Simpson, et al, “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later”

Three University of Manitoba economists, Wayne Simpson, Greg Mason, and Ryan Godwin, have jointly authored a new research paper about the Manitoba Basic Annual Income Experiment (“Mincome”), a trial of a guaranteed income that took place from 1974 to 1979.

The Mincome experiment consisted of randomized studies in Winnipeg and rural Manitoba, as well as a saturation study in the town of Dauphin, where all residents were eligible for participation in the study. Participants received an income supplement that was phased out as personal earnings increased, and several combinations of minimum income level and taxation rates were tested. The guaranteed income scheme tested, a negative income tax, is equivalent in its distributional effects to a basic income that is taxed back with personal income over a certain amount. Decades after Mincome ended, its outcomes were analyzed by economist Evelyn Forget. The results are now frequently mentioned as evidence of the effectiveness of basic income / negative income tax.

At present, the province of Ontario is preparing a new major trial of a guaranteed income (which, as in Mincome, is likely to be designed as a negative income tax). In a lengthy discussion paper about the new trial, project advisor Hugh Segal notes that the Dauphin saturation study, showed “population health improvements, the potential for government health savings, and no meaningful reduction in labour force participation.”  

In their new article, Simpson, Mason, and Godwin re-examine Mincome, and consider how it might answer questions about contemporary experiments in Ontario and elsewhere.

Abstract

The recent announcements of the Ontario Basic Income Pilot and Finland’s cash grants to jobless persons reflect the growing interest in some form of guaranteed annual income (GAI). This idea has circulated for decades and has now been revived, no doubt prompted by concerns of increased inequality and employment disruptions. The Manitoba Basic Annual Income Experiment (Mincome), conducted some 40 years ago, was an ambitious social experiment designed to assess a range of behavioural responses to a negative income tax, a specific form of GAI. This article reviews that experiment, clarifying what exactly Mincome did and did not learn about how individuals and households reacted to the income guarantees. This article reviews the potential for Mincome to answer questions about modern-day income experiments and describes how researchers may access these valuable data.

Wayne Simpson, Greg Mason and Ryan Godwin (2017), “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later,” Canadian Public Policy.


Reviewed by Cameron McLeod

Photo: Northern Lights in Manitoba, CC BY-NC-ND 2.0 AJ Batac

ONTARIO, CANADA: Government releases summary of consultations on minimum income pilot

The government of Ontario has released an overview of the results of three months of public consultations on the design of the province’s impending “Basic Income Pilot”.

The provincial government of Ontario, Canada is currently designing a pilot study of a guaranteed minimum income (a “basic income” in its terminology [note]), which it plans to launch in the spring of 2017. On November 3, 2016, project advisor Hugh Segal released the paper “Finding a Better Way: A Basic Income Pilot Project for Ontario” to serve as the focus of discussions on the design of the pilot (see the summary in Basic Income News). Concurrent with the publication of the paper, Ontario’s Ministry of Community and Social Services released a call for feedback from the public via public meetings, online surveys, and written submissions.

Public consultations continued through January 31, 2017, and, in the end, 32,870 people responded to the public online survey, 1193 attended the public meetings, and at least 537 individuals and community groups submitted written feedback–according to a newly released summary of the results of the consultations.

The new report, “Basic Income Consultations: What We Heard” (March 2017), provides an overview of feedback received from the public, although no details have yet been provided as to how this feedback will inform or influence the design of the pilot.

One issue addressed in the consultations was which of the potential measurable outcomes were most important to Ontarians. Segal suggested ten in his discussion paper, and consultations revealed “general agreement” that, of these, four were “particularly important” to residents: health, housing, food, and work behavior.

The level of the minimum income was also a topic of discussion–with the widely announced amount of $1320 per month called into question by some. This $1320 per month amount, which Segal recommended in his discussion paper, was based on a calculation of 75% of the Low-Income Measure (LIM). Some participants in public hearings recommended instead that the minimum income be set at 100% of the LIM.

Participants also discussed the selection of sites for the pilot, with widespread agreement that a variety of locations should be chosen, representing urban, rural, and northern areas, but that the government should also strive to focus on areas of greatest need (i.e. highest poverty rates).

Read about other results here.

 


[note] As is common in Canada, the Ontario government uses the term ‘basic income’ more broadly than does BIEN. The report above, for example, describes a basic income as a “payment from the government to a person or family to ensure they receive a minimum income level” and lays out several methods of implementing such a policy: “giving the same amount of money to everyone” (i.e. the specific approach that organizations like BIEN refer to as a “basic income”, sometimes also called a “demogrant”), “topping up the incomes of people who earn less than a certain amount”, and “setting up a system where people who earn less than a certain amount get a payment from the government, instead of paying taxes” (i.e. a negative income tax).

Often, ‘basic income’ is used to refer specifically to schemes in which all members of a community receive an equal amount of money, paid to individuals, while a term like ‘guaranteed minimum income’ is applied to the broader category of “payment[s] from the government to a person or family to ensure they receive a minimum income level”. Thus, although the Ontario government has titled its project “Basic Income Pilot”, it might be more accurate to describe it as a “minimum income pilot” to avoid confusion with BIEN’s more specific use of ‘basic income’.

Segal himself strongly recommended that the pilot avoid testing a “demogrant” (“universal basic income”) in favor of a negative income tax. However, as the new report reveals, some participants in the consultations suggested the adoption of a demogrant model.


Reviewed by Genevieve Shanahan

Photo (Ottawa, Ontario) CC BY-NC-ND 2.0 Stuart Williams 

World Economic Forum blog: “Canada’s basic income experiment – will it work?”

In January, Apolitical published an exclusive interview with two leaders behind the planning of a pilot study of a basic income guarantee program in Ontario, Canada: Helena Jaczek, Ontario’s Minister of Community and Social Services, and project advisor Hugh Segal.

Earlier this month, the interview was republished in the official blog of the World Economic Forum, the Switzerland-based organization responsible for the prestigious annual Davos meeting (which this year held a panel discussion and debate on “basic income: dream or delusion”).

In the interview, Jaczek and Segal explain the reasons for their interest in and optimism about basic income. Jaczek sees the program as a means to provide economic security to allow individuals to contribute to society. Segal supports basic income as a way to avoid the “poverty trap” that occurs when poor individuals lose benefits after taking a job, as well as a way to empower the poor to make decisions on their own behalf.

The Government of Ontario has recently completed public consultation hearings on an initial proposal for the pilot study, and will release its final plan in Spring 2017. As proposed, the pilot will consist of both a randomized control study in a large metropolitan area (in which randomly selected individuals receive the basic income guarantee) and several saturation studies (in which all members of a small city receive the basic income guarantee). If Segal’s initial recommendations are followed, subjects will be eligible to receive an unconditional cash transfer of up to 1,320 CAD (about 1,000 USD) per month, gradually tapered off with additional earnings, which would replace existing unemployment programs in the province.

Read more:

Exclusive: Inside Canada’s new basic income project,” Apolitical, January 4, 2017.

Canada’s basic income experiment – will it work?” World Economic Forum blog, February 2, 2017.


Reviewed by Danny Pearlberg

Photo (Ottawa, Ontario, Canada) CC BY 2.0 Brian Burke

CANADA: Over 10,000 people have signed to support Basic Income

CANADA: Over 10,000 people have signed to support Basic Income

(Image credit: Basic Income Canada Network)

The Basic Income Canada Network (BICN) has just passed their goal of signing 10,000 people who support a basic income guarantee in Canada.

This milestone marks the culmination of over a year of collecting supporters. BICN now looks toward its next milestone: reaching the 15,000-person threshold.

BICN is a non-profit organization affiliated to BIEN that advocates for basic income in Canada. It does so by publishing regular news stories as well as annual reports about basic income developments. BICN also disseminates resources for getting involved in the struggle for basic income, in addition to educational sources informing about relevant debates and issues. A central part of this organization is its ongoing petition, open to everyone, which calls for the implementation of a basic income in Canada.

BICN’s website was launched in August 2015, when this counter for supporters of basic income began. It has taken BICN almost a year and a half to reach 10,000 supporters, 8,000 of which coming in the last nine months. The 10,000 person threshold was surpassed on December 13th.

This event marks the latest in a series of positive developments for basic income in Canada. Recently, on December 7th, a unanimous decision was reached by the Legislative Assembly of Prince Edward Island, Canada, to “pursue a partnership with the federal government for the establishment of a universal basic income pilot project.” Also, in Ontario, the regional government is moving forward with plans to test a universal basic income. These plans began in early 2016, when Ontario tasked Hugh Segal with an outline paper concerning the C$25m pilot project.  The project is set to start this spring.

 

More information at:

Ashifa Kassam, “Ontario pilot project puts universal basic income to the test”, The Guardian, October 28th 2016

ONTARIO, CANADA: Smiths Falls council reverses decision, votes to lobby for basic income pilot

ONTARIO, CANADA: Smiths Falls council reverses decision, votes to lobby for basic income pilot

In a reversal of a decision last December, the council of the Eastern Ontario town Smiths Falls has voted to send a delegate to an upcoming convention of municipalities to lobby for the town’s selection in Ontario’s basic income pilot study.

 

Background: Ontario’s Pilot Plans

The Canadian province of Ontario is currently in the consultation phase of the design of a pilot study of a basic income guarantee. According to the recommendations of the project adviser Hugh Segal, the pilot should test a guaranteed minimum income of approximately $1320 per month, plus an additional $500 for those with disabilities, which would replace the province’s current welfare and disability programs (Ontario Works and Ontario Disability Support Program) for at least three years. Segal proposes that this basic income guarantee take the form of a negative income tax, in which participants with no income would receive the full $1320 cash transfer, with no strings attached. The amount of the transfer would be gradually clawed back with additional earnings, with the result that participants whose income remains sufficiently high would receive no money as a result of participation in the pilot. The pilot will likely be designed to assess a variety of outcomes, such as health, food security, education, and employment.

While the final design of the pilot has not yet been announced, Segal has recommended that it include the selection of three saturation sites: communities in which every adult resident would be assured of the guaranteed minimum income. Saturation sites allow the province to investigate the effects of a basic income guarantee at a community level (such as effects on crime, utilization of public services, and civic participation), as well as to examine the process of administering the program within an entire municipality. (Segal advises that government test the basic income guarantee in such saturation in addition to conducting a randomized control trial in a large urban area.)

Segal further suggests that three saturation sites be chosen to represent three different “faces” of the province: Southern Ontario, Northern Ontario, and indigenous communities. He recommends that the communities be relatively geographically isolated, to limit “contagion” effects from surrounding communities, and to have stable populations. (For more discussion of the desired characteristics of saturation sites, see “Finding a Better Way: A Basic Income Pilot Project for Ontario”.)

The final design of the study is expected to be announced in April 2017, after which the pilot will enter its implementation phase.

 

New Support from Smiths Falls Council

Smiths Falls, an Eastern Ontario town of around 9,000 residents, now plans to lobby the provincial government for selection as one of the saturation sites. On January 16, 2017, the town’s council voted to send a delegate to the Rural Ontario Municipal Association (ROMA) Conference, which will take place at the end of the month in Toronto. At the conference, municipal delegates will have an opportunity to present their cases before Ontario’s Ministry of Community and Social Services (MCSS).

The council’s vote reversed a decision of December 19, 2016, when it voted 3-2 against sending a delegate to ROMA to lobby for the town’s selection in the pilot — a decision that defied the wishes of Mayor Shawn Pankow and incited protests among the Smiths Falls residents.

Prior to the December 19 meeting, Pankow had written to MCSS, expressing a desire that the provincial government consider Smiths Falls as a site for its basic income pilot. This action was taken without the knowledge of full council, leading some councillors to hesitate endorsing the proposal (with one later stating that he had felt “blindsided” by the mayor’s action). Pankow himself was unable to attend the meeting during which the council voted down the motion to lobby in favor of the pilot, having been stuck in holiday traffic en route from Ottawa.

The December 19 vote was not a vote against participation in the pilot per se (as the provincial government could still select Smith Falls for the pilot, even if the town itself does not produce a delegate lobby for it), and not all councillors who cast negative votes were themselves opposed to the idea of a basic income guarantee (or even, necessarily, its implementation in Smiths Falls). Nonetheless, some councillors did use the opportunity to voice their general opposition to basic income. Councillor Dawn Quinn, for example, was widely cited in the press for her assertions that the distribution of unconditional cash transfers is the wrong approach to poverty and that, instead, poor people must learn how to better budget their money.

The council’s initial decision faced a backlash from residents. One resident, Carol Anne Knapp, started a petition in the days after the vote, calling upon the council to conduct a re-vote on the matter. In early January, Knapp and another resident, Darlene Kantor, interrupted a city council meeting to demand the council support efforts to bring the basic income pilot to Smiths Falls.

The town has faced economic hardship following the closure of a Hershey’s chocolate plant in 2008, as well as the loss of other manufacturing plants such as Shorewood Packaging and Stanley Tools. Residents like Knapp and Kantor believe that the council should welcome the basic income pilot (if Smiths Falls is selected) as a potential solution to its high rate of poverty.

On January 12, a public information session on the basic income pilot, convened by the Smiths Falls council, drew a crowd of more than 250 people.

The response of constituents was influential in the council’s reversal of its decision at the January 16 special meeting.

 

References and Further Information:

Evelyn Harford, “Smiths Falls town council won’t have ultimate sway on basic income pilot project’s location, says province,” Smiths Falls Record News, January 6, 2017.

Evelyn Harford, “Protesters make a stand in support of basic income pilot at Smiths Falls town council,” Smiths Falls Record News, January 9, 2017.

Hillary Johnstone, “‘An occupy moment’: Smiths Falls residents demand basic income pilot project,” CBC News, January 10, 2017.

Evelyn Harford, “Council votes to send basic income delegation to ask questions, lobby province,” Smiths Falls Record News, January 16, 2017.

Chris Must, “Council reverses stance on basic income lobbying,” Hometown News.

 

See also:

John Chang, “CANADA: Council of small town Smiths Falls rejects basic income trial, residents disagree,” Basic Income News, January 16, 2017.

 


Reviewed by Dawn Howard

Photo: Bridge near Smiths Falls, CC BY-NC-ND 2.0 David McCormack