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Amirhosein Rahbari
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Universal Basic Income, Social Cohesion, and Social Contract in Iran
Amirhosein Rahbari
go!
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Research Ideas
Social Contract
Social Cohesion
A future reform?
Yarane Features and History
Iran's Profile
Why UBI? Why Iran?
My Profile
Lorem ipsum dolor sit amet consecteteur
Index
Page 1
Toloo Mehr Doosti
Save the ChildrenUNDP: socialprotection.org
Experience
Social protection and climate change adaptation
SocialProtection
Perceived injustice
Psychology
Peace with Nature
NGOs
Researcher's Profile
Page 2
A social protection programme that unconditionally transfers cash to all individuals (Gentilini et al., 2020, p. 3).UBI is a highly controversial topic and is considered by the ILO as a “radical” policy instrument (Ortiz et al., 2018, p. 1).
Universal Basic Income (UBI)
Page 3
(Mathebula, 2021)
Arguments
Social
Political
Economic
A review of UBI studies indicate that it (Hasdell, 2020):ameliorates poverty and contributes to human capital and well-being with limited impacts on the labour market involvement.
Why UBI?
(Kidd et al., 2022, p 30)
Page 4
Social registry and (proxy) means testing
(Kidd & Athias, 2019, p 48)
(Kidd & Athias, 2019, p 26)
Inclusion Errorand Low Impact
Informal Economy
(ILOSTAT 2023)
(Staab, 2020, p. 218)
Why UBI?
Page 5
- UBI in practice?
- Iran’s (quasi) UBI programme is the only one the world still working nationwide (Gentilini et al., 2020, p. 254)
- This UBI programme has been in place for more than 12 years
- Right-based
- Has implications for climate mitigation
- Has lessons for countries providing subsidies
- Lots of ups and downs, countless opportunities for research
- Very limited studies
- Numerous polititions opponing the universality of the programme, blaming it for inflation, unemployment, and inefficiency (this money could be used in the supply side of the market)
Why Iran?
Page 6
UBI in Practice
Targeted Subsidies Reform LawCash subsidyYaraneیارانه
Page 8
Individuality
Adequacy
Universal
Unconditional
Financed by subsidy reform
Cash based
PeriodicMonthly
Features
$4 per person
Page 9
UBI expenditure: 80% of the reform revenue, $4.8b per month.
History
2010
Subsidies Reform Act Passed
2011
First phasearound $40 per personA family of four received $160 per month
2019
Second phaseNo compensationcausing casualties and deaths
2022
Food subsidy removal$10 per personThe top economic decile is excluded
202X
Future reforms?Natural gas, fuel, electricity, water?
Page 10
(IEA, 2022)
Page 11
Author's own illustration, based on Plan and Budget Organization data
Page 12
Unequal Distribution of Oil Revenues
Page 13
"Each year $80 b is paid for fuel subsidies, while all oil industry earned $43 b last year."Javad Owji, Minister of Petroleum, 2022This means that the UBI can scale-up to around $40 per person, if half of $80 b were available to 85 million people.
Possibility of a Transformative Policy
Page 14
Impact
- Reducing poverty (Salehi-Isfahani et al., 2015).
- Less inequality (decreasing the Gini index from 0.39 to 0.36), but lower consumption(Zarepour & Wagner, 2022, p. 10)
- demand for most energy products dropped
- Labour supply did not change in the first year, but female employment fell by 2 per cent. Why?
- Bargaining power of workers?
- Spill-over effects?
- Buying assets in instalations and receiving loans (lump-sum money) using UBI
- Borrowing and lending
Page 15
Idea:Envy-free and strategy-proof rules ------> Trust in others and cooperation with others for a common goodRenegotiation-proof and self-enforcing-------> trust in institutions and cooperation with the government for a common good
Leininger et al.’s (2021, p. 4) proposed model of social cohesion: “cooperation, trust, and inclusive identity” components that act vertically and horizontally.This model allows for evaluating social cohesion
Social Cohesion
A context with low trust and cooperation among individuals would deteriorate the intended results
Page 16
Social Protection and Social Cohesion (SP-SC)
The SP-SC nexus has not so far been fully investigated but literature suggests connections (Burchi et al., 2022, p. 1197). These connection
Citizens and the government
Division between rich and poor
Horizontal trust
Social inclusion (gender lens) and social interactions
Vertical trust towards institutions
Horizontal SC mediating in the outcomes of SP
Page 17
Accountability
Right-based SP and not hand-out
(Loewe et al, 2021, p 7)
- Accontability and social protection leading to democratic and socially just form of social contract (Hickey and King, 2016)
- Social contract deliverables
Social Contract and Social Protection
Page 18
(Davies et al., 2022)
(Neumärker)
Ex-post socially just outcomes
Strategy-proof
Renegotiation-proof
Self-enforcing
Envy-free
New Ordoliberalism
Social Contract
Research Ideas
Page 19
The Same Results in Iran?
(Financing)
(Coverage)
Page 20
1. How do financing mechanisms affect VSC?2. How does introducing UBI and a targeted programme under different financing impact envy, social contract renegotiation, and the strategy proof?
UBI/Targeted (Coverage)Taxed/Subsidy Reform (Financing)
Page 21
- Computer-based, but others' income and wealth is observable
3rd evaluation
Baseline
1st evaluation:Trust in institutionsEnvyWillingness for renegotiation
Intervention
Token allocation and expenditure (cards as assets) for 12 rounds+Shocks will be introduced randomly
2nd evaluation
Intervention 2
New systems:- subsidy-based UBI and targeted- Tax-based UBI and targeted- none
After 12 rounds under the new system
Page 22
1. What is the impact of vertical social cohesion (VSC) (especially societal-government trust and cooperation) on the acceptance of subsidy reform to finance UBI?2. What is the impact of currency inflation on acceptance of UBI implementation?
Procedure after signing the consent form and providing demographic information:1. Evaluating VSC by asking about their trust in institutions and participation in governance via a valid designed questionnaire.2. Randomly assign participants in Rial and Euro groups3. beginning from those least appealing (with the highest cost-to-benefit ratio) to most appealing proposals“What is your opinion regarding the subsidy removal that increases the fuel price to ________ per litre but with a monthly UBI transfer of __________ per person?” “Fully support,” “Do not support”3. Hierarchical multiple regressions will calculate whether VSC significantly contributes to the acceptance of new policies.4. Interviewing the participants about the reasons for their choice
UBI Acceptance and VSC
Unforseen Contingencies
Shock-proof Basic Income
Climate change adaptation and disaster risk management
Adaptive
Shock-responsive
Climate change adaptation and emergency aid
Page 23
- Covariate shocks: Climate-induced, pandemics, natural events, war
- Addressing climate inequality
- Right-based
- Automated: Early warning systems + social registry + other relevant information systems (ie. climate vulnerability)
- Ex-ante policy for possible shocks and ex-post mechanism for unforseen contingencies
Adaptive and Shock-responsive Basic Income and ex-post governance for unforeseen contingencies
Page 24
- Female employment decreased by 2 per cent. Why?
- Who should receive the children's UBI (Uganda case)?
- Low horizontal social cohesion: conflict between spouses can impact the results of UBI by damaging its renegotiation-proof and envy-free principles
Gender Lense and Social Cohesion
Page 25
- The top income decile exclusion (6 million) faced a massive complain (5 million). Among which 3 million re-entered the programme. But why the rich did not want to give up the transfer even when it was $5?
Excluding the Rich
Page 26
Wouldn't it simpler and more sustainable to earmark a fix percentage of GDP to finance UBI in return for subsidy removal (VAT) and automating the transfer? Instead of using savings from subsidy removal?Examining how possible subsidy reform and UBI scaling up may affect households with differing sizes, incomes, and fuel consumption levels. This analysis will allow us to identify potential winners and losers of such new policies.
Microsimulation
Page 27
- Burchi, F., Loewe, M., Malerba, D., & Leininger, J. (2022). Disentangling the Relationship Between Social Protection and Social Cohesion: Introduction to the Special Issue. The European Journal of Development Research, 34(3), 1195–1215. https://doi.org/10.1057/s41287-022-00532-2
- Davies, C., Franke, M., Kuang, L., & Neumärker, K. J. B. (2022). A contractarian view on homann's ethical approach: The vision of" new ordoliberalism". The Constitutional Economics Network Working Papers. http://hdl.handle.net/10419/262011
- Gentilini, U., Grosh, M., Rigolini, J., & Yemtsov, R. (2020). Exploring Universal Basic Income: A Guide to Navigating Concepts, Evidence, and Practices. Washington, DC. World Bank. https://documents1.worldbank.org/curated/en/993911574784667955/pdf/Exploring-Universal-Basic-Income-A-Guide-to-Navigating-Concepts-Evidence-and-Practices.pdf
- Hickey, S., & King, S. (2016). Understanding social accountability: Politics, power and building new social contracts. The Journal of Development Studies, 52(8), 1225-1240
- Hasdell, R. (2020). What we know about universal basic income. Stanford Basic Income Lab. https://basicincome.stanford.edu/uploads/Umbrella%20Review%20BI_final.pdf
- IEA. (2022). Value of fossil-fuel subsidies by fuel in the top 25 countries, 2020. International Energy Agency. https://www.iea.org/data-and-statistics/charts/value-of-fossil-fuel-subsidies-by-fuel-in-the-top-25-countries-2020
- ILOSTAT. (2023). SDG indicator 8.3.1 - Proportion of Informal Employment in Total Employment. https://www.ilo.org/shinyapps/bulkexplorer54/?lang=en&id=EMP_NIFL_SEX_GEO_NB_A
- Kidd, S., & Athias, D. (2019). Hit and miss: An assessment of targeting effectiveness in social protection. https://www.developmentpathways.co.uk/wp-content/uploads/2019/03/Hit-and-miss-long-report-.pdf
- Kidd, S., Athias, D., Nastasi, S., & Pop, A. (2022). Inequality and social security in the Asia-Pacific region. USA. UNDP. https://www.undp.org/publications/inequality-and-social-security-asia-pacific-region
- Leininger, J., Burchi, F., Fiedler, C., Mross, K., Nowack, D., Schiller, A. von, Sommer, C., Strupat, C., & Ziaja, S. (2021). Social cohesion: A new definition and a proposal for its measurement in Africa (31/2021). Discussion Paper. https://doi.org/10.23661/dp31.2021
- Mathebula, B. (2021). The universal basic income grant (UBIG): A comparative review of the characteristics and impact (2021/01). Social Policy in Demand: A Working Paper Series. https://doi.org/10.18418/978-3-96043-089-6
- Loewe, M., Zintl, T., & Houdret, A. (2021). The social contract as a tool of analysis: Introduction to the special issue on “Framing the evolution of new social contracts in Middle Eastern and North African countries”. World Development, 145, 104982
- Ortiz, I., Behrendt, C., Acuña-Ulate, A., & Anh, N. Q. (2018). Universal Basic Income Proposals in Light of ILO Standards: Key Issues and Global Costing. ILO. https://doi.org/10.2139/ssrn.3208737
- Salehi-Isfahani, D., Wilson Stucki, B., & Deutschmann, J. (2015). The Reform of Energy Subsidies in Iran: The Role of Cash Transfers. Emerging Markets Finance and Trade, 51(6), 1144–1162. https://doi.org/10.1080/1540496X.2015.1080512
- Staab, S. (2020). Social protection for women informal workers: perspectives from Latin America. In The Informal Economy Revisited (pp. 215–220). Routledge. https://www.taylorfrancis.com/chapters/oa-edit/10.4324/9780429200724-38/social-protection-women-informal-workers-silke-staab
- Zarepour, Z., & Wagner, N. (2022). Cash instead of subsidy: Assessing the impact of the iranian energy subsidy reform on households. Energy Policy, 168, Article 113145, 1–11. https://doi.org/10.1016/j.enpol.2022.113145
References
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Procedure after signing the consent form and providing demographic information:
- Baseline: evaluation before starting the experiment:
- Participants will be randomly assigned to one of three study groups: tax-financed, subsidy reform, or control
- Participants will be allocated a set number of tokens each round, representing their income group, which will be categorised as poor, vulnerable, middle-income, or rich. The poor income will be that less than their expenses, while the vulnerable will face a higher risk of falling into poverty due to various factors such as climate change, health issues, and other social and economic risks. The middle-class group benefit from social insurance and higher income. The rich will receive 15 times higher income than the middle-income and covered by different insurance schemes.
- Participants will be asked to spend on food, housing, and education every round, but they can lower their food consumption at a certain level or stop spending on education, if they have to.
- They cannot borrow/lend tokens
- The risks will be introduced randomly by tossing dice once every three rounds, with each number representing a risk to all, resulting to different levels of loss of tokens (representing the risks everyone face during life)
- *After 12 rounds, participants will be asked to evaluate their level of VSC (trust in the institutions), considering renegotiating for a system change and envy of others
- The government will then announce a new policy, which will differ across the three study groups: tax-financed group (progressive tax), subsidy reform group (or carbon tax on goods and services). In both cases, participants will receive UBI no matter the income.
- *In another cluster, a programme to fight poverty will be introduced, targeting those in the poverty group. Participants will learn about the targets of this programme and then will be asked their willingness to apply. Randomly, some of the registered poor will be excluded (exclusion error) while some of those registered for the programme in the vulnerable gourp will be accepted (inclusion error).
- Following 12 additional rounds with the new policy, the level of VSC will be once more evaluated. Participants will be briefly interviewed individually regarding their reasons for their trust level in institutions.
- There will be also a control group going through the same evaluations as other groups but without any change of policies