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Teppo Eskelinen and Johanna Perkiö, “Micro-investment perspective and the potential of the universal basic income”

Teppo Eskelinen and Johanna Perkiö have published “Micro-investment perspective and the potential of the universal basic income” in Development Policy Review (June 2017).

Eskelinen and Perkiö analyze basic income as a tool to promote micro-investments by poor individuals and households, hypothesizing that a basic income would impart to such households a “greater confidence to undertake more risky activities, knowing they will have a minimum income to fall back on.”

As they explain in the abstract, the authors “aim to estimate potential impacts of the BI by synthesising existing knowledge. This estimation will not be quantitative, but rather show likely outcomes of a BI scheme. We will complement existing knowledge by exploring cognate cash transfer policies and other experiences that bear similarity to the BI.”

As a core part of their analysis, the authors examine the pilot studies conducted in the Namibian village of Otjivero-Omitara (2008 to 2009) and the Indian state of Madhya Pradesh (2011 to 2013), looking especially at the effects on “labour, behavioural impacts, psychological impacts, and investment in human capital.” Regarding psychological impacts, they point out that, in the Madhya Pradesh experiment, “households receiving cash grants were three times more likely to start a new business or production activity than control group households,” which appears to affirm their conjecture that “the availability of money combined with a sense of security is what eventually determines the occurrence of micro-investment.” Regarding behavior, they note a “recurring observation” that part of recipients’ additional income was “invested in income-generating activities.”

Eskelinen is a philosopher and social scientist who has published on political theory, political economy, global justice, and development theory. He is senior lecturer at University of Jyväskylä.

Perkiö is a doctoral candidate in the social sciences at the University of Tampere, writing her dissertation on the history of the basic income debate in Finland (see her November 2016 presentation for Kela). Many of her previous articles and blog posts on basic income available online, including the Transform! Network discussion paper “Basic Income Proposals in Finland, Germany and Spain,” the International Solidarity Work report “Universal Basic Income – A New Tool for Development Policy?,” and a response to the OECD’s recent critical report on basic income, published on Kela’s blog.

Reviewed by Russell Ingram

Photo: Store in Madhya Pradesh, CC BY 2.0 Brian Gratwicke

About Kate McFarland

Kate McFarland has written 512 articles.

Former lead writer and editor of Basic Income News.

The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

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