by Kate McFarland | Nov 4, 2016 | News
The latest step to Ontario’s basic income pilot occurred on Thursday, November 3, 2016, when the Ministry of Community and Social Services released a call for public input on the design and objectives of the study and published a new comprehensive report from Project Adviser Hugh Segal.
In February 2016, the provincial government of Ontario, Canada announced a budgetary commitment to finance a pilot study of a basic income guarantee. In June, the government appointed former senator Hugh Segal — who has been promoting basic income in Canada for more than a decade — as the project’s Special Adviser. (For some of Segal’s past writings on basic income, see here.)
Segal has now released a detailed and comprehensive discussion paper in which he lays out his recommendations for the design and administration of the pilot. The government is soliciting input from the public before it makes its final decision.
This release of this proposal for Ontario’s basic income study closely follows the publication of details about the upcoming pilots in Finland and the Netherlands, as well as the charity GiveDirectly’s study in Kenya.
A Negative Income Tax Model
If the provincial government of Ontario decides to adopt Segal’s newly announced proposal, it will test a basic income guarantee (BIG) — wherein cash payments are disbursed automatically and unconditionally to individuals whose income falls below a certain threshold — as a replacement to its Ontario Works program and Ontario Disability Support Program.
Segal recommends that participants in the pilot be guaranteed a monthly income of at least $1320, or 75 percent of the province’s Low Income Measure, with an additional $500 supplement to those with disabilities.
In Segal’s proposal, the BIG is to be structured as a negative income tax (NIT), in which the amount of the subsidy is tapered off for higher earners, in contrast to a “demogrant” model wherein all participants would receive a fixed monthly payment regardless of other earnings. That is, the government would “top up” the earnings of pilot participants whose incomes fall beneath $1320 (or other level chosen for the basic income guarantee). Those who earn more than $1320 per month would receive smaller benefits or, depending on earnings, none at all.
Eligibility is to extend to all residents of the selected communities between the ages of 18 and 65, regardless of current income. All participants will be guaranteed a minimum income, as per the NIT model summarized above. However, depending on their initial and subsequent earned income, some participants may not receive any payment during the course of the experiment. As Segal’s discussion paper notes, “even though the program is based on a principle of universal access, not all participants will receive symmetric payments or any payment at all.”
Segal offers two reasons for his recommendation that the pilot test a negative income tax rather than a universal demogrant. First, this makes the design unique: no other planned trial of a basic income guarantee will employ the NIT model; thus, outside of Ontario’s pilot, no data on the impact of this specific model will be collected. Second, Segal believes that a demogrant, unlike an NIT, is not realistically affordable in Canada (nor in other developed nations).
Experimental Design
Segal recommends two types of studies:
(1) A randomized control trial, to be conducted in an urban center, in which different treatment groups receive different levels of guaranteed income and/or pay different rates of taxes on additional earned income. Subjects will be randomly sampled from all residents (of at least one year) between the ages of 18 to 65, with participation in the experiment being voluntary. Participants would then be randomly assigned to one of four groups, including a control.
(2) “Saturation sites” in which all members of a community receive the basic income guarantee (and are subject to corresponding changes in the tax schedule). Ideally, according to Segal’s report, “one saturation site would be located in southern Ontario, one in northern Ontario, and one would be chosen and planned in close collaboration with First Nations communities.”
In each case, the study is to last a minimum of three years.
Measured Outcomes
According to the discussion paper, the “core question” that Ontario’s pilot endeavors to answer is, in Segal’s words, “Is there a more humane and efficient way to reduce poverty, a way that better respects the rights of those in poverty to make their own life choices, reduces stigma and growth in bureaucracy, yet produces improved outcomes in terms of work and life prospects?”
In order to answer this question, Segal lays out many variables that he urges researchers to monitor and analyze in the pilot, including the following:
- Administrative costs or savings to the government.
- Health outcomes, as measured by (for example) prescription drug use or number of visits to primary care physicians, emergency departments, and hospitals.
- “Life choices” such as career decisions, education decisions, family decisions, and choices in living arrangements.
- Education outcomes of participants and their children, including completion, attendance, and standardized test scores.
- Work behavior, including employment status, hours worked, number of jobs, and participation in job-search activities. The report mentions participation in the underground economy as another outcome of interest.
- “Food security” status as assessed through the Canadian Community Health Survey and the researchers’ own surveys or interviews.
- Subjects’ “perceptions of their place in society, their capacity to contribute, their social environment’s capacity to protect them” as collected through interviews.
- Interactions between the basic income guarantee and other welfare programs (e.g. the Canada Child Benefit).
- In saturation sites, community-level impacts such as changes in rent and prices of goods and services, crime and incarceration rates, civic participation, and the use of public services.
Thus, the Ontario pilot is likely to examine a much wider and more diverse range of outcomes than the impending basic income pilots in Finland and the Netherlands, which focus more narrowly on assessing the impact of a basic income guarantee on employment.
This difference follows in part from a deliberate decision not merely to reproduce these studies. Segal states Ontario should not duplicate research being conducted elsewhere, for the sake of “maximiz[ing] the diversity of various different data sets generated by such endeavours.”
National Context
Segal recommends that Canada’s federal government “consider partnering with any willing province on any Basic Income pilots now being considered or contemplated.”
As Segal describes in the report (links added), Ontario is not alone in Canada in its interest in pursuing a basic income pilot:
“[T]he federal government introduced an enhanced child benefit in July 2016, with the objective of constructively increasing the income of low and middle-income Canadian families with children. Moreover, the House of Commons Finance Committee recommended in its pre-budget report that the government of Canada move forward with a pilot project on Basic Income.
“In its most recent ministerial mandate letter, the government of Quebec instructed the Minister of Employment and Social Solidarity to modernize income support programs and embrace better ways of reducing poverty, including a Basic Income guarantee. The Quebec Liberal Party Youth Wing, in August 2016, summoned the government to implement a Basic Income guarantee in lieu of the province’s current welfare system. The government of Nova Scotia has initiated a comprehensive social support review looking for better ways to eliminate the welfare wall and to better support the working poor. The mayors of Calgary and Edmonton have welcomed the idea of a Basic Income guarantee and associated pilot projects, as has Alberta’s Minister of Finance. In August 2015, the Government of Saskatchewan Advisory Group on Poverty Reduction also recommended a Basic Income pilot.”
Call for Input
As announced on November 3, 2016, Ontario’s Ministry of Community and Social Services will be conducting consultations to solicit public input on the basic income trial, guided by Segal’s discussion paper. Consultations will run through January 2017.
Those who want to provide input may contribute in one of two ways: attend an in-person meeting (see the schedule here) or share feedback online (until January 31, 2017).
The first stage of the pilot study — selecting the sites, obtaining access to data sources, and selecting and obtaining consent from participants — is slated to commence before the end of March 2017.
More Information
News release from the Ontario government (Ministry of Community and Social Services): “Ontario Seeking Input on Basic Income Pilot”
Discussion paper: “Finding a Better Way: A Basic Income Pilot Project for Ontario” by Hugh Segal.
Thanks to Jenna van Draanen for proofreading a draft of this article.
Cover photo: “Terminally Invisible” CC BY-NC 2.0 Kat Northern Lights Man (taken in Toronto, Ontario).
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 Kate McFarland | Sep 25, 2016 | News
In a blog post dated September 22, the charity GiveDirectly announced that it will begin an initial pilot study of a basic income guarantee in a village in Kenya in late October.
According to GiveDirectly’s announcement, the pilot will “test the operational details of the model and also generate qualitative insights which we will then feed back into the ultimate quantitative evaluation.”
In the same post, the research team laid out some further details concerning its full study (the start date of which remains unspecified). In the full study, experiments will be conducted in two counties in rural Kenya — one in which GiveDirectly has acted previously (with few issues and near 100% participation rates), and one new county.
Villages in these counties will be divided into three treatment groups: one in which all adult residents receive a guaranteed basic income for 12 years, one in which all adult residents receive a guaranteed basic income for two years, and one in which all adult residents receive a lump sum equivalent to the two-year basic income. The amount of the basic income will be approximately $0.75 per day, which will be held fixed across villages in all three treatment groups. Data will also be collected on a control group of villages in which no cash transfers are given to residents.
In the blog post, the researchers mention a particular interest in the question of how a long-term income guarantee impacts risk-taking, such as in starting a business. They go on to add that, given the scale of the experiment, “we have reasonably good odds of detecting impacts not only on individuals, but also on village-level markets.”
GiveDirectly aims to include 40 villages in the first treatment group and 80 in each of the latter two. This would result in roughly 26,000 individuals receiving cash transfers.
There are some minor complications. For instance, according to a blog post published on September 5, lower-than-usual participation rates are being witnessed in some parts of Kenya — which the researchers attribute largely to misgivings and skepticism about the nature of the charitable organization:
We’ve found that people typically refuse out of skepticism. Potential recipients find it hard to believe that a new organization like GiveDirectly would give roughly a year’s salary in cash, unconditionally. As a result, many people have created their own narratives to explain the cash, including rumors that the money is associated with cults or devil worship.
However, the charity is working to improve its outreach to communities and stresses that, contrary to some press, relatively high rates of nonparticipation do not bespeak a “fatal problem” with the experiment.
GiveDirectly has raised over $11 million since April, when the organization announced its plan to fund a major study of basic income. It has also assembled a team of distinguished advisors, including Alan Krueger (former Chairman of President Obama’s Council of Economic Advisers) and MIT economists Abhijit Banerjee and Tavneet Suri (MIT). In July, an article about the work of GiveDirectly appeared in the prestigious Quarterly Journal of Economics.
Reference
GiveDirectly team (September 22, 2016) “New details on our basic income pilot”
Reviewed by Dawn Howard
Photo CC BY-NC 2.0 Evandro Sudré
Special thanks to Kate’s supporters on Patreon
by Kate McFarland | Sep 1, 2016 | News
Ontario’s provincial government is on track to begin a pilot study of a guaranteed minimum income, according to the latest comments by former Conservative senator Hugh Segal. A more detailed report will be available in mid-September.
In June, the government of Ontario appointed Hugh Segal — a long-time proponent of a guaranteed income — to advise officials in the design and implementation of the pilot study, which is currently on track to begin before April 2017.
The pilot is designed to test a guaranteed minimum income, in which participants’ total incomes are topped up to above the poverty line. This income subsidy will supplement any support received from existing anti-poverty programs, which will not be eliminated or replaced during the pilot.
Thus, although it is often referred to by the term ‘basic income’, the policy to be tested in Ontario should be distinguished from the commonly discussed “demogrant” model of basic income, wherein all individuals receive a regular payment of the same amount, regardless of other earnings or total income. Ontario will be investigating a program that supplements the earnings only of individuals whose incomes are below a certain level (e.g. the poverty line). In this respect, the pilot is similar to Manitoba’s well-known “Mincome” experiment of the late 1970s.
As under a demogrant model, however, there would be no work requirement or other conditions that poor Canadians would need to meet to qualify for the guaranteed minimum income. All would be eligible, whether working or not.
According to CBC News’ most recent report (dated August 30), Segal has suggested that the government could run two types of pilots: one in a small community in which the entire community would receive a guaranteed income (as was the case in the Mincome experiment), and another involving a sample of individuals within a large community. The latter design would allow the beneficiaries of the guaranteed income to be compared against a control group, as in the recently-announced design of the basic income experiment in Finland.
Statements in the CBC’s article suggest that the participation in the pilot will be voluntary [1]. This would contrast with the Finnish experiment — in which, as a measure to prevent bias in the sample, participation is mandatory for those individuals selected to participate.
The CBC News report also notes Ontario will not receive direct financial support from Canada’s federal government — despite the fact that the majority Liberal Party endorsed guaranteed annual income as party policy at its convention in May. The provincial government itself has earmarked $25 million for the pilot.
According to CBC, Segal is planning to publicize a preliminary report on the pilot project in mid-September, making it available for three months of public consultation.
[1] Context: “…the pilot will not eliminate or consolidate existing poverty-reduction programs, but rather be designed as a top-up to such programs to lift its voluntary participants above the poverty line [emphasis added].”
Addendum (December 8): In light of the continued high frequency of view of this post, we note that the report in question was published on November 3. See the Basic Income News summary — and links to the full report — here.
References
Dean Beeby, “Ontario to test guaranteed-income program amid warnings about costs, effectiveness“, CBC News; August 30, 2016.
Roderick Benns, “New report out for Ontario pilot on basic income“, Basic Income Canada Network; August 30, 2016.
Rob Rainer, “Ontario moving toward basic income pilot”, Basic Income News; July 23, 2016.
André Coelho, “CANADA: Ontario reaches further into basic income implementation”, Basic Income News; June 26, 2016.
Photo CC BY-NC-ND 2.0 Commonwealth Secretariat
by Tyler Prochazka | Aug 3, 2016 | Opinion
As the US Presidential race heats up, most of the candidates have already made their opinions known regarding Universal Basic Income. Regardless, it is imperative that the United States fund new basic income pilot programs to test how a basic income would affect the current economy.
The United States experimented with a type of basic income in the 1960s and 70s, but it is time to collect new data. This is the first step toward implementing a full UBI in the United States.
Recent pilot programs throughout the world, such as in India, have given the basic income movement ammunition to push its message, showing improved educational, health and entrepreneurial outcomes. A pilot program in the United States would show policymakers that a basic income is far superior to our outdated bureaucratic safety net.
Sign this petition to ask all of the US presidential candidates to take a pledge to fund basic income pilot programs throughout the country.
