includes risk-taking. We make use of a 10-point Likert scale.

see above

During a 25-period lifetime consisting of a working phase and a retirement phase, the participants decide how much to work - to earn an income; the residual leisure earns utility, whether to invest in human capital - to improve productivity, yielding a higher income, and to consume income - yielding consumption utility – or save – earning interest. The project enriches the literature on life-cycle models (Duffy and Li, 2019), unconditional basic income (Füllbrunn et al., 2019), but stated-effort experiments (e.g. Charness et al., 2018).

- Charness, G., Gneezy, U., & Henderson, A. (2018). Experimental methods: Measuring effort in economics experiments. Journal of Economic Behavior & Organization, 149, 74-87.
- Duffy, J., & Li, Y. (2019). Life-cycle consumption under different income profiles: Evidence and theory. Journal of Economic Dynamics and Control, 104, 74-94.
- Füllbrunn, S., Delsen, L., & Vyrastekova, J. (2019). Experimental Economics: A Test-Bed for the Unconditional Basic Income?. Empirical Research on an Unconditional Basic Income in Europe, 171-199.

Not available

Participants subscribed to Orsee (Greiner, 2015) and will be invited to participate considering a list of sessions. Participants can only take part in one session.

Individual students take part in the sessions, i.e. there is no clustering.

No

We invite students from one faculty.

We plan to have 200 student participants.

We plan to have 50 students per treatment; the Duffy & Li (2019) experiment had about 30 student participants.

Simple treatment comparisons allow us to detect an effect size of 0.565 or higher, assuming α=0.05 and 1-β=0.8 (Faul et al. 2008). Based on our new environment and the different dependent variables, we cannot meaningfully provide information at the unit, standard deviation, or percentage level. Faul, F., Erdfelder, E., Lang, A. G., & Buchner, A. (2007). G* Power 3: A flexible statistical power analysis program for the social, behavioral, and biomedical sciences. Behavior research methods, 39(2), 175-191.