For the next two years, 30 people in the United Kingdom will receive £1,600 ($1,984) a month from the think tank Autonomy to help researchers understand the effects of universal basic income (UBI) policies. Will the program teach us anything other UBI pilots haven’t?
The idea of UBI is to expand, regularize, and streamline social spending by giving every citizen cash payments, thus reducing inequality and increasing opportunity. It pulls together several threads: the realization among aid workers that giving cash to people in poor countries is a powerful tool for development; the success of policies like Social Security and the Earned Income Tax Credit, which provide a basic income for seniors and low-income workers respectively; and the concerns about structural changes in a technology-driven economy that concentrate wealth at the top.
Critics fret about the cost of such programs and whether they can really replace national health programs and other welfare spending; they worry, too, about the incentives a UBI could create for recipients to leave the job market.
Proponents are building a case by launching a wide variety of pilots across the world to test the effects in real time.
In the US, there have been more than 120 pilots since 2017, with 58 on-going, according to Natalie Foster, president of the Economic Security Project, which advocates for UBI policies and assists in trials. A Stanford University lab is tracking 30 US pilots that include more than 7,000 people. And the charity GiveDirectly is currently working on a 12-year project tracking guaranteed incomes provided to 20,000 people in Kenya.
What UBI pilots can teach us, and what they can’t
Early returns on studies that have been completed tend to be positive, according to literature reviews: Labor force participation tends to increase, while metrics for health and well-being (pdf) rise. However, some economists have argued that pilots won’t provide answers to long-term questions about how UBI could change the way people behave.
“This is in part because the samples are quite small, a function of the high cost of providing a UBI (and a cautionary tale about the feasibility of implementing a UBI at a large scale),” two UC Berkeley economists wrote in a 2019 study. “[T]hey will shed little or no light on any long-term effects, such as those operating through human capital accumulation, or on the psychological and political effects of universality.”
There are some long-term natural experiments—like Alaska’s Permanent Fund, which shares oil revenue among the state’s citizens—that suggest a UBI could work. The pandemic relief checks distributed in the US also provided hints although the results are hard to disentangle from the rest of the effects of the pandemic on the economy. Another recent policy, the refundable child tax credit, was hailed by UBI advocates but expired due to a lack of support in Congress.
“If good data passed policy, we would live in a very different world,” says the Economic Security Project’s Foster, noting that several state governments in the US are considering expanding the child and employment tax credits.
The point of local experiments with UBI
Foster argues that pilots, including one in Stockton, California (pdf) enabled by her organization, have catalyzed interest in deploying and exploring cash grants. The point of the pilots isn’t just the empirical findings, but to make the policy tangible.
And that brings us back to the latest experiments in England.
“It is important that questions are asked and answered locally,” Foster says, “so that elected officials can hear the answers more clearly. In the UK, with the pilot, they would be able to have local data that tells a local story. A story that [success] is possible is a prerequisite for a guaranteed income.”
UPDATE, 6/15/23: This story has been revised to include a more accurate accounting of on-going UBI pilots in the US.