by Kate McFarland | Oct 28, 2016 | Research
Earlier in the year, Stewart Lansley (Visiting Fellow at the University of Bristol and at City University) and Howard Reed (Director of Landman Economics) co-authored an extensive report on basic income for the British think tank Compass.
As described in the executive summary, “This paper examines the desirability and feasibility of introducing a universal basic income (UBI) scheme in the UK. It examines the merits of such a scheme, how it might be implemented and what role it might play in the search for a good society, one that is more equal, sustainable and democratic. In particular, it presents the results of a number of simulations of how such a scheme would work in practice, including its cost, distributional impact and feasibility.”
More recently, Lansley and Reed summarized their conclusions and policy recommendations–a gradual and incremental approach to the introduction of a UBI–in an article for the London School of Economics blog.
Read more:
Stewart Lansley and Howard Reed (October 13, 2016) “How to make a Universal Basic Income a reality” LSE blog.
Stewart Lansley and Howard Reed (May 2016) “Universal Basic Income: An idea whose time has come?” Compass.
Also see Tyler Prochazka’s Basic Income News exclusive interview with Lansley about the Compass report.
Image CC BY 2.0 Steven Depolo
by Kate McFarland | Oct 15, 2016 | News, Research
As previously reported in Basic Income News, Kela, the Social Insurance Institution of Finland, submitted a report on basic income experiments to the Finnish Government on March 30. Previously released to the public only in Finnish, the report is now available in English.
Kela’s report describes and analyzes several basic income models, including a “full” basic income of at least 1000 EUR per month, which would replace all existing social insurance programs, a “partial” basic income of under 800 EUR per month, and a negative income tax. It additionally examines conditional programs such as a participation income.
In the conclusion of its report, Kela advises the Finnish government to adopt a partial basic income model for its experiment.
In August, Finland’s Ministry of Social Affairs and Health drafted a bill authorizing the basic income experiment. This bill revealed that the government plans to test of a partial basic income of 560 EUR per month, distributed to a random sample of 2,000 individuals who are between the ages of 25 and 58 and currently receive unemployment assistance. The Ministry’s proposed legislation also made clear that experiment will be designed specifically to test whether a partial basic income incentivizes employment.
The English version of Kela’s 62-page report is now available as a free download from its website (see link below). This version also includes a postscript concerning the bill drafted by the Ministry of Social Affairs and Health, including a summary of criticisms of the bill and an explanation of the government’s decision to adopt the chosen experimental design.
Kansaneläkelaitos Kela; Social Insurance Institution of Finland Kela (2016) “From idea to experiment. Report on universal basic income experiment in Finland”
Link: https://helda.helsinki.fi/handle/10138/167728
Photo: CC BY-NC 2.0 Aaronigma
by Tyler Prochazka | Oct 12, 2016 | News, Research
After many years writing scholarship on the citizen’s income (or basic income), Malcolm Torry was constantly asked about the feasibility of the policy. A new book by Torry, The Feasibility of Citizen’s Income, seeks to answer this question.
Below is an interview with Torry on he came to write the new book and some of the conclusions he made in his research.
What prompted you to write this book?
It was about two years ago that the Citizen’s Income debate started to become seriously mainstream. I had already published Money for Everyone: Why we need a Citizen’s Income (Policy Press, 2013), a general introduction to the subject. Although the book was designed to be accessible to the general reader, a number of people had said to me that something shorter and cheaper would be useful so I wrote 101 Reasons for a Citizen’s Income (Policy Press, 2015). Both of these books were designed to show that Citizen’s Income is a good idea. They might or might not have contributed to the increase in interest in Citizen’s Income among think tanks, political parties, and the press. (Both international developments and increasing concern about the future of the employment market were probably more significant causes.) I had frequently been asked questions about the feasibility of Citizen’s Income. At both BIEN and Social Policy Association conferences I had presented papers about feasibility that built on articles about political feasibility by Jurgen De Wispelaere and his colleagues; and then, following a presentation for Cambridge economists on different kinds of feasibility, Karl Widerquist, who was the other presenter at the seminar, asked me if I would turn my presentation into a book for the Palgrave Macmillan series that he edits. Some of us had already noticed that the Citizen’s Income debate was becoming at least as much about feasibility as it was about desirability, so I agreed to Karl’s proposal.
What was the most surprising and/or interesting element you discovered while researching for this book?
A combination of related elements: that the policy process (the process by which an idea finds its way to implementation through a variety of interconnected institutions) is extremely diverse; that understandings of it are equally diverse; and that ideas can sometimes achieve implementation without passing through what we might call a normal policy process: that is, that policy accidents can occur. The book therefore contains chapters on political feasibility and on policy process feasibility, as well as a final chapter, ‘From feasibility to implementation’, in which policy accidents are discussed.
Which aspect will be most challenging to overcome in achieving a citizen’s income: political or psychological barriers? Why?
It became clearer to me as I researched and wrote the book that political feasibility relies heavily on psychological feasibility. Only if a significant proportion of a population are convinced of the case for a policy change, and significant proportions of particular groups within populations (journalists, academics, policy-makers, etc.) are convinced of the case, is there any chance of political feasibility. Psychological feasibility therefore precedes political feasibility – except when political accidents occur, and even then potential psychological feasibility is required. Psychological feasibility will not be easy to achieve because in the UK we have been means-testing benefits for four hundred years, and it takes a significant paradigm shift to recognise that in the presence of a progressive income tax an unconditional payment can do the same job as means-tested benefits and can do it a lot more efficiently and without all of the side-effects of means-testing. Given the further popular ‘deserving/undeserving’ mindset, building psychological feasibility for a Citizen’s Income for everyone is going to be difficult. However, building psychological feasibility for such ‘deserving’ groups as elderly people, the pre-retired, children, and young people, would not be so hard: so a feasible implementation method might be to implement Citizen’s Income one age group at a time, beginning with those thought most deserving. This would eventually build the psychological feasibility required for a Citizen’s Income for working age adults.
Is a citizen’s income feasible just using current revenue? If so, would this be the most desirable way to implement basic income?
A Citizen’s Income certainly is feasible just using current revenue if income tax allowances (‘standard deduction’ in the USA; ‘Personal Allowance’ in the UK) are adjusted appropriately, and Income Tax rates and other aspects of a tax and benefits system are adjusted appropriately. We have shown that in the UK a Citizen’s Income of £60 per week for working age adults (less for children and young adults; more for elderly people) would require no additional public expenditure if Income Tax Personal Allowances were reduced to zero, Income Tax rates were raised by just 3%, and National Insurance Contributions (social insurance contributions) and means-tested benefits were adjusted appropriately.
Whether this would be the most desirable way to implement a Citizen’s Income scheme is of course debatable: but it would probably be the most feasible way to begin implementation.
What would the most significant effect of the citizen’s income be on households?
What would be the most significant effect must be a matter of personal opinion, because different households have different priorities: but among significant effects would be greater freedom to choose an employment pattern that worked for all of the members of the household; lower marginal deduction rates for all or many households, meaning that an increase in earned income would translate into a higher additional net income than under current means-tested benefits systems; and freedom from bureaucratic intrusion into the household’s relationships and circumstances.
What is the empirical evidence that universal programs are superior to means tested ones?
To decide whether one system is superior to another requires a list of criteria for a good benefits system, and then different systems need to be evaluated against those criteria. The book Money for Everyone contains a full discussion of the criteria for a good benefits system, discusses the ways in which the criteria are met or not met by different systems, and concludes that a universalist system meets the criteria more thoroughly than a means-tested one. The Feasibility of Citizen’s Income does not ask directly about the desirability of Citizen’s Income, but rather seeks evidence for Citizen’s Income’s ability to pass a variety of feasibility tests (although of course feasibility is required for desirability, and desirability for feasibility). Evidence is drawn from natural and constructed experiments, microsimulation results, and other empirical research.
What is the most desirable aspect of a citizen’s income? What is the main reason you support basic income?
Again, what is the most desirable aspect of Citizen’s Income will be a matter of opinion. Since we all have different preferences, the question then comes down to the second question asked: What is the main reason that I support Citizen’s Income? There is no main reason; there are lots of reasons: unconditionality; universality; lower marginal deduction rates; greater individual freedom; greater equality; decreased poverty; enhanced social cohesion; administrative simplicity; the absence of stigma, error, fraud, and bureaucratic interference in the lives of individuals and households.
What brought you to the citizen’s income movement?
From 1976 to 1978 I worked in the Department of Health and Social Security’s Supplementary Benefit office in Brixton in South London, administering means-tested benefits. We all knew how bad the system was, both for claimants and for the staff. The benefit that we and the claimants loved was universal Child Benefit, for its simplicity, its reliability, and the way that it reduced poverty, increased equality, and created social cohesion. Why shouldn’t the same principles and the same results be transferred to benefits for working age adults?
I was ordained, and served my first post in the Church of England’s ministry at the Elephant and Castle: the parish in South London in which the headquarters of the DHSS was located. I got to know people in the offices, and was invited to the department’s summer school. There I found the idea of a Basic or Citizen’s Income being seriously discussed. I was invited to join a group of individuals from a variety of backgrounds interested in the idea – the Basic Income Research Group, now the Citizen’s Income Trust – and have participated in its work ever since.
The motive has always been the same: to research the desirability and feasibility of an unconditional income for every individual as a right of citizenship. My new book concludes that Citizen’s Income’s implementation is feasible.
by Kate McFarland | Oct 8, 2016 | News, Research
The Canadian Centre for Policy Alternatives (CCPA)–a national independent research institute studying issues related to social, economic, and environmental justice–recently released two reports on basic income:
– David Macdonald (October 5, 2016) “A Policymaker’s Guide to Basic Income“
– Alex Himelfarb and Trish Hennessy (eds) (October 6, 2016) “Basic Income: Rethinking Social Policy“
David Macdonald, a senior economist at CCPA, considers two general types of basic income policies (defining a “basic income” as “a ‘no strings attached’ transfer from government to individuals or families”): a universal basic income, in which cash transfers of equal value are distributed to all Canadians regardless of income, and a negative income tax, in which benefits are tapered so that the poorest Canadians receive the full amount while the richest Canadians receive nothing.
For each of these two general approaches, Macdonald simulates four different scenarios, which vary according to the amount of the basic income and which (if any) existing programs are eliminated. He then analyzes, for each scenario, the effect on poverty reduction (for children, adults, and seniors), the consequences for net earnings across income groups, and the cost of the program to the government.
Based on his analyses, Macdonald concludes that basic income programs that replace all current welfare programs in Canada would result in “dramatically higher levels of poverty”. Even at relatively high levels of the basic income, a policy that eliminates Canada’s pension program would require “ethically and politically unsupportable compromises where seniors are pushed into poverty to lift up adults and children” (p. 8). Thus, he believes that the preferred approach, should the Canadian government pursue a basic income, would be to introduce the basic income guarantee in addition to existing programs. Moreover, Macdonald favors the negative income tax approach, as opposed to universal cash transfers, due to NIT’s lower cost and comparative effectiveness in reducing poverty.
Press coverage of Macdonald’s report tended to emphasize his point that basic income is not a “silver bullet” against poverty (see, e.g., reports in The Star, CTV News, and Huffington Post).
Alex Himelfarb and Trish Hennessy provide an edited volume of twelve short essays (not including their own introduction to the volume), which encompass a variety of viewpoints on both the benefits and limitations of basic income.
In a series of essays in the first half of the volume, proponents of basic income lay out several cases in favor of the policy–invoking (in different contributions) such considerations as homelessness, seasonal work and cyclical unemployment, and the social and economic determinants of health. Other contributions are more critical, although rarely opposed to basic income (at least in its progressive variants). For example, Jennefer Laidley critically assesses whether a basic income can really alleviate poverty, and Margot Young discusses limitations of basic income with respect to the difficulties faced by lone mothers. Michael Mendelson points out differences between right and left proposals of “basic income” and urges Canadians not to blindly consent to any program that bears the name, preferring a gradual approach to a progressive basic income. Louis-Philippe Rochon and Toby Sanger, meanwhile, argue that the government should focus its attention on full employment–which, while not incompatible with a basic income guarantee (as they admit), is a goal they believe should take precedence.
The CCPA was founded in Ottawa in 1980 by faculty Carleton University. Since this time, the organization has expanded, now holding branch offices in other cities and provinces, including Vancouver, Winnipeg, Regina, Halifax, and Toronto. While officially nonpartisan, the CCPA has been described as “left-leaning” and describes itself as “one of Canada’s leading progressive voices in public policy debates”.
Reviewed by Dawn Howard
Photo: “Toronto Homeless” CC BY-NC 2.0 Anton Bielousov
by Kate McFarland | Oct 3, 2016 | Research
The Government of Ontario plans to move forward with a pilot study of a basic income guarantee, to begin by April 2017.
On September 20, four researchers — Evelyn L. Forget (Professor of Economics at the University of Manitoba), Dylan Marando (PhD Student at the University of Toronto), Tonya Surman (founding CEO of the Centre for Social Innovation), and Michael Crawford Urban (Policy Associate at the Mowat Centre) — released a report called “Pilot Lessons: How to design a basic income pilot project for Ontario”. “Pilot Lessons” offers recommendations to the Ontario government on the basis of previous trials of basic income guarantee programs. It also calls for a greater focus on the impact of a guaranteed income on innovation and entrepreneurship.
The report begins by glossing the meaning of the term ‘basic income’ as it is used by the authors (“basic income is best conceptualized as a policy whereby a government guarantees, to all of its citizens, a regular predictable income sufficient to live a basic but dignified life”), distinguishing between the “demogrant” and “negative income tax” models.
The authors go on to overview past experiments on basic income, especially those conducted in the United States and Canada during the 1970s.
Based on this review of past experience, they identify four lessons:
1. Vary the parameters (e.g. eligibility conditions, amount of income guarantee, tax-back rates), but don’t vary them too much.
2. Communicate the results of experiments through scientific, not political, channels. The authors state that “science and politics don’t mix well”. For example, they point to the politically-driven promulgation of the alleged correlation between receipt of a basic income and increased divorce rates following the United States experiments in the 1970s. This contributed to the deterioration of interest in the policy, especially among Republicans.
3. Don’t overlook indirect benefits of basic income that might be observed in experiments. For example, the authors note Evelyn Forget’s investigation of Manitoba’s “Mincome” experiment: Forget demonstrated that the basic income guarantee in Dauphine corresponded to lower hospitalization rates and increased high school graduation rates.
4. Don’t assume that a decline in the time spent in paid employment implies a decline in the time spent in socially valuable work (e.g. consider whether the time is spent instead in childcare, continued education, volunteer work, etc).
In the next chapter, the authors describe major changes in the labor market that pose important differences between the present context and that of the past experiments, such as the increase in precarious labor and rise of automation. They also argue that, by decreasing the risk associated with leaving a job or starting a business, a basic income could facilitate entrepreneurship and innovation.
The report concludes with 14 recommendations for the design of a pilot study.
The full report is available for download.
Reviewed by Dawn Howard
Photo: Vancouver Science World CC BY 2.0 Franco Ng
by Tyler Prochazka | Aug 21, 2016 | Research
The Overseas Development Institute just released the largest meta-analysis of cash transfer programs ever, spanning 15 years of data and 165 studies. The main takeaway is that studies show a consistent reduction in poverty measures. Perhaps an even more important conclusion is that most evidence showed an increase in work participation after receiving the basic income.
The Overseas Development Institute is an independent think tank based in the United Kingdom. The meta-analysis reviewed tax and donor financed cash transfers to individuals and households. Retirement and unemployment were not included in the analysis. The studies had to meet “methodological rigor” to be included in the analysis.
Though these cash transfers differ somewhat from a pure basic income, the study provided the strongest evidence yet that a basic income-type approach is a crucial tool to eliminate poverty.
“There is strong evidence that cash transfers are associated with reductions in monetary poverty,” The report noted. “The evidence consistently showed an increase in total expenditure and food expenditure and a reduction in poverty measures.”
The few studies that did not find a statistically significant impact were possibly due to low transfer levels or because the transfer was only for limited time-frame, the report said.
One of the most heated disputes regarding the basic income is its effect on work participation. The report provided robust evidence that concerns about lowered work participation are unwarranted.
Most of the studies found no statistically significant effect on work participation, and those that found an effect largely found increased work participation and intensity.
Those studies that found decreased work were due to the elderly and individuals with dependents lowering their work participation. Several studies also found lower rates of child labor. As basic income advocates have said, this is likely a socially desirable effect.
Several other positive effects were found among the studies:
- Health service use and dietary diversity improved
- School attendance increased and several studies found positive effects on cognitive development test scores
- Women had greater decision-making power and less instances of physical abuse
- Savings and investment improved, improving recipients’ autonomy
The study has some caveats regarding the overall positive results. But the review said concerns regarding unintended negative effects are not supported by the evidence.
“The vast majority of studies reporting statistically significant results showed that cash transfers contribute to delivering the outcomes that policy-makers intend to achieve. This finding is particularly impressive given its consistency across the critical outcome areas and high number of indicators covered by this review,” the report said.
Jessica Hagen-Zanker, Francesca Bastagli, Luke Harman, Valentina Barca, Georgina Sturge and Tanja Schmidt, “Understanding the impact of cash transfers: the evidence”, Overseas Development Institute. July 2016.
