Roosevelt Institute finds that giving cash directly to people improves quality of life
Ioana Marinescu. Credit to: Harris School of Pubic Policy.
The Roosevelt Institute finds positive overall quality of life outcomes from giving cash directly to individuals. By studying three programs that share different components of a universal basic income, University of Chicago Professor Ioana Marinescu is able to shed light on empirical evidence showing improvements in consumption, health, education, among other areas of life that runs counter to fears about what may happen when people are given cash directly.
What would happen if cash was provided directly to people with no strings attached? The Roosevelt Institute recently published a report authored by University of Chicago Professor Ioana Marinescu that explores this question. The report is published as part of the Roosevelt Institute’s Reimagine the Rules effort to reorient policy at all levels toward a new economic and political system that is good for all. Marinescu reviews the empirical results from unconditional cash transfer programs that share different components of a universal basic income (UBI).
The programs evaluated include the U.S. and Canadian negative income tax experiments, the Alaska Permanent Fund Dividend, and the Eastern Band of Cherokees’ casino dividend program, in addition to other supplemental studies. In the 1970s, the U.S. and Canadian negative income tax experiments were developed where a random group of people in six U.S. states were provided enough money to live on through tax credits equivalent to the poverty line. Since 1982, every Alaskan resident has received an annual dividend between $800 and $2,000 as a share of invested oil profits from state lands through the Alaska Permanent Fund Dividend. The Eastern Band of Cherokees’ casino dividend program began in 1996 and provides a portion of the profits from a casino on the reservation to all tribal members through annual dividends of $4,000 per person per year.
Across these programs, the report analyzes behavioral effects of providing unconditional cash transfers to individuals in categories including labor participation, consumption, education, health, among other social factors. One concern about providing cash directly to people is that it would decrease the amount of people working and contributing to society. Marinescu’s research challenges these concerns with findings that show significant improvements in the overall quality of life of people who receive unconditional cash transfers. For example, the Alaska Permanent Fund provides universal payments directly to residents and shows no effect on employment and an increase in part-time work. People have been shown to increase their buying and spending when receiving unconditional cash transfers. In terms of education, “school attendance, grades, and test scores” improve for children and educational attainment is increased. Even for health outcomes, there was almost a 10 percent decrease in hospitalizations and improved mental health with a lower likelihood of experiencing alcohol or cannabis use or dependence in the case of the Eastern Band of Cherokee’s casino dividend program.
These findings are a critical step in providing a picture of what future possible outcomes and considerations should be taken into account as the debate on universal basic income continues to gain international prominence. By countering fears and assumptions about how providing unconditional cash directly to people may affect people’s contributions to society with empirical evidence on outcomes, the narrative about universal basic income can be repositioned to be grounded in facts rather than fears.
More information at:
Kate McFarland, “Survey of 11,000 Europeans finds 68% would vote for basic income,” Basic Income News, May 1st 2017
Kate McFarland, “Alaska, US: Judge Upholds Governor’s Veto of Part of State’s Social Dividend,” Basic Income News, December 3rd 2016
Ioana Marinescu, “No Strings Attached: The Behavioral Effects of U.S. Unconditional CASH Transfer Programs,” Roosevelt Institute, May 16th 2017