Will the Kenya Universal Basic Income experiment find that UBI significantly increases local inflation?
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282
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resolved Jan 15
Resolved
NO

Villages in two Kenyan counties were randomly assigned to receive (or not) about US$0.75 per adult per day for 2 or 12 years. Transfers began in 2018.

https://www.socialscienceregistry.org/trials/1952

At the bottom of above link is the pre-analysis plan. Inflation defined as consumer price index defined as the weighted sum of the prices of commodities sold in local markets (market survey) weighted by control group expenditure (household survey, Section B).

https://www.poverty-action.org/study/effects-universal-basic-income-kenya

2023 working paper: https://econweb.ucsd.edu/~pniehaus/papers/UBI_main_paper.pdf

If the "Long Term arm" has significantly higher inflation (as defined by the PAP) than the Control group, then the market resolves Yes. Otherwise, the market resolves No.

Note that if the p-value is above .05 on this test, then the results will be considered insignificant and the market will resolve No.

The market will resolve based on the first set of results released by the authors on inflation that purports to be running the tests outlined in the PAP.

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The authors recently released a paper on the results: https://econweb.ucsd.edu/~pniehaus/papers/UBI_main_paper.pdf

I have not read it thoroughly yet but they describe the inflation results as "we do not reject the null that consumer prices were unaffected" pg. 19 The attached Table E.10 shows the results.

Given this, I think I should resolve No. Let me know if anyone disagrees or has additional information.

bought Ṁ50 of YES

It has to.

bought Ṁ100 of NO

@ParkerR Not necessarily. Inflation happens when the money supply or rate of spending increases faster than the quantity of goods and services produced. If extra money stimulates extra production in proportion, it needn't cause inflation. If there isn't the spare capacity for more production, that's when you get inflation.

predicted YES

@chrisjbillington Nice. explanation.

Questions that need answering:
How accurately is inflation measured in treatment counties and control counties? Random measurement error decreases probability of finding a true effect, but increases probability of "false positive" or overstatement if true effect is actually zero?

* What does the current basket of commodities look like? Is it mostly locally produced? What share of costs are transportation? Local labor?