by Kate McFarland | Nov 23, 2016 | Research
Malcolm Torry, director of the UK’s Citizen’s Income Trust (CIT) and co-secretary of BIEN, has prepared a report on implementing a citizen’s income (i.e. a basic income for UK citizens) for the Institute for Chartered Accountants of England and Wales (ICAEW).
Malcolm Torry (picture: Citizen’s Income Trust)
In a report written for ICAEW’s opinion column, its “Outside Insights“ series, Torry develops four different proposals to implement a basic income guarantee wherein weekly cash grants are disbursed in equal amounts to all adult UK citizens. (As mentioned below, however, two of the proposals recommend that the government move toward a universal basic income by first introducing equal and unconditional cash transfers within certain subpopulations.)
As is common in the UK, Torry refers to the policy as a “citizen’s income”, which he defines as “an unconditional, non-withdrawable income, paid automatically to every individual as a right of citizenship” — or, roughly, a universal basic income for citizens. (Here, I will use the terms ‘basic income’, ‘UBI’, and ‘citizen’s income’ interchangeably.)
On Torry’s proposals, the amount of the payouts would be the same for all citizens, regardless of earnings, although higher earners might be taxed more heavily. This is slight but notable difference from the form of basic income guarantee under consideration by the government of Ontario, for example, which is planning to test a model wherein the amount of the cash grants is tapered off with earnings (that is, a negative income tax).
The ICAEW report briefly addresses several common objections to basic income, and reviews the types of “feasibility” analyzed in detail in Torry’s book, The Feasibility of Citizen’s Income, published earlier in the year –including (to use his terms) financial, psychological, behavioral, administrative, political, and policy-process feasibility.
A Citizen’s Income: Four Schemes
Against this background, Torry investigates four specific models for implementing a basic income:
1. The first proposal is to introduce a universal basic income at a level at least as high as the UK’s current benefit cap, which would replace current means-tested social assistance. Torry notes that this scheme would be most feasible in a highly automated economy, in which a portion of the proceeds on machine production could be used to fund the citizen’s income, and wherein any potential work disincentive effects of the UBI would be benign to the economy. However, he does not believe that it is currently financially feasible, since financing it would require either massive increases in income tax rates or additional sources of revenue.
2. The second proposal is to introduce a smaller level of UBI (e.g. £60 per week for working age adults) without abolishing current means-tested benefits. Under this scheme, the government would take account of the amount of income received through the UBI when determining eligibility for additional social welfare benefits. Torry states that this scheme could be funded by a 3% increase in income taxes. However, he hypothesizes that it would be unpopular (psychologically infeasible) due to the redistribution of money from income earners to other working-age adults.
3. The third proposal is to phase in a UBI by gradually introducing it to successive age-cohorts of young adult. Torry recommends that the government begin with a universal child benefit £45 per week per child under the age of 16, and a citizen’s income of £60 per week for each person 16 years of age. The latter would then retain the citizen’s income in subsequent years, while those who turn 16 would begin to receive it.
Torry notes that, without additional pressure to implement a fully universal basic income, it could take 40 to 50 years for the entire population to receive the unconditional benefits. However, he believes that it is one of the most feasible options (on all dimensions of feasibility).
4. The fourth and final proposal, which Torry also considers to be relatively feasibility, is to phase in a UBI in the opposite age-wise direction: beginning by introducing the benefit to “pre-retired” adults (e.g. those over age 60) who voluntarily opt into the program.
The ICAEW has more than 147,000 members worldwide from the finance professions. The organization itself does not take an official stand on citizen’s income.
Read More:
The full report is available for download from the ICAEW website: Malcolm Torry, “How might we implement a citizen’s income?“
The CIT has also published a blog post summarizing the results of the report: Citizen’s Income Trust (November 16, 2016) “ICAEW report on implementing Citizen’s Income”
Article reviewed by Ali Özgür Abalı
Cover image: “Chartered Accountant’s Hall” CC BY-SA 2.0 R4vi
by Kate McFarland | Nov 20, 2016 | Research
Gertrude Schaffner Goldberg, Professor Emerita of Social Work at Adelphi University, evaluates the relative merits of income guarantees and job guarantees in a recent article for the national US labor journal New Labor Forum (published by the Murphy Institute and the City University of New York).
The paper ends inconclusively (and with a Philippe van Parijs quote):
There are important drawbacks to both approaches. The UBI is expensive, inefficient and, in the United States, counter-culture. By contrast, the JG suffers from public denial of the magnitude of unemployment, its dependence on government expansion, and the enmity of powerful interest groups. Yet the serious problems that both strategies address impel us to continue to discuss, debate, advocate, agitate, modify, and perhaps find alternatives. As Van Parijs writes, “. . . seismic events do occur, and it is important to prepare intellectually for when a political opportunity suddenly arises.”
Gertrude Schaffner Goldberg, “Employment or Income Guarantees: Which Would Do the Better Job?” New Labor Forum 2016, Vol 25(3): 92-100
Download: https://njfac.org/wp-content/uploads/2015/06/NLFJobsIncomGuar.pdf
Photo CC BY-NC-ND 2.0 Brian Dys Sahagun
by Nick Yeretsian | Nov 11, 2016 | Research
PROOF, the interdisciplinary research group that studies food insecurity in Canada, has published research on guaranteed annual income and food insecurity (not having access to sufficient affordable, nutritious food) in Canadian Public Policy.
Seven years of national-level data shows that a guaranteed annual income (in this case, Canada’s Old Age Security program and its supplement for those with low incomes) is effective in decreasing food insecurity among low income seniors in Canada.
“Turning 65 and being eligible for this funding is associated with, on average, a 15 percentage point drop in food insecurity compared to baseline.”
-PROOF press release
In the households studied, the prevalence of food insecurity was cut by nearly 50% among low income single-person households who were food insecure after the age of 65 and who, during the time of the study, experienced a shift in their source of income from wages or conditional public assistance to public pensions.
At the beginning of this year, 2.83% of Canadians were using food banks. And the use of food banks has been on a steady rise over the past decade across Canada. (Click here for an interactive map of the nation’s food insecurity levels as of 2012.)
While food insecurity in Canada is crescendoing, so is the support for Basic Income (BI) as a way to dampen it. PROOF’s study backs the recent surge of Canadian BI endorsements as a way to solve food insecurity and other problems associated with poverty.
Here are some of the endorsements just in the past year:
- Food banks like Winnipeg Harvest began advocating for BI.
- Food Banks Canada put BI at the top of its list of recommendations in its annual report.
- The Haliburton, Kawartha Pine Ridge District Health Unit endorsed BIG (joining many Ontario health units who have done the same).
- The Waterloo Regional Council endorsed BI.
- Valerie Tarasuk (Professor of Nutritional Sciences at the University of Toronto) has recommended a guaranteed annual income to alleviate food insecurity.
- Hugh Segal recently recommended that food security be one of the variables studied in the upcoming pilot in Ontario (he is one of the Project Advisers).
“Although this work is focused on low income seniors, it paves the way for future research to identify alternative funding models, like basic income, that address poverty in individuals before they are eligible for Old Age Security.”
-Tim Li PROOF Administrator
On November 17-18, the University of Toronto is hosting a conference on advancing food insecurity research in Canada.
PROOF’s new research is available here: https://www.utpjournals.press/doi/abs/10.3138/cpp.2015-069
McIntyre, L., Dutton, D. J., Kwok, C., & Emery, J. H. (2016). Reduction of Food Insecurity among Low-Income Canadian Seniors as a Likely Impact of a Guaranteed Annual Income. Canadian Public Policy, 42(3), 274-286.
Picture: cover of journal Canadian Policy
by Kate McFarland | Nov 2, 2016 | Research
An article on the impact of cash transfers on longevity was published in the April 2016 volume of the American Economic Review, a highly distinguished peer-reviewed journal published by the American Economic Association.
Abstract
We estimate the long-run impact of cash transfers to poor families on children’s longevity, educational attainment, nutritional status, and income in adulthood. To do so, we collected individual-level administrative records of applicants to the Mothers’ Pension program — the first government-sponsored welfare program in the United States (1911-1935) — and matched them to census, WWII, and death records. Male children of accepted applicants lived one year longer than those of rejected mothers. They also obtained one-third more years of schooling, were less likely to be underweight, and had higher income in adulthood than children of rejected mothers.
The charity GiveDirectly, which is planning a major basic income trial in Kenya, has published a blog post (dated September 20) on the importance of the study. GiveDirectly points out, for one, that most previous research on cash transfers focuses on developing countries, and little research has been published about the US.
Reference
Aizer, Anna, Shari Eli, Joseph Ferrie and Adriana Lleras-Muney. 2016. “The Long-Run Impact of Cash Transfers to Poor Families.” American Economic Review, 106(4): 935-71.
Online: https://www.aeaweb.org/articles?id=10.1257/aer.20140529
Photo CC BY 2.0 Tony Fischer
by Hilde Latour | Nov 1, 2016 | Research
In a recent review, the World Bank estimates that around 150 countries in the ‘developing world’ have implemented cash assistance programmes, which together reach approximately 800 million people.
The impact of such programmes in sub-Saharan Africa was thoroughly evaluated, using experimental data from two Unconditional Cash Transfer (UCT) programmes implemented by the Government of Zambia, where each programme is accompanied by a randomized controlled trial (RCT).
A UCT is similar to an Unconditional Basic Income (UBI) in that beneficiaries are paid directly in cash with no requirements on their actions. The main difference between the types of programmes concerns the inclusion criteria for participation. A UBI is targeted at every citizen, regardless of (for instance) socioeconomic status, whereas the UCT’s are often available for the poor population only, often with specific inclusion criteria, such as the presence of children of a specific age in a household or geographical criteria.
In 2010, the Zambian government began testing two different UCT-programmes. The programmes are still on-going. One of them is targeted at households with a child under age 3, while the other is targeted at households with various types of vulnerabilities (female or elderly headed households taking care of orphans or disabled children). Neither of the programmes is explicitly poverty targeted at the household level, but the (geographical) inclusion criteria resulted in 90% of beneficiaries below the Zambian poverty line. The outcome-parameters are identical in the two programmes. In each case, the annual amount transferred to a household is $144 ($24 every two months).
The effects after 2 and 3 years were compared to baseline. Far-reaching effects were reported in both groups, not only on the primary objective, food security and consumption, but also on a range of productive and economic outcomes.
A relatively simple flat cash transfer, unconditional and paid every two months, is shown to have wide-ranging effects on ultra-poor households in rural Zambia, significantly raising consumption and increasing food security, children’s schooling and material well-being, while at the same time strengthening economic capacity and assets.
After three years, household spending was -on average- 59% larger than the value of the transfer received.
These results are presented in a paper published by UNICEF: “Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from two government-led programmes in Zambia.”
Additional info:
A Basic Income News article by Tyler Prochazka about a recent meta-analysis (of 165 studies) on the effects of Cash Transfers can be found here.
cover photo (published with permission) and full citation of the paper:
Handa, Sudhanshu; Natali, Luisa; Seidenfeld, David; Tembo, Gelson; Davis, Benjamin. Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from two government-led programmes in Zambia, Innocenti Working Papers no. IWP_2016_21, UNICEF Office of Research – Innocenti, Florence
Special thanks to Josh Martin and Kate McFarland for reviewing this article.
by Kate McFarland | Oct 28, 2016 | News, Research
The Niskanen Center, a libertarian think tank based in Washington DC, has produced a new report on the potential of universal child benefit: “Toward a Universal Child Benefit” by Samuel Hammond and Robert Orr. The report proposes an unconditional benefit of $2000 annually for every child under the age of 18, which would be phased out for higher-income families.
Although clearly not universal, Hammond and Orr’s proposed policy might be considered a “basic income guarantee for children”. Significantly, the benefit is paid in cash rather than in kind (as discussed at length in the report), and it is distributed to all families in need–irrespective of whether a child’s parents or legal guardians in the workforce, seeking work, or able to work. As the authors note, the latter is a significant difference from the Child Tax Credit supported by front-running US presidential candidate Hillary Clinton, which is only available to households with earned income (leaving households without income to rely solely on in-kind benefits).
Hammond and Orr’s proposal is modeled after Canada’s Child Benefit program, previously covered in Basic Income News.
Hammond has previously written for the Niskanen Center in support of a basic income guarantee in the form of a negative income tax. He believes that a universal child allowance could provide a bridge to a guaranteed annual income for adults as well.
We might note that Hammond is not alone in envisioning this path toward a basic income in the US. Progressive commentators such as the Roosevelt Institute’s Mike Konczal and New York journalist Joel Dodge have advocated a universal child allowance as a policy that is both desirable in itself and a possible route to a universal basic income.
Shortly after the publication of the Niskanen Center report, Michael Tanner, a senior fellow at the Cato Institute (another DC-based libertarian think tank), published a response in which he expressed sympathy for the proposal but called for caution in pursuing such a policy. (Tanner is the prior author of a similarly cautious policy report on basic income guarantees for the Cato Institute.)
Founded in 2014, the Niskanen Center says that it “works to change public policy through direct engagement in the policymaking process” — targeting Washington insiders such as legislators, presidential appointees, congressional committee staff, interest group analysts, and civil servants in planning, evaluation, and budget offices. It branched into welfare policy earlier this year. For information about the think tank’s specific libertarian approach to social welfare, see Will Wilkinson (March 29, 2016) “Libertarian Principles and Welfare Policy“.
More Information and Background:
Samuel Hammond (October 25, 2016) “Toward a Universal Child Benefit” Niskanen Center blog.
Samuel Hammond (June 9, 2016) “‘Universal Basic Income’ is just a Negative Income Tax with a leaky bucket” Niskanen Center blog.
Michael Tanner (October 27, 2016) “Not So Fast on Universal Child Benefit“ Cato at Liberty blog.
Reviewed by Genevieve Shanahan
Photo CC BY 2.0 Pedro Ribeiro Simões
