Universal Cash and Crime: An Interview with Brett Watson

By Amanda Knox with Christopher Robinson

Brett Watson is a researcher at the Institute for Social and Economic Research at the University of Alaska, Anchorage. In 2019, Watson co-authored Universal Cash and Crime, a study on the impact of Alaska’s Permanent Fund Dividend, an annual lump-sum payment made to all Alaska residents, on crime rates. As criminal justice reformers are calling for a systemic overhaul to better address the root causes of crime ― poverty, social and economic disenfranchisement, stress, despair, and abuse ― could a universal basic income be the universal answer?

Amanda Knox

What is Alaska’s Permanent Fund Dividend?

Brett Watson 

So back in the ‘70s and ‘80s, the state was getting a lot of money from the oil industry, and they weren’t sure what to do with it. They decided to put it in a bank account and throw away the key for a while. After a couple of years, that bank account started to get really big, and they still weren’t sure what to do with the money, so the governor at the time, J. Hammond, decided that they could just give it back to the people of Alaska in a lump sum distribution. And so every year since 1982, every citizen of the state has received between $500 and $3,000. Both adults and kids. You have to be a resident of the state of Alaska for a year, but otherwise there are very few restrictions on who gets this money. It’s the closest thing that we have, internationally, to a universal basic income program that’s functioned for as long as it has, at the scale that it has. 

Amanda Knox 

How does the Permanent Fund Dividend compare to universal basic income proposals like Andrew Yang’s Freedom Dividend?

Brett Watson 

The first thing to know is that it’s smaller in magnitude. The proposal from Andrew Yang [is] $1,000 on a monthly basis. The Permanent Fund Dividend is between $1000 and $3,000 on an annual basis. But again, it goes to every person in a household, and so if you are a two-parent household with two children, that money starts to add up pretty quickly, and it makes a big difference up here for families. The cost of living in Alaska is pretty expensive and so this money can make a real difference in people’s lives.

Amanda Knox 

So it’s not exactly designed, like Andrew Yang’s, to raise all Americans above the poverty line, but it is something that a lot of Alaskans have depended upon to get through the year. 

Brett Watson 

That’s exactly right.

Amanda Knox 

What inspired you to study the impact of the dividend on crime?

Brett Watson

One feature of the dividend is that all of the money is dropped into Alaska on a single day. All the checks get mailed out on the same day. People can set it up so it’s deposited straight into their bank accounts. And so people wake up on the first Friday in October several thousand dollars richer than they were the day before, and that happens to every person in the state. And so we just were curious what effect that might have on people’s behaviors, on people’s health, on their education, on their propensity to engage in illicit activity. Some people’s aversion to cash transfer programs like Andrew Yang’s dividend program is that the money might be “wasted,” and I’m putting air quotes up. Some people’s concerns with setting up a cash transfer program are that people might not do something that they approve of with it. We wanted to kind of put that theory to the test. And we thought that the most direct way to do that was to look at criminal activity and police activity in Alaska around the timings of these distributions.

Amanda Knox

So the naysayers of a universal basic income, or annual dividend like Alaska has, is that they fear that certain individuals simply can’t be trusted with cash, and that they’re going to misuse that cash for criminal purposes. 

Brett Watson  

That’s a great synthesis. That’s one of the reasons that there’s restrictions on food stamps, for example. Food stamps don’t come in the form of cash. They’re restricted to purchases that you make at a grocery store, even though people might like to have the flexibility of taking that benefit and applying it toward rent or a car payment. The PFD is just a cash payment, and so you can use it on whatever your most pressing need is at the time, or save it for the future.

Amanda Knox 

What are the conclusions of your examination? Are the naysayers right?

Brett Watson

We find kind of a mixed story here. We look at what happens to crime in the city of Anchorage, which is the largest city in Alaska, it’s about half the population in the state. We look at different categories of crime. Some categories go up and some categories go down. So for example, we find that there’s about a 17% increase in substance abuse related incidents, drunken disorderly events, DUIs, these types of things, that persist for a couple of weeks after the timing of the payments. But at the same time, there’s about a 12% decrease in property crime, burglaries, robberies, automobile thefts, etc., and those last for about two weeks. But overall, when we look at, on an annual basis, how much do these changes impact the overall levels of crime in the state, we come to the conclusion that it’s probably not all that meaningful, that these increases and decreases don’t meaningfully impact the statistics on an aggregate annual level. And so there’s not a lot of evidence to support the conclusions from the naysayers.

Amanda Knox

So it’s not necessarily lowering the crime rate significantly, but it’s not raising the crime rate. What do you think would happen if Andrew Yang’s Freedom Dividend came to Alaska? What would you anticipate based upon the data about this Permanent Fund Dividend? 

Brett Watson

One of the things that we talk about when we talk about in this research is that it’s hard to think of a goofier way to construct the actual method of these payments. The Alaska economy is about $40 billion on an annual basis. About 1.5 to $2 billion in a year is the Permanent Fund Dividend. When you compare the size of these transfer payments to the size of the Alaska economy, it’s pretty sizable. And all of that money is getting dropped in the economy at the same time. If you were to create a program that had these distributions staggered over time, you might be able to smooth out some of these issues that we find in the paper. By kind of smoothing that distribution out maybe over the course of a month, getting payments on a weekly basis, or bi weekly, for example, that can help mitigate some of the negative impacts, these increases in substance abuse, while at the same time potentially not reducing the positive impacts, the reductions in property crime. After all, the PFD is relieving some of the financial stress that individuals are facing, which is what we argue is taking them out of engaging in property crime. But if you are relieving that financial stress in a single day or over the course of a month or a year, you might still be able to achieve those social gains. 

Amanda Knox 

There is this growing movement amongst criminal justice reform advocates, arguing for a more systemic solution to the problems of mass incarceration. So instead of relying on the criminal justice system to disincentivize people who commit crimes through punishment, there’s a growing number of people who are arguing that we should be addressing the myriad ways that our society incentivizes people to commit crimes in the first place: wealth inequality, and a vast number of people living below the poverty line because there’s lack of dignified economic opportunity. Based on your research, do you think that that sort of move is verified by the evidence? Or do you think that more research needs to be done to make a definitive case on whether UBI should be part of a systemic solution to crime?

Brett Watson

That’s a really good question. And definitely one that we need more research on, and Alaska might be a good place for it. Committing a felony conviction disqualifies you from the dividend for a certain period of time, and so what that does is it creates an incentive for people to avoid felony convictions. There’s also a certain number of misdemeanors that if you commit back to back to back over a certain time period, that also disqualifies you for a dividend for a certain time period. And so, in a way, the Permanent Fund Dividend does pay you to be a good citizen. That is not an effect that we study directly, but it’s worth noting as one of the long run changes in crime that we might expect implementation of a dividend program like this to have. One of the things that we also do in the paper is talk a little bit about the conditionality of these payments. We try to compare the PFD to conditional cash payments, like food stamps. And we show that the benefits that you get by tying the cash onto specific categories of purchases probably aren’t huge, and that given that there’s a cost to administer those types of programs, it might be more efficient to administer them just with unconditional cash payments. 

Amanda Knox  

I’m coming to this because I was really excited about Andrew Yang’s UBI proposal. I felt like raising all Americans above the poverty line might have an enormous impact on crime. Going into your own study, what were you expecting to find from the data?

Brett Watson  

I was expecting to see larger impacts than we end up finding. I mean, we find measurable effects, but when you look at them on an aggregate basis, over the course of the entire year, they’re relatively small. I was also surprised that we didn’t find any effect at all on violent crime. Violent crime doesn’t change at all before or after the dividend. That’s potentially encouraging because, like I said, it would be hard to construct a form of the payment that would encourage more extreme effects, meaning that the goofiest way that you could construct these payments is the way that we do in Alaska, which is dumping it all on the economy in a single day. One of the things that we talked about in the paper is something that we call the social multiplier effect. PFD day is like a holiday up here. For the weeks leading up to it are sales, everything from mattresses to snow machines. There’s a big lead up to it, and then the day of, there’s a lot of activity down at the bars, people are out celebrating. We call that the social multiplier effect. And like I said, you could alleviate a lot of the problems that that creates just by spreading these payments out more, both across individuals, and then over time.

Amanda Knox

It seems like basically what Alaska has done is the carnival version of universal basic income. And instead of it just being this steady baseline that we can all count on, it becomes this party atmosphere.

Brett Watson  

One of the other things that’s worth mentioning is that this program was never really intended to function as a universal basic income. The idea was always that this was wealth that was owned by the residents of the state of Alaska, and this program was just designed to return that wealth to them. There’s some of that same framing that Andrew Yang uses when he describes a universal basic income. He describes both the effect of a UBI on different social and economic outcomes, but he also described the sources of revenue that might fund a UBI as just belonging to the people of a nation. Revenues from data, revenue from environmental and other natural resources, that those gains belong to citizens. I think that that’s an interesting framework. Who owns this wealth, and why? 

Amanda Knox 

How does social cohesion, or ideas around belonging or wealth, change given the existence of a Permanent Fund Dividend?

Brett Watson

Alaskans have a relatively unique relationship with their state government. The Permanent Fund Dividend is a very salient issue for Alaskans. Over the last couple of election cycles, it’s the number one issue on the minds of Alaskans. All politicians on their billboards, whether they’re Republicans or Democrats, will have some mention of being protectors of the PFD on them. It’s harder for me to speculate about social cohesion, just because I don’t know what Alaska looks like where the PFD isn’t around today, but it certainly has an effect on politics up here, and the way that people think about their relationship to state government. One other thing that I should mention here, is that you’re probably familiar with some of the pilot studies that are going on in various places around the world. I think Stockton, California has a pretty popularized universal basic income trial that they’re doing. This social multiplier effect of the dividend, it’s not just about one person getting cash, it’s about everybody getting cash at the same time from the same type of program. One of the things that I think makes the PFD interesting, as we think about different ways to structure cash transfer programs, is that it’s really hard in those trial settings to understand that social multiplier effect. You mentioned social cohesion or belonging, it’s going to be really difficult for you to understand that aspect of a universal dividend when you’re doing a small scale trial experiment. Whereas if you’re looking at the impacts for an entire state over a 30 or 40 year period of time, those are questions that you can answer a little bit better. And so I hope that, as other people get interested in universal basic income, they’ll not only learn the lessons from the small scale trials in places like Stockton, but also look at the lived experience that we’ve had up here in Alaska.