Social Interaction, Envy, and the Basic Income: Do Remedies to Technological Unemployment Reduce Well-being?

The present article aims to utilize some insights from behavioral and happiness economics to discuss the consequences that the introduction of an unconditional basic income to cope with technological unemployment may hold for well-being. The impact of 21st-century technological progress on employment has only just begun to make itself felt and it will take time to realize its full extent. However, the main innovation is already common knowledge: robots (and artificial intelligence) are finding their way into the production process. According to several recent (although controversial) contributions, the phenomenon is radically different from past technological revolutions and could generate high levels of unemployment, calling for innovative redistributive public policies. The present article, building on Keynes' (1930) short essay ("Economic Possibilities for Our Grandchildren") and referring to some of the principles and models of behavioral and happiness economics, focuses on the best-known of these policies, namely provision of an unconditional basic income. A series of factors - loss aversion and hedonic adaptation, the impossibility of escalating to higher-grade consumption behaviors, social interaction in the form of active and passive envy, loss of self-esteem and social stigma - are all likely to have a negative impact on well-being if an unconditional basic income that remains unchanging over time is implemented. A policy mix combining a rising basic income with other measures is therefore proposed.