by Andre Coelho | Aug 22, 2018 | Research
Ive Marx. Picture Credit to: University of Antwerp
A news article posted in Flanders Today refers to a report, headed by economist Ive Marx, which concludes that introducing basic income in the Netherlands can actually increase poverty while having only a small effect on inequality.
Marx, from the University of Antwerp, concluded that introducing a 700 €/month basic income to all citizens with ages between 18 and 64, and 165 €/month to all minors would have a yearly net cost of 94 million Euros. That, according to the research, would have to be funded by extra taxes, plus cutting on unemployment and child allowances. As a result, around 75% of adult citizens would lose out financially, compared to their actual situation given the present-day benefits structure in the Netherlands. According to the study’s parameters, around 30% of the adult population would lose more than 10% of their income, which would contribute to an increase of poverty in 3%. Marx has also added that “proponents of the system must show why it is superior. You would have to be almost crazy to introduce it.”
In spite of these discouraging results, the study itself is not explicitly referred to in the article above, and no link to it is supplied. This way, base assumptions cannot be verified and a relevant discussion about it initiated. Furthermore, the author has not replied to contact attempts, which would allow to report on the study’s details, and compare it to other research reports and experiments.
More information at:
Editorial Team at Flanders Today, “Basic income doesn’t work, Antwerp research suggests”, July 13th 2018
by Jelena Vitic | Aug 21, 2018 | News, Research
Picture credit to: Big Think.
On the 12th of July 2018, Trump’s Council of Economic Advisers (CEA) released the report “Expanding Work Requirements in Non-Cash Welfare Programs”, in response to an executive order made in April 2018 on reducing poverty in America.
The poverty rate of 3%, as measured in the CEA report, is at an all-time low. Although a favorable result, the authors point out that “many non-disabled working-age adults do not regularly work, particularly those living in low-income households. Such non-working adults who receive welfare benefits […] can become reliant on welfare programs.” In an attempt to increase self-sufficiency in recipients of benefits, they propose strengthening and increasing work requirements.
Ed Dolan reflects on the results outlined in the report in his article for the Niskanen center. He poses four questions that challenge the report’s main conclusions.
- Are the measures of poverty used in the report appropriate?
In the report poverty was measured through consumption starting in 1980, when the first reliable data is available. After adjusting for changes in purchasing power, the results show that the poverty rate has fallen compared to 1980. Although this approach has solid ground in research, Dolan argues that alternative measures produce different results (examples available here and here), mainly due to different definitions of poverty itself and using different years as the base for comparison.
- Who are the recipients?
The CEA distinguishes between two groups that currently receive welfare support: i. recipients unable to work, and ii. non-disabled recipients able to work. They report that non-disabled recipients have lower employment rates compared to the general population of working age. The authors explain this finding with the fact that recipients receive less benefits as their income raises which demotivates them to find work.
Dolan challenges this argument by saying that recipients cannot be easily grouped into non-disabled and disabled welfare beneficiaries. The Kaiser Family Foundation study found that some individuals that reported not working due to some form of disability do not meet the social security disability requirements for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) support, making them officially non-disabled. These individuals are unlikely to get employed despite policy adjustments, effective tax rates and work requirements.
- Are work requirements effective?
According to the CEA, there is sufficient evidence to support the claim that work requirements would be effective in reducing dependency on welfare benefits and increasing employment. Their argument is based on the welfare reform that took place in the 1990s.
Dolan disagrees with this conclusion, pointing out that the golden standard among experts for evaluating the 1990s reform is a series of eleven experiments known as the National Evaluation of Welfare-to-Work Strategies, conducted in the 1990s across the country with each lasting five years. In these experiments, participants were divided into two groups. The treatment group received benefits as a function of work requirements, while the control group continued to receive payments without conditions. The treatment group had modest gains in employment and there was a 1% decrease in total income on average. The results showed that the increase in wages was often smaller than the decrease in benefits. Finally, positive results were produced only where administrative support was provided (one-on-one interactions, training etc.). Dolan believes this provides little evidence that work requirements would help recipients move towards self-sufficiency. He also criticizes the CEA report for not emphasizing the crucial role of administrative support.
- What is the real agenda?
Dolan believes that work requirements are not likely to be effective at increasing employment and raising self-sufficiency: “Think of it this way. As currently configured, the message to in-kind welfare beneficiaries is, ‘We encourage you to work, but if you do work, we will take your benefits away.’ Adding work requirements changes the message so that it becomes, ‘If you work, we will take your benefits away, but we will also take them away if you don’t work.'” However, as a tool to lower welfare payments and reduce administrative costs work requirements could be effective, since more individuals would be excluded from the system, according to Dolan.
More information at:
“CEA Report: Expanding Work Requirements in Non-Cash Welfare Programs“, Council of Economic Advisers, July 12th 2018
Executive Office of the President, “Reducing Poverty in America by Promoting Opportunity and Economic Mobility“, Executive Order 13828, April 10th 2018
Ed Dolan, “Do we really want expanded work requirements in non-cash welfare programs?“, July 23rd 2018
MaryBeth Musumeci, Rachel Garfield, and Robin Rudowitz, “Medicaid and Work Requirements: New Guidance, State Waiver Details and Key Issues“, January 16th 2018
by Jelena Vitic | Aug 2, 2018 | News, Research
Picture credit to: iStock
The start of the longest and largest Universal Basic Income (UBI) experiment in Kenya and the approaching end of the trial in Finland spark a new discussion among experts on the effects of ‘no-strings attached’ money transfers.
An article published in Nature in May 2018 discussed the importance of randomized trials in informing researchers and policy makers alike about the feasibility of an UBI scheme. The article states that critics of the currently employed conditional welfare systems believe that the limited results do not justify large administrative costs that come with such policies. Some policy-makers see UBI as a more affordable alternative that has more potential to alleviate poverty, according to the article, but the costs and benefits of UBI schemes still have not been clearly identified. With that in mind, many decision makers prefer to employ a data-driven approach by making randomized trials, the most universally accepted method of gathering information about the effects of UBI. However, even supporters of the evidence-based approach claim that designing and conducting UBI trials comes with its own set of difficulties. They point out that it requires a large amount of planning and researchers need to look for benefits in a wide variety of areas such as health, education, nutrition and job-seeking. Furthermore, lack of standardized goals and agreed upon areas of impact pose another challenge for advocates of UBI trials.
Damon Jones, an economist at the University of Chicago believes that even clearly demonstrated benefits will not necessarily indicate that UBI would work in practice. He arguments that most resources for the trials come from private funds and only include a small portion of the population. Hence, he thinks trials do not say much about the affordability of big government programs and the willingness of people to fund them through tax increases. On the other hand, he adds that despite these inherent limitations research still should be done.
Others propose that trials have an ongoing impact on UBI discussions. Rob Reich, a political scientist at California’s Stanford University thinks trials will help researchers identify flaws in the process, refine goals and impact areas as well as provide policy makers with some answers they are looking for. Furthermore, supporters argue that over time the studies will provide more insight on the costs and benefits of guaranteed income schemes. Proponents of UBI trials recognize that despite being important, updating research is expensive.
On the other hand, Quartz interviewed experts that expressed doubt whether randomized trials are the best option for analyzing the effects of UBI in the first place. According to Karl Widerquist, many effects will play out over the years and will not be revealed during the experiment, regardless of its size and cost. Nonetheless, he notes there is very little downside to trying it out. Others believe that the benefits have already been proven by initiatives such as Alaska’s Permanent Fund Dividend and there is no need for more research. Matthew Zwolinski adds that UBI has to be “robust enough to survive the political process”, meaning that he sees gradual changes having a higher likelihood of being implemented, compared to radical policies.
Although opinions differ, supporters hope that big trials like the one in Kenya will open the door for future research and help the discussion move forward.
More information at:
Carrie Arnold, “Nature: Money for nothing: the truth about universal basic income”, Nature, News Feature, May 30th 2018
Kate McFarland, “Overview of current basic income related experiments (October 2017)”, Basic Income News, October 19th 2017
Kate McFarland, “US/KENYA: GiveDirectly Officially Launches UBI experiment”, Basic Income News, November 17th 2017
Olivia Goldhill, “We’re giving up on universal basic income before the evidence is in”, Quartz, May 29th 2018
by Hannah Trippier | Jul 31, 2018 | News, Research
The Welfare Conditionality (WelCond) project recently released a report on how people receiving benefits in the UK experience welfare conditionality within a social security system. Welfare conditionality is where a person’s eligibility for benefits is dependent on meeting certain requirements, for example attending regular interviews, which will be taken away if a person does not meet the latter.
The study used longitudinal qualitative methodology to investigate the experience of people receiving welfare in the UK and the changes in their behaviour over time. Over five years, from 2013-2018, the study conducted 1082 qualitative longitudinal interviews with 481 people receiving welfare (including jobseekers, single parents, migrants, homeless people, and offenders who have left the judicial system), 52 semi-structured interviews with policy stakeholders and 27 focus groups with frontline welfare practitioners.
Longitudinal qualitative methodology enables researchers to gain an insight into people’s experience of and perspectives on welfare conditionality over a period of time. However, qualitative research does not enable the assessment of the effectiveness of welfare conditionality intervention on relevant outcomes (such as the motivation to work). Accordingly, the results of the study cannot be taken to show the effectiveness of welfare conditionality as an intervention but can be used to gain a greater understanding of the potential benefits and harms of this practice.
The results of the study indicated that benefit sanctions do little to enhance people’s motivation to prepare for, seek, or enter paid work. On the contrary, in some cases the imposition of benefits sanctions led to feelings of reduced motivation and disengagement with the social security system. Welfare conditionality was viewed to be largely ineffective in facilitating people’s entry into paid labour market or in sustaining employment. Participants often reported a lack of change or sustained change in employment status, where they shifted between short-term, insecure, and low paid jobs, and periods of receiving benefits.
Additionally, welfare conditionality and benefit sanctions were reported to be connected to adverse outcomes such as poverty, increased reliance on charitable providers and informal support networks, increased debt and loss of tenancy, etc. People dealing with high debts may have to go for a rental property after losing their home and take the assistance of a letting agents to find a property at a reasonable rate. Welfare conditionality can also be associated with negative health outcomes, including fear, anxiety, psychological distress, and exacerbating existing health conditions, particularly in people with mental health issues.
The study also indicated that the current support provided often did not help people looking for work and that the provision of personalised, holistic support could be more effective in helping people to gain and retain employment. This was noted as a potential facilitator to increase motivation to prepare for, seek and enter work, and to enable people to overcome personal and structural barriers to work.
The authors of the study concluded that the perceived benefits of welfare conditionality to increase motivation to work did not outweigh the potential drawbacks and recommended a trial of conditionality-free benefits for those looking for work and the removal of benefit sanctions for people receiving incapacity benefit for existing health conditions. As an alternative to welfare conditionality, the authors recommended that personalised, holistic employment support should be given to help people enter the job market.
More information at:
Welfare Conditionality, “Final findings report – Welfare Conditionality Report 2013-2018“, Welfare Conditionality, June 2018
by Andre Coelho | May 23, 2018 | Research
Political Quaterly has just published a series of papers devoted to Tony Atkinson’s Participation Income (these will appear in print later in 2018, but all articles are available online at the moment). These have been presented and discussed at the 2017 BIEN Congress.
Participation Income has been an idea introduced by Tony Atkinson in the 1990’s, which can be summarized as follows (by Jeremy Williams):
“The participation income is a compromise that overcomes both of these issues [definition of citizenship and “money for nothing” moral hazard]. Rather than a true universal and non means-tested payment, it would be conditional. To receive the basic income, people would need to be participating in society. That could be formal work, it could be unpaid work such as care. It could be volunteering, or education, and of course people who were disabled or unable to work wouldn’t be excluded. Anyone who was contributing to society in some way would be eligible to enjoy its rewards.”
More information at:
Stirton, Lindsay, “Symposium Introduction: Anthony Atkinson’s “the Case for a Participation Income””. The Political Quarterly: 1–2, May 3rd 2018
Jurgen De Wispelaere and Lindsay Stirton. “The Case Against Participation Income — Political, Not Merely Administrative”. The Political Quarterly, May 7th 2018
Heikki Hiilamo and Kathrin Komp. “The Case for a Participation Income: Acknowledging and Valuing the Diversity of Social Participation”. The Political Quarterly: 1–6, April 30th 2018
Cristian Pérez Muñoz, “Participation Income and the Provision of Socially Valuable Activities”. The Political Quarterly: 1–5, May 4th 2018
Almaz Zelleke, “Work, Leisure and Care: a Gender Perspective on the Participation Income“. The Political Quarterly: 1–7, May 13th 2018
by Quentin Mathys | May 10, 2018 | News, Research
District of columbia Lincoln memorial Washington monument. Credit to: History Channel.
The district of Columbia has released on the 27th February 2018 a policy analysis that examines different approaches and strategies for providing a locally-funded guaranteed minimum income or universal basic income for its residents.
The study, named “Economic and policy impact statement: Approaches and strategies for providing a Minimum Income in the district of Columbia”, starts by evaluating the cost of living in absence of public social safety net assistance for three types of low-income households, 1) single adults without children, 2) single adults with one child, and 3) single adults with two children. The results show that a single adult without children would approximatively need an annual income of US$ 36 988 to meet their basic needs. For a single parent with one child, the annual income need is roughly US$ 66 113, while a single parent with two children would need about US$ 96 885 a year.
The paper then discusses the existing monetary and in-kind entitlements benefits, supports, and maintenance provided by the federal and District governments to low and moderate-income residents. According to the authors, the existing social safety net is strong enough to allow households who have full access to the public benefit programs to meet their basic needs. However, as Ryan Harrison underlines in his article about the report, households most in need for assistance do not qualify for the cash grants available, due to the work requirements of these means-tested policies.
In the next section of the study, the economic feasibility of implementing a basic income in the District is discussed. The authors explore three amounts for basic income where the first one is set at 100% of the Federal Poverty Line (FPL), the second one at 300% and the third one at 450% of the FPL. The associated gross cost of the three policies is estimated at 7, 21.5, and 32.2 billion US$ per year, respectively. According to the authors, the implementations of a basic income set at 450% of the FPL is the only approach that would allow all the households to meet their basic needs. This is debatable, since being above the FPL would, in principle, mean that basic needs were covered. However, the authors fear that such amount would lead to many households deciding to drop out of the workforce and making this implementation expensive and inefficient. This is also questionable, considering existing results from performed basic income pilots. Based on these issues, the report does not simulate the impact of providing a universal basic income in the Columbia district.
Furthermore, the authors only discuss the gross cost of implementing a basic income. Mentioning the net cost would have been relevant, as cost reductions can be expected in existing social assistance programs, and a restructuring of income taxes and /or other forms of taxes to finance the reform. The report, nevertheless, introduces an important discussion about the feasibility of a basic income implementation of in the district of Columbia.
More information at:
Susana Groves and John MacNeil, “Economic and policy impact statement: Approaches and strategies for providing a Minimum Income in the district of Columbia”, Office of the Budget Director of the Council of the District of Columbia, January 27th 2018
Ryan Harrison, “District of Columbia releases policy analysis for basic income”, Medium, April 8th 2018
“Council Budget Office releases Economic and Policy Impact Statement: Approaches and Strategies for Providing a Minimum Income in the District of Columbia”, David Grosso DC Council at-large, February 28th 2018
