Universal income study finds money for nothing won’t make us work less
For the last two years the Finnish government has been giving 2000 unemployed people a guaranteed, no-strings-attached payment each month. It is the world’s most robust test of universal basic income, and the preliminary results, released this morning, seem to dispel some of the doubts about the policy’s negative impacts.
Universal basic income comes in different flavours, but the essence of the idea is to give everyone a guaranteed income that covers their basic needs, like housing and food. Crucially, the income is the same for everyone all the time – it does not get reduced if, for example, a person gets a job or a salary increase.
The Finnish results were hotly anticipated because the experiment’s careful design promised robust evidence on UBI. “This is an exceptional experiment, both socially and globally,” said Pirkko Mattila, Finland’s Minister of Social Affairs and Health, at a press conference.
The experiment began in December 2016. Kela, the Social Insurance Institution of Finland, randomly selected 2000 people aged between 25 and 58 from across the country who were on unemployment benefits.
It then replaced those people’s benefits with a guaranteed payment of €560 a month. They would continue receiving the payments whether they got a job or not.
The experiment ended on 31 December 2018 and preliminary results were published this morning. It compared the income, employment status and general wellbeing of those who received the UBI with a control group of 5000 who carried on receiving benefits.
There was no difference between the two groups in terms of the number of days in employment in 2017 – both groups worked on average 49 days. The UBI trial group only earned €21 less on average than the control group during 2017.
The surveys also showed that the UBI group perceived their health and stress levels to be significantly better than in the control group.
“This is early data but nonetheless a significant moment as global interest gathers in basic income,” says Anthony Painter at the RSA think tank, which is working with the Scottish government to scope out a possible trial of UBI in Fife.
Supporters of UBI say that it frees people’s time for social goods like looking after children or serving their community, although this wasn’t measured in the Finnish trial. Additionally, requiring unemployed people to continually prove they are looking for work creates a lot of stress for them, which is bad for their health and may mean they are less likely to be able to find work. It also creates bureaucracy for the state.
On the other hand, basic income is expensive, even if it replaces existing benefits. And some say it could encourage people to work less.
“The criticism levelled at basic income that it would disincentivise work is not supported by [the Finnish] data,” says Painter.
An old idea
UBI is a concept that originated at least 200 years ago. But over the past few years it has become a fashionable policy idea, with many countries exploring pilot studies.
One reason for the increased interest is the fear that automation might displace large numbers of people from employment – essentially robots taking our jobs.
There have been several other trials of the idea, but none were definitive. Take for example the Mincome experiment, in which the 10,000 citizens of Dauphin in Manitoba, Canada, were guaranteed a basic level of financial security in 1975.
Recent analysis of public records from the time showed that it was only young men and young women who spent less time in work during the trial, and this because they were either in college or looking after babies.
Yet there was no control group. And it wasn’t a true basic income, because the money wasn’t given unconditionally — people’s earnings were topped up when they dropped below a threshold.
There is still more to find out about UBI that has not been revealed in experiments as yet. “What we have been able to find out so far is not the whole truth,” said Oli Kangas at the University of Turku, who led the Finnish study in partnership with Kela. “That is much more sophisticated.”
For example, Painter points out that, because the experiment chose people randomly from across Finland, it can’t tell us about any regional differences in the effects of UBI. “There is a strong case for further experiments,” says Painter. “It would be good to see ‘saturation’ pilots where everyone in an entire area receives a basic income.”