Does universal basic income work?

How has UBI been tested and what have we learned? Let's explore some pilot programs of basic income and see what that research has shown us, as well as what research is upcoming or underway.

🌎 Where has UBI been tested, what did they do, and what does the data show?

We’re back babes! Time for part two of our exploration into universal basic income and how it might or might not align with our goal to create a more caring world. (If you missed it, here is part 1, what is UBI?) Today we’ll look at some of the times UBI has been tested to understand how it’s been implemented and what we’ve learned. 

While we went over a very general definition of UBI in the last article, once we start looking at the tests, it’s clear that there are a lot of different interpretations of what a UBI might actually look like once it’s implemented. This means that if we want to talk about UBI together, we have to be really intentional to make sure we’re comparing apples to apples.

First off, let’s be clear: a full universal basic income has never been rolled out across an entire country or even state. But there have been plenty of smaller scale tests, at varying levels of “universal” and “basic,” over the last few decades. (Finland did do a nation-wide randomized study to very low income households which had good results, but after the study it didn’t roll out to everyone.) Other sources have compiled the tests quite well, so I’m not going to list every single one of them for you. For a pretty complete accounting, check out Everywhere basic income has been tried, in one map by Sigal Samuel in Vox (from 2020) and this article in the Washington Post from 2022 that digs into more recent trials in the last couple years. Spoiler: almost all the trials show positive results in employment, and all trials that measured it show positive results in personal welfare of recipients. 

Let’s go ahead and dig into few examples that I think are particularly interesting to explore.

US Negative Income Tax Experiments in the 1970s

Believe it or not, Richard Nixon almost passed a sort of basic income legislation in the US. In 1969, making negative income tax (NIT) a federal law was on the roster as The Family Assistance Plan, but it ended up failing after a concerted effort from folks who didn’t want to give the poor any money. Negative income tax would have provided a bottom floor to the poorest folks in the country, by giving folks money up front and then taxing it back based on how much they earned, with folks earning >~$20,000/year (in 2021 dollars) ending up paying it all back. This is not a full universal basic income, but it does provide a clear income floor in a way that doesn’t exist today. Unfortunately, the plan didn’t end up passing. 

However, to validate this idea, from 1968 to 1980 the US government ran “negative income tax” experiments in six cities including Seattle and Denver.  This study has been used ever since as a gotcha to show that basic income doesn’t work. This article makes the bold claim that “For single males who were not heads of households throughout the experiment, the reduction in hours worked per week was a staggering 43 percent.” However, if you go to the linked research paper, what it actually says is that these results are not for all single males. They are for young males between age 16-21 who were the children, step-children, or grandchildren of the head of house who was an NIT recipient. So they were in a household with at least one other wage earner, the head of house. And more than half the people in this already small group who stopped worked likely did so because they are also going to school. Those are some pretty key factors to leave out. 

Also, and very importantly, these earning were self reported. “When the findings were cross-referenced with actual earnings data, the labor force effects in Gary disappeared entirely, and the Seattle/Denver ones were diminished considerably.” (From Vox) So it turns out the conclusions were made on inaccurate data, and people are still hung up on that inaccurate data instead of updating their information. Alas. 

So in general, this study shows a slight reduction in working hours for broke people who got a bit of money, but we didn’t get any peripheral information about their health, happiness, decision making, education choices, etc. which is information usually collected in more recent studies.

Alaska’s PFD 

All Alaskan residents who live in state at least six months per year are eligible for the Permanent Fund Dividend, or PFD. The Permanent Fund is an investment fund that the Alaskan state government runs that is funded by the state investing 25% of the royalties from Alaskan mines, oil, and gas reserves every year. Then every September, the interest from this fund is diving up evenly and sent out to state residents, usually amounting to ~$1000 to 2,000. While this has shown the ability to reduce extreme poverty in the state, it’s nowhere near enough to cover all basic needs for a year, especially in rural Alaska which can have a pretty high cost of living. I remember how excited I was to make $10/hour at the coffee shop I worked at when I moved to Homer, Alaska in 2012 (up from $8/hour in Maryland) which was quickly deflated by sticker shock at the grocery store. Alaska ain’t cheap.

Throwing out Alaska as an example of UBI without clear caveats is likely going to get you some eye rolls. It simple doesn’t fit the bill as far as covering basic needs, which is usually what people when when they refer to UBI. It’s also tied to oil revenue, which isn’t something replicable across different locations. (Though I’d argue that localized solutions are the best path forward for most of our problems, so that isn’t necessarily a blocker. Just something to be aware of if you’re using it as an example.)

Canada’s long unanalyzed Mincome

Canada also tried out a universal base income, known as Mincome. As with many of these tests, it was not universal. It was a supplemental income delivered to the lowest income families in Dauphin, Manitoba, Canada, serving 2,128 people total. It ran for four years and then abruptly ended when oil prices dropped and unemployment surged and the government budget could no longer support it. Initial data showed that it reduced employment by some, but mostly the data wasn’t analyzed due to the budget issues. 

Thankfully, more than 30 years later, a health economist Evelyn Forget decided to find out what had happened. She pulled out the data (literally in dusty folders) and get to work. Her results showed an 8.5% decline in hospitalizations – primarily because there were fewer alcohol-related accidents and hospitalizations due to mental health issues – and a reduction in visits to family physicians.

This study also saw reports of people being willing and able to start their own businesses when supported with a basic income. David Cox with the BBC reports that “Joy Taylor, who was 18 and newly married when the scheme began, remembers that people had much less to worry about financially during the course of the experiment, which improved their wellbeing. Her husband was suddenly able to get a loan to open a local record store, with banks being more willing to lend money to small businesses because of the guaranteed payments.” 

We see repeatedly in basic income trials that entrepreneurship increases. (Again in Japan and in Kenya, linked below.) This stands to reason, as starting a business requires an initial investment of money and time that folks living in precarity simply don’t have. People who are entrepreneurs today aren’t necessarily smarter. They just have the resources to take the leap. 

Capitalists get in on the game

Under the purview of Sam Altman (now CEO of OpenAI, creator of the famous ChatGPT), Y Combinator, famous Silicon Valley venture capital firm and startup incubator, actually funded a small basic income experiment in California in 2016. They wanted to research whether basic income would work, and Altman said “I think it’s good to start studying this early.  I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale.”

Somewhat unsurprisingly, the challenges of crafting and delivering this as a research experiment were greater than the YC crowd expected. (In my experience, even well-meaning tech bros tend to think they can ‘move fast and break things’ in all aspects of the world and are stunned to find out this doesn’t translate into every other industry. But I digress.) From what I could find (and it was surprisingly difficult to find information on this), they tried to run a pilot of 100 people in Oakland and were able to get about 10 people engaged. They were struggling with hurdles around potentially blocking people from accessing other (currently means-tested) forms of welfare. Basically, if they gave people too much money, they won’t qualify for other stuff they need.

YC Research has now become Open Research and isn’t connected to YC. They still have a basic income experiment listed on their website, but they have no timelines listed and they didn’t respond to comment when I reached out. I’m sure we’ll continue to see Silicon Valley explore this path forward, both because it’s full of libertarians and because they’re considering how to safeguard their increasingly concentrated wealth from hoards of have-nots. 

Black-led mayoral collective forms to generate a movement in the US

In 2019, Stockton, California mayor Michael Tubbs worked with the Economic Security Project to launch a universal basic income trial in his city to deliver $500 per month to selected low income individuals. This clearly isn’t enough to live on, but the hope was that it would give people enough breathing room to be able to improve their lives. It went well and was expanded. But not only that. Tubbs expanded his focus from Stockon, CA to connect with other mayors around the country and started Mayors for a Guaranteed Income to support others in rolling out basic incomes in their cities. Their goal is to use these pilots to get enough supporting data to convince legislators to pass a federally funded basic income scheme.

So far, they have helped fund and launch 30+ pilot programs helping 7,000+ people, with more detailed information shared on this dashboard.

Other basic income projects around the world

There have been many other cash-transfer programs around the world aimed at poverty reduction. There’s currently a 12 year study going on in Kenya by GiveDirectly, where they are giving money monthly to ~5,000 people across 300 rural villages. Early results are promising, showing folks are less likely to get sick or go hungry and are more likely to start a business in their community. (You can donate to support this initiative, if you like.)

In conclusion…

The data shows that at least when targeted toward the lowest earning members of a community, basic income works to improve their lives. It makes people happier, healthier, and is unlikely to reduce employment. (Though we’ll explore later whether our tight hold on the need for full employment really makes sense in our new age.) We’ll need larger scale tests to understand how these results change if the UBI is delivered for a longer time, in larger amounts or to a wider population. 

Stay tuned for the next part…

…where we’ll zoom out of the data and try to understand why we still struggle to see UBI as a real policy possibility, especially in the US. Then we’ll go on to explore some alternatives to the more common understanding of UBI that might better lay the path to create caring communities supporting collective liberation. 

🧘 Looking inward

In the face of almost all early data showing in support of direct cash transfers as the best (and most cost efficient) way to reduce poverty, why is it still such an unpopular proposal? This is where we have to turn inward. 

Two of the core beliefs that block us from moving forward here are:

1. Poor people are poor because they are stupid, lazy, and/or make bad decisions. They cannot be trusted to make their own decisions with money. 

2. People shouldn’t get something for nothing. If you aren’t doing some sort of (unpleasant) work that I deem as “enough”, you don’t deserve to get any resources or support. 

What part of the above beliefs you identify with? Does it feel true in some circumstances but not others? What sticks out to you?

 Getting deeper into what we believe and why can help us figure out what we’re open to changing and what we hold as a deep truth.

These are both complex, and we won’t be able to break them down entirely here (and I already gave you a lot to read 😅). Maybe it’s something we can explore together in future articles. Drop a comment if you’d be interested in that! But I want to highlight them both because it’s important to explicitly address them as real underlying beliefs blocking the rollout of a universal and/or basic income. No amount of data will make someone feel it will work if your fundamental beliefs about human nature mean humans can’t benefit from collective social support.

🗣 Question of the day

Would you want to see a universal basic income in your community? What is your biggest concern about the policy? 

Drop a comment or hit reply and let me know your thoughts — I’ll share some responses in the next post and use responses as a jumping off point for the next exploration!

👂Responses from our last question

Here are some interesting responses y’all shared to the question from the last post which was “What would you do with your time and energy if you knew your basic needs were going to be met?”

“Pretty much what I'm doing now.” (I heard a lot of this.) 

“I’d pour more energy into connecting with my neighbors & building a badass block. I'd like to spend more time outside exploring with my kids. Connecting to other families on the community & making it more equitable for all.”

“Gardening, beekeeping, and making art that wasn't meant to sell.”

Share your thoughts via email, chat, or comments as we explore different questions together!

🧠 For further exploration

Here are some books and articles for you to check out and explore this topic more. I’d love to hear any thoughts or further recommendations you have in the comments! 

• 📚Bullshit Jobs: A Theory by David Graeber

• 📝Basic income: the world’s simplest plan to end poverty, explained by Dylan Matthews