by Kate McFarland | May 23, 2017 | News
Note: Please see this article for a more current update (Oct 15)
The (Second) Year of the Pilot
Status of Basic Income (and Related) Experiments in May 2017
Last Updated: May 15, 2017
BIEN cofounder Guy Standing, a basic income pilot veteran and now frequent consultant, dubbed 2016 “the year of the pilot“ in response to the burgeoning interest in experimentation with basic income in various countries throughout the world. In 2017, some of these pilot studies were launched, some have been delayed, and other plans have remained dormant. Some have turned out to resemble a full-fledged basic income to a lesser degree than first anticipated.
This page summarizes the current state of this year’s existing, planned, and previously announced basic income pilot experiments (as of May 2017).
A. UPDATES ON SEVEN STUDIES
Following are summaries of the present status (as of mid-May 2017) of seven pilot studies of basic income–or, better put, seven alleged or reported pilot studies of basic income–that have received international publicity within the past year, including projects in Finland, Kenya, the Netherlands, Ontario, Scotland, Uganda, and the United States.
First, though, an important caveat: although each project listed below has been described as a “basic income pilot” or “basic income experiment” in media reports, few manifest every characteristic of a basic income, defined by BIEN as “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.”
Granted, any social policy experiment is by its nature limited in certain ways, making it something of a vacuous criticism to say that a basic income experiment fails to test a “genuine” basic income. While a basic income is lifelong, experiments are necessarily bounded in duration. While a basic income is universal, experiments typically require that a portion of the population not receive the benefit in order to provide a control or reference group. (Even saturation studies, in which every member of a community is eligible for the program, remain limited in that the basic income does not extend to other communities in the same general geopolitical region.)
That said, some of the most highly-publicized experiments and pilot programs diverge from a basic income in ways that are significant even after accounting for inherent constraints due to the nature of experimentation. For example, the target population might not be universal. (As described below, this is the case in the experiment currently running in Finland, as well as those planned in Ontario and several Dutch municipalities and, likely, the experiment under development by Y Combinator.) Additionally, the benefits disbursed to the treatment groups in some of the experiments–such as, most notably, those planned in Ontario and the Netherlands–diverge from some of the key attributes of a basic income, such as by being household-based or reduced with earned income. (As mentioned below, the treatment conditions in the Dutch experiments will even retain a degree of job-conditionality.)
I touch upon additional caveats at the end of this article.
1. Finland’s “Perustulokokeilu” (Basic Income Experiment)
Status: Launched on January 1, 2017.
The national government of Finland has enacted a two-year experiment to investigate the effects of a basic income on labor market participation, designed and directed by Kela (Finland’s Social Insurance Institution). The experimental group consists of 2,000 persons, who were randomly selected from a pool of individuals between the ages of 25 and 58 who were receiving unemployment benefits from Kela in November 2016 (about 175,000 individuals nationwide). Participation in the basic income program was mandatory for those selected.
The 2,000 participants are receiving unconditional payments of €560 (about 590 USD) per month. Unlike Finland’s current programs of unemployment assistance, the pilot program imposes no requirement that recipients demonstrate that they are seeking employment or accept jobs offered to them, and those who do obtain work will continue to receive the full €560. (Thus, while the sample is clearly not representative of all Finns, the individual cash transfers do match the definition of basic income, although not a fully livable one.)
The experiment was officially launched on January 1, 2017–with the first payouts distributed on January 9–and will continue through December 31, 2018.
The research group at Kela will compare outcomes in the experimental group to a control group, consisting of all persons in the original target population who were not selected to participate. As mentioned above, the analysis will focus on labor market participation, including differences in employment rates between the treatment and control groups. Research director Olli Kangas has stated in recent lectures that Kela will also monitor expenditure on medication, health care usage, and income variation.
To avoid observer effects, Kela is conducting no interviews or questionnaires during the course of the experiment, and will publish no results prior to its conclusion at the end of 2018 (despite recent rumors driven by exaggerated claims stemming from a single anecdote voluntarily produced by one experimental participant).
Kangas has recommended expansion of the experiment in future years (e.g. to test different models and broaden the target population); at the time of this writing, however, the government has not acted upon this recommendation.
Official website: https://www.kela.fi/web/en/basic-income-experiment-2017-2018.
2. GiveDirectly’s Kenyan Basic Income Experiment
Status: Pilot launched in one village in October 2016; full experiment (200 villages) intended to launch in fall 2017.
GiveDirectly, a US-based charitable organization, has initiated a project in which it will eventually provide unconditional cash transfers to the residents of 200 villages in rural Kenya (about 26,000 people in total).
An initial pilot study commenced in one village in October 2016, in which all 95 residents now receive monthly unconditional cash payments of about 23 USD (€21) per month, amounting to roughly half of the average income in rural Kenya. Payments will continue in this village for 12 years. At the time of this writing, only this initial “test village” is receiving a basic income. GiveDirectly’s current objective is to launch its full experiment in September 2017.
In the full study, 300 villages will be randomly assigned to one of four groups: three treatment groups, in which all residents receive some form of unconditional cash transfer, and a control group of villages in which no cash transfers are given to any residents.
In the first treatment group, which will include 40 villages, residents will receive cash payments of about 23 USD every month for 12 years (as in the initial test village). In the second, containing 80 villages, residents will receive monthly cash payments of the same amount, but only for two years. In the third, also containing 80 villages, residents will receive a lump-sum payment equal in amount to the two-year basic income. (Note that, ignoring their time-boundedness, the schemes implemented in the first two treatment groups do meet BIEN’s definition of ‘basic income’.)
As GiveDirectly explains on its website, “Comparing the first and second groups of villages will shed light on how important the guarantee of future transfers is for outcomes today (e.g. taking a risk like starting a business). The comparison between the second and third groups will let us understand how breaking up a given amount of money affects its impact.”
The organization also indicates that it will investigate outcomes including “economic status (income, assets, standard of living), time use (work, education, leisure, community involvement), risk-taking (migrating, starting businesses), gender relations (especially female empowerment), [and] aspirations and outlook on life.”
GiveDirectly is making much of its data public as it collects it (e.g. responses to the first survey of participants in its initial pilot); this practice, however, pertains only to the pilot village, which is not itself to be included in the full experiment. The organization expects to publish its first experimental results after one or two years.
Official website: www.givedirectly.org/basic-income.
3. Ontario’s Guaranteed Minimum Income (“Basic Income”) Pilot
Status: Pilot studies scheduled to commence in two regions in spring 2017, and in a third region in autumn 2017.
The government of the Canadian province of Ontario is preparing a three-year pilot study of a guaranteed minimum income (commonly called in a ‘basic income’ in Canada), which will take place in three locations: the Hamilton, Brantford, and Brant County region (launching in late spring 2017); Thunder Bay and surrounding area (launching in late spring 2017); and the city of Lindsay (launching in autumn 2017).
A total of 4,000 potential participants will be randomly selected from a pool of low-income adults between the ages of 18 and 64 years who have lived in one of the three test locations for at least one year. Participation is voluntary, and those who do agree to participate in the experiment may exit at any time during the study.
Study participants will receive a minimum annual income of 16,989 CAD (€11,340) for single individuals and 24,027 CAD (€16,038) per year for couples. That is, individuals and couples with no external income would receive this amount of money. For participants who to earn additional income, the amount of the benefit will be reduced by the amount of 50% of earned income (entailing that, for example, single individuals will stop receiving any payment if their income rises above 48,054 CAD per year). Individuals with disabilities will receive an additional amount of up to 500 CAD (€334) per month.
The benefit is not contingent on work or looking for work. However, because the amount of the benefit depends on income and household composition, and because eligibility for the study is limited to low-income individuals, the program to be tested in Ontario is not a basic income in BIEN’s sense. (As mentioned above, the term ‘basic income’ is often used in Canada to refer to guaranteed minimum income programs, in contrast to the definition adopted by BIEN and common in Europe. The Ontario government is not being sloppy or dishonest in titling the program ‘Basic Income Pilot’; mere dialectical differences explain the ambiguity.)
According to the Government of Ontario website, the experiment will measure outcomes in a variety of areas, including food security, stress and anxiety, mental health, health and healthcare usage, housing stability, education and training, and employment and labor market participation. A third-party research group will evaluate data collected during the pilot.
Results of the pilot will be reported to the public in 2020.
Official site for more information: www.ontario.ca/page/ontario-basic-income-pilot.
4. Municipal Social Assistance Experiments in the Netherlands
Status (July 2017): Six municipalities approved to proceed with two-year experiments, which will begin in Sep-Oct 2017; applications from Utrecht and Amsterdam currently under review.
In 2016, research teams in several municipalities in the Netherlands developed plans to experiment with unconditional cash transfers to replace the nation’s workfare-oriented program of social assistance. However, their plans encountered resistance from the national government, which imposes constraints upon–and, in effect, prohibits–experimentation with unconditional benefits. (For example, the Dutch Participation Act would require that experimental participants be surveyed after six and twelve months to verify that they have made sufficient efforts to find work, and dropped from the study if they have not–effectively removing the “unconditionality” of the benefit.)
A pilot proposed in Utrecht, which had gained the lion’s share of attention in the English-language news media, has been delayed after the government failed to authorize the experiment as designed by the Utrecht University research team.
On July 3, 2017, the Dutch Ministry of Social Affairs authorized experiments in the first five municipalities: Groningen, Wageningen, Tilburg, Deventer, and Ten Boer (read more). Groningen and Ten Boer will be working in collaboration.
A similarly structured experiment in Nijmegen, which is to involve 400 participants, was also approved later in the month.
In contrast the previously rejected design of an experiment for in Utrecht, the designs of the latter experiments were deemed to be in compliance with the requirements of the Participant Act. For example, each includes a treatment group in which participants are subject to workforce-reintegration requirements that are more intensive than current welfare programs.
In each of the experiments, which will run for two years, participants will be randomly selected from a pool of current social assistance beneficiaries (with participation voluntary for those selected), and assigned either to a control group or to one of several treatment groups.
Each experiment has at least three treatment groups, testing the following types of interventions: (1) removing reintegration requirements (e.g. job applications and training programs) on welfare benefits; (2) providing a more intensive form of reintegration service; (3) permitting participants to earn additional income on top of their welfare benefits. Subjects assigned to the third treatment groups will be permitted to retain 50% of additional earned income, up to a maximum of €199 per month, for the duration of the two-year experiment. In contrast, under current policy, welfare recipients are permitted to keep only 25% of additional income, and only for up to six months.
The Groningen / Ten Boer experiment includes a fourth treatment group, in which participants are permitted to choose to join any one of the three preceding groups.
It is not fully accurate to refer to the Dutch municipal experiments as tests of basic income. None includes an experimental condition in which the amount of the benefit is fully independent of either income or household composition (the existing benefits are household-based, which is not to be altered in any of the proposed experiments). Further, none of the proposed experiments includes a treatment that combines a reduction in the withdrawal rate of benefits with a removal of work-related conditions. And, as mentioned above, even those subjects who receive the “unconditional” payments will be subject to removal from the study after six or twelve months if they fail to seek work.
Researchers plan to examine outcomes such as employment (including part-time and temporary employment), education, and health and well being.
5. Eight’s Unconditional Cash Transfer Project in Uganda
Status: Launched on January 1, 2017.
In January 2017, Eight, a charitable organization based in Belgium, began disbursing unconditional cash payments in the Ugandan village of Busibi. All residents of the village, including 56 adults and 88 children, receive monthly cash payments, distributed via mobile phones. Each adult receives 18.25 USD (about €16.70) per month, approximately 30% of the average income of lower-income families in Uganda, and each child receives half of this amount, or 9.13 USD per month. The payments will continue through the end of 2018.
Used by permission of Steven Janssens
Eight is working with anthropologists at Belgium’s University of Ghent to examine outcomes along four main dimensions: girls’ educational achievement, access to health care, entrepreneurship and economic development, and participation in democratic institutions. Researchers will compare data collected during and after the pilot to data that were gathered before its launch. However, no additional village is being studied as a control, limiting the project’s usefulness as an experiment.
That said, Eight’s project has objectives beyond research. It is also the basis of a documentary, the first segments of which have already been release, and cofounder Steven Janssens has emphasized its larger purpose to inform future basic income projects: “From our experiences with this pilot we will learn and adjust where necessary, because in the long term we want to scale-up to more villages as our organization grows.”
Official site for more information: eight.world.
6. Y Combinator’s US-Based Unconditional Cash Transfer Study
Status: Design phase; no known launch date.
Sam Altman, CC BY 2.0 TechCrunch
In early 2016, Silicon Valley tech entrepreneur Sam Altman decided to pursue a privately-funded basic income experiment, motivated in part by the goal of moving away from a focus on employment effects and examining potential benefits of a basic income more holistically. To this end, he founded a research group at his company Y Combinator to design and implement the project.
In a February 2017 talk at Stanford, research director Elizabeth Rhodes explained that Y Combinator’s pilot is still in the design phase. As currently planned, it will use a stratified sample of 2,000 to 3,000 individuals from two states, between the ages of 21 and 35, with household incomes below the median in their area. At least 1,000 of these study participants will be randomly assigned to the treatment group, in which they will receive 1000 USD (about €915) per month for three years (with a subset receiving the payments for an additional two years). The payments will be given unconditionally and irrespective of income. The remainder of the sample will provide a control group.
The research group is also still in the process of developing metrics to evaluate the experimental results. However, Rhodes has indicated that experimenters are interested in a holistic evaluation of individual-level outcomes such as labor market participation, training and education, time spent with children, physical and psychological health and well-being, risk-taking, financial health, and help given to friends and family. Outcomes related to the children of participants (e.g. grades and test scores) might also be examined.
Y Combinator’s “pre-pilot” in Oakland, announced in May 2016 to media acclaim, is not itself an experiment; its purpose is merely to help the research team fine-tune its methods and procedures (selection of subjects, disbursement of payments, collection and recording of data, etc.).
7. Scottish Municipal Experiments
Status: Feasibility studies in progress.
In Glasgow, Scotland, the City Council has partnered with the think tank Royal Society of Arts (RSA) to investigate designs for a basic income pilot. The planning process, while moving forward, is at an early stage in development, with the Council and RSA currently working on a study of the financial, administrative, and constitutional feasibility of the pilot. Workshops on these topics will be held in June and July 2017, and a report is planned for September.
The Councils of Fife and North Ayrshire have also committed to investigate the possibility of conducting basic income experiments.
B. OMISSIONS AND FURTHER CAVEATS
Avid followers of basic income news (including Basic Income News) might have noticed that some previously announced pilots and experiments have been omitted from the above list.
Oversight, of course, is a possible cause: if a current or planned basic income experiment is missing from this page, please submit it to our Submit a News Lead form.
In some cases, though, apparently omissions may be intentional. Sometimes “basic income experiments” are announced in the media (1) prematurely, (2) when the experiment is not actually testing a basic income, or (3) when the project is not an experiment:
1. Not all previously announced pilot studies have come to fruition. For example, contrary to claims promulgated in news media and social media in recent months, neither the Office of Financial Empowerment of San Francisco, California nor the provincial government of Prince Edward Island, Canada is pursuing a pilot study of basic income at this time (primarily due, in both cases, to failures in attempts to secure funding for the experiments).
India has also occasionally been cited as a location about to launch a new basic income pilot study–or even about to implement a full-blown basic income policy (see the response in Basic Income News to rumors that circulated at the start of the 2017). To be sure, the national government of India has shown considerable interest in universal basic income, devoting an entire chapter to the topic in the 2017 Economic Survey, an annual document prepared by the Ministry of Finance. India is also notable in the basic income community for the success of previous basic income pilot studies. At the time of this writing, however, no firm plans for additional pilot studies (let alone a full-blown policy) have been announced, and any popular media reports of new pilot studies in India remain speculative and premature.
In general, one should be wary when the popular media announce the impending launch of a basic income experiment. Such announcements often frame the prospective studies as far more certain–and farther along in the planning process–than they actual are. Researchers and governmental officials might indicate interest in running an experiment prior to attempting to obtain funds or examining the legality or feasibility of the project, and sometimes such expressions of interest capture the ears of the media. Of course, such tentative interest does not entail that an experiment will ever actually manifest.
2. I have raised the second issue–the fact that many so-called “basic income pilots” or “basic income experiments” diverge substantially from tests of a genuine basic income–at the start of this article, and we have already seen examples above (including the Dutch social assistance experiments and the Ontario pilot).
Due to their relative lack of attention in popular media, I have not included reference to other social assistance experiments that have, on occasion, been inaccurately called “basic income experiments” — including those in Barcelona and the Italian town of Livorno. About the latter, a six-month social assistance experiment, BIEN-Italia’s Sandro Gobetti has clarified in Basic Income News, “Among the requirements [for participation in the experiment] was residency in the municipality for at least five years, unemployment status, registration at the employment center and a family income not exceeding €6530 gross per year. In exchange for €500 monthly, the municipality invited successful applicants to perform socially useful work.”
3. Finally, note that several non-profit organizations have launched projects that involve the distribution of unconditional cash transfers to individuals, but that are not experiments (although, in some cases, they might still be called “pilots”).
For example, Brazil’s ReCivitas raises money to distribute unconditional cash payments of 40 Brazilian Reais (about €12 or 10 USD) per month to residents of the village of Quatinga Velho, Brazil. In January 2016, the organization announced that the monthly payments would be lifelong, and began distributing the payments to an initial group of 14 individuals. However, the ReCivitas Institute is not gathering data to study the effects of basic income. Project leaders have stated that they are already convinced that basic income is effective, and that their goal is to provide a model and inspiration to other similar initiatives. The initiative might be considered a pilot, insofar as it is intended to provide information about how NGOs have effectively implement a basic income scheme; however, it is not an experiment.
Lottery programs that award selected individuals their own “basic income” for some length of time, such as Germany’s Mein Grundeinkommen, are also not experiments and should not be classified as such.
Most recently, a newly launched film project in the United States, Bootstraps, has begun raising money for what it calls a “basic income pilot program”. This effort also appears not to be an experiment but, instead, a similar lottery-style program, intended to generate anecdotes, publicity, and awareness of the idea of basic income rather than robustly test its effects.
Reviewed by Tyler Prochazka. Some additional proofreading by Karl Widerquist, May 25, 2017
Cover Image: CC BY-ND 2.0 iT@c
by Genevieve Shanahan | May 12, 2017 | Opinion
David Piachaud, Emeritus Professor of Social Policy at the London School of Economics, last November put forward a four-pronged case against basic income – on the grounds of justice, simplicity, economic efficiency and political feasibility. While the argument, I believe, fails on all four counts, I’ll here focus on the justice argument.
To summarize, Piachaud outlines Philippe van Parijs’ famous argument for basic income from his 1991 paper “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income” and claims that the fatal flaw of van Parijs’ argument is that he does not take into account a crucial distinction between the voluntarily and involuntarily unemployed.1 The former value their leisure, it is posited, at least as much as the lowest wage paid to their employed counterparts. In this way, only redistribution of income to the involuntarily unemployed can be justified on Rawlsian grounds. Unfortunately, Piachaud overlooks or underestimates van Parijs’ lucid explanation of why both are entitled to the basic income. In what follows, I’ll try to show why van Parijs’ argument is unaffected by Piachaud’s critique.
The Difference Principle
Both van Parijs and Piachaud begin their arguments from the Difference Principle – a key concept in political philosophy since its first presentation in John Rawls’ seminal A Theory of Justice in 1971. Briefly, the Difference Principle states that social and economic inequalities (or inequalities in terms of “primary goods”) are justified only insofar as they benefit the least advantaged. The most important consequence of this principle, on Rawls’ account, is that it justifies inequality in wages to the extent that offering higher wages for valuable work, or steep rewards for successful innovation, incentivises the types of behaviour that generate economic growth and thereby increase the standard of living for all.
A crucial point for the Difference Principle, of course, is determining who counts as “the least advantaged”. One of the first criticisms of Rawls’ theory was that, if the least advantaged are just the people who have the least wealth, it would unfairly favour people who prefer smaller incomes and a lot of leisure over those who prefer to work hard and earn vast sums. If we imagine that the “least advantaged” in our society are those who can only find minimum wage employment (leaving aside other clear forms of disadvantage, like chronic illness and disability, or marginalization), it can seem intuitively perverse to treat those who choose not to take up that minimum wage job as more disadvantaged, and therefore more deserving of public assistance, than those who do. It’s pretty natural to think, “Well, if the surfer doesn’t do the best he can to get that job at McDonald’s, that’s his look out. We can’t be expected to support him when he’s perfectly capable of supporting himself.”
To avoid counterintuitively lavishing taxpayer money on the surfer, then, Rawls proposed that leisure time be treated as a primary good:
“[T]wenty-four hours less a standard working day might be included in the index as leisure. Those who are unwilling to work would have a standard working day of extra leisure, and this extra leisure itself would be stipulated as equivalent to the index of primary goods of the least advantaged. So those who surf all day off malibu must find a way to support themselves and would not be entitled to public funds.”2
This basically gets us to the social welfare system as we (aspire to) have it now: public funds are used to support the least advantaged, who are those who cannot find employment, whether due to incapacity or a lack of jobs. To ensure this support only goes to those who are the least advantaged, conditions and testing are applied – recipients of benefits must prove that they cannot work or that they are actively looking for work. And while basic income advocates often point to the inefficient costs associated with conditionality, such that it may be better for everyone if we just accept and absorb the cost of free-riders, van Parijs points out that people are likely to be willing to forgo efficiency gains to preserve their view of fairness. That is, if we are to gain the requisite political support, we must show that basic income is not merely efficient but also just and fair on a reasonably intuitive view of fairness.
Philippe Van Parijs (photo credit: Enno Schmidt)
Twenty years after Rawls introduced the Difference Principle, van Parijs took this idea and extended it. While most of us basic income advocates aren’t primarily motivated by concern for surfers who can’t possibly take a 9-to-5 job because it wouldn’t leave them adequate time to catch the perfect, most righteous wave, van Parijs’ strategy is strong. If it can be shown that even surfers – capable but unwilling to work – deserve a basic income sufficient to live on, it would seem to follow that everyone else does, too. How, then, does van Parijs get from Rawls’ support for conditional income support to the full, universal, unconditional basic income that would be paid even to the surfer?
Is Leisure Time a Resource?
Van Parijs argues that it is in fact unfair to treat leisure time as a primary good. As a liberal theory of justice – that is, a theory that is neutral regarding what constitutes a “good life” – the Difference Principle should not favour those who prefer working over those with other values. This means that, while we might say that people have to work to pay their own way on the grounds of justice, we can’t say people should work simply because hard work and self-denial is virtuous. Van Parijs shows, by means of a thought experiment, that such discrimination is the result if we follow Rawls and treat the value of leisure time as equivalent to the wage one could earn in the same time if one were working.
This thought experiment involves examining what the consequences of the approach would be in the case of an “exogenous windfall”, such as the state discovering valuable oil and gas reserves off its coast. In the case of such a windfall, the incomes of those who are working or deemed deserving of income support would (ideally3) increase, but the surfer’s set of primary goods would stay the same (i.e., he would have his day of leisure and empty pockets both before and after the windfall). The surfer is thus excluded from the benefits of the windfall – to which he is equally prima facie entitled as a citizen of the state – simply because his leisure time is deemed to be equivalent to the wage earned in a standard working day.
Here Piachaud enters the fray, defending Rawls’ suggestion that the voluntarily unemployed must value their leisure at least as much as the wages they forgo. If the surfer continues to shirk employment at the new, higher wage permitted by the exogenous windfall, the argument goes, it must be because the value of his leisure, to him, was all along at least equivalent to the new higher wage. In this way, the surfer’s share of primary goods continues to be at least equivalent to that of the least advantaged worker.
Piachaud’s argument here relies on a distinction between the voluntarily and involuntarily unemployed, drawn on the grounds of the value of leisure time to them – measured by their willingness or not to take up work where it is available. This is a mistake, however, though one very easily made (I feel its pull constantly in these discussions). It is a mistake because leisure time, like any other primary good, should not be valued at the level of the individual. It doesn’t matter that I value my leisure time a lot and you don’t. What matters is the value of this resource as determined by the market – that is, as van Parijs puts it, “in terms of competitive equilibrium prices.”4 Van Parijs here draws upon another widely influential theorist of distributive justice, Ronald Dworkin, who elegantly shows in “Equality of What? Part 1: Equality of Welfare” that what egalitarians must be concerned with is not equality of happiness, or preference satisfaction, or welfare, but rather equality of resources.5
Let’s illustrate the surfer’s evaluation of his leisure time with a more concrete example. Say I *love* lager. If you hand me a glass of the finest champagne at a party, I’ll hand it back and say “thanks, but please, give me a bottle of lager instead”. If it happened that it was incredibly expensive to make lager, such that one bottle cost $100, I would still buy cases, forgoing many other pleasures. That I live in a world where lager is pretty cheap is lucky for me. But should I be charged more so that the price I pay better reflects its value to me personally? No – that would be unfeasible (how, exactly, would vendors measure each customer’s preferences to ensure they were charging the right price?) and nonsensical (by the same logic, I could pay $5 for the champagne since I only get $5 of enjoyment from it, despite its massively higher market price).
The Costs to Others of Our Choices
This isn’t a simple question of efficiency. What we’re looking for, from a justice perspective, is that no one impose costs on others. It would be wrong from me to pay only $5 for the champagne, despite my personal judgement of its value, because of the vastly greater cost to others of producing it. Dworkin puts it this way – as a matter of justice, “people must pay the actual cost of the choices they make […] measured by the cost to others of those choices.”6
Returning, then, to the distinction between the voluntarily and involuntarily unemployed, van Parijs argues that it is welfarist – that is, mistakenly pursuing equality of welfare rather than equality of resources – to apply willingness-to-work conditions to the basic income. This approach “charges” for leisure time based on whether the able-bodied potential worker enjoys the time off or not (as clumsily measured by Jobcentre assessments of employment search efforts). As we’ve outlined here, the correct price to “charge” for leisure time is its cost to others – the worth of what others might have to give up for us to have that leisure time.
Doesn’t a basic income immediately violate this principle, requiring the rest of society to hand over a portion of their earnings to the voluntarily unemployed? Van Parijs says it does not, because the basic income, fundamentally, is just the individual’s share of the world’s resources he was entitled to from the start, by virtue of being a person.
It should be noted that van Parijs does distinguish between voluntary and involuntary unemployment in a way that affects the level of the basic income. Piachaud and van Parijs both agree that, where there is involuntary employment (i.e. not enough jobs to go around), there are employment rents that are properly subject to redistribution. That is, in a perfectly competitive, idealised labour market – where everyone has access to all relevant information, there are no geographical limitations to what jobs an individual can apply for, and there are no costs associated with hiring and firing, or regulations like minimum wage – supply and demand would balance. Workers’ wages would simply be the actual market price of their labour, and there would be no unemployment attributable to lack of jobs. By contrast, in any real labour market there is friction – due to imperfect access to information, geographical limitations, hiring and firing costs, and regulations – which means that many workers are paid more than would be necessary in a perfect market for their labour, and many eager potential workers are left without a job. In this way, on van Parijs’ account, the level of the basic income can rise and fall in accordance with the level of employment rents in a labour market.
“[…] in the case of scarce jobs, let us give each member of the society concerned a tradable entitlement to an equal share of those jobs. […] If involuntary unemployment is high, the corresponding basic income will be high. If all unemployment is voluntary, no additional basic income is justified by this procedure.”7
As another way of understanding this point, van Parijs suggests that we think of jobs as resources in themselves (though Piachaud does not seem to entertain this line of reasoning). Perhaps the classic way of thinking of a job is as labour one expends in exchange for resources (a wage). Yet we know that jobs are much more than that – many jobs have value beyond the wage earned, whether in terms of meaning, enjoyment, community, status, etc. This is part of the reason why one might not value the increase in leisure time afforded by unemployment: even where conditional unemployment benefits are generous, most people still prefer work. Since available employment is limited due to the market inefficiencies outlined above, the surfers are doing the aspiring workers a favour, correctly assigning themselves to the ranks of the unemployed so that more jobs are available for those who want them.
If we return, then, to the idea of justice as not imposing costs on others, we can see that the surfers are in the clear. The lowest level of basic income simply corresponds to each individual’s rightful share of the world’s natural resources. Then, where there are additional resources to be redistributed due to the existence in a labour market of employment rents, this is to compensate for the costs imposed on the unemployed by the employed in taking up scarce jobs. There is no distinction between the voluntarily and involuntarily unemployed in entitlement to this level of the basic income – each equally provides a benefit to the employed by freeing up their share of jobs and the various non-monetary benefits that go with them. Directly anticipating and defusing Piachaud’s claim that such rents should only be redistributed to the involuntarily unemployed, van Parijs warns:
“adopting a policy that focuses on the involuntarily unemployed amounts to awarding a privilege to people with an expensive taste for a scarce resource. Those who, for whatever reason (whether to look after an elderly relative or to get engrossed in action painting), give up their share of that resource and thereby leave more of it for others should not therefore be deprived of a fair share of the value of the resource. What holds for scarce land holds just as much for scarce jobs.”8
Arguments about distributive justice like these, that drill down to the fundamentals of the way our economies and societies work, are necessarily abstract. It’s therefore important to be wary of directly inferring real-world policy from such idealised thought experiments. Nevertheless, amidst the complexity of our modern interlocking economic systems, the core argument – that everyone is entitled to their share of the world’s natural resources – is a guiding light.
Reviewed by Tyler Prochazka and Kate McFarland
Read More:
David Piachaud, “Citizen’s Income: Rights and Wrongs,” Centre for Analysis of Social Exclusion, LSE, November, 2016.
Hilde Latour, “UNITED KINGDOM: David Piachaud Calls Basic Income a Wasteful Distraction from Other Methods of Tackling Poverty,” Basic Income News, February 9, 2017.
Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs, 1991.
John Rawls, “A Theory of Justice,” Harvard University Press, 1971.
John Rawls, “The Priority of the Right and Ideas of the Good,” Philosophy and Public Affairs, 1988.
Ronald Dworkin, “What is Equality? Part 1: Equality of Welfare,” Philosophy and Public Affairs, 1981.
Ronald Dworkin, “What is Equality? Part 2: Equality of Resources,” Philosophy and Public Affairs, 1981.
Ronald Dworkin, “Sovereign Virtue Revisited,” Ethics, 2002.
Main Photo: The photographer reading John Rawls’ ‘A Theory of Justice’, CC BY-NC-SA 2.0 Dana Hilliot
1. A parallel argument, unexplored here, would address the important question of whether employment is voluntary or involuntary. Under most of today’s welfare systems for able-bodied adults, conditionality and sanctions are used to “incentivise” recipients to take up any job available. This threat of destitution has moral implications, in that it calls into question the consensuality of such employment.
2. John Rawls, “The Priority of the Right and Ideas of the Good,” Philosophy & Public Affairs (1988) p. 257
3. At present, incomes generated from natural resources are directly distributed to citizens in only a handful of cases (the Alaska Permanent Fund and Norway oil fund spring to mind). More commonly, states channel incomes from natural resources into the general budget, or such natural resources pass into the realm of private property. While arguments can be had regarding direct versus indirect distribution – whether each citizen gets their share of the windfall directly, or instead indirectly through government spending – that all citizens should benefit in some way seems uncontroversial.
4. Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs (1991), p117
5. For a quick run-down of the problems with equality of welfare, see this summary from the Stanford Encyclopaedia of Philosophy.
6. Ronald Dworkin, “Sovereign Virtue Revisited,” Ethics 113.1 (2002), p111
7. Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs (1991), p124
8. Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs (1991), p126
by Kate McFarland | May 10, 2017 | News
On Tuesday, May 9, an article published in The Independent alleged that Finland’s Basic Income Experiment has already produced evidence that unconditional payments lower stress and improve mental health for unemployed Finns.
This widely shared article generated rumors that the Finnish government has released the first results of this two-year pilot study, which commenced on January 1, including the above findings. These rumors are inaccurate, and the present post aims to address this misconstrual.
Background on Finland’s Basic Income Experiment
Directed by Kela, the Social Insurance Institution of Finland, Finland’s nationwide pilot study of basic income generated widespread international interest from its announcement in 2015 to its launch at the start of 2017. In its current design, the experiment is restricted to those between ages 25 and 58 who were receiving unemployment assistance at the end of 2016. Nonetheless, it differs from several other contemporary so-called “basic income experiments” in that the experimental group–consisting of 2,000 randomly selected individuals from the above target group–receives cash payments (€560 per month) that are indeed unconditional, individual, and not means tested (compare, for example, to the experiments planned or underway in Ontario, the Netherlands, Barcelona, and Livorno, Italy).
Many basic income supporters and followers are, no doubt, eagerly anticipating the results of this experiment, which will continue through December 31, 2018. Here, though, it is important to keep in mind several caveats–especially as rumors of initial results begin to surface.
1. Kela will publish no results prior to the end of the experiment (i.e. December 31, 2018).
In a blog post published in January, in response to the widespread media attention directed at the experiment, research team leader Olli Kangas and three colleagues explain that publishing any results during the course of the experiment runs the risk of influencing participants’ behavior:
A final evaluation of the effects of the basic income can only be made after a sufficiently long period of time has elapsed for the effects to become apparent. The two-year run of the experiment is not very long for changes in behaviour to materialise. The potential of the experiment, short as it is, to provide reliable results should not be undermined by reporting its effects while it is underway.
2. Kela will conduct no questionnaires or interviews of participants while the experiment is in progress.
As the same blog states, the researchers will minimize their reliance on questionnaires and interviews to gain information about study participants–again to minimize the effect of observation on behavior–relying instead on data available from administrative registries. If any individual questionnaires or interviews are used, they “will not be conducted without careful consideration, and not before the experiment has ended.”
3. Analysis of the experiment will focus on labor market effects.
A major reason for the Finnish government’s interest in basic income has been the policy’s potential to improve employment incentives (in contrast to Finland’s current unemployment benefits, which are reduced by 50% of earned income if a recipient takes a part-time job and which demand much bureaucratic oversight of individuals). Correspondingly, a main objective of the experiment, as stated by Kela, is to determine “whether there are differences in employment rates between those receiving and those not receiving a basic income.”
Some basic income proponents have criticized the Finnish pilot for its lack of attention to other potential beneficial effects of basic income, such as its effects on individual health and well-being; however, Kela has no current plans to examine such effects.
“Reduced Stress” Claim
It is in this context that we must read The Independent’s recent article “Finland’s universal basic income trial for unemployed reduces stress levels, says official.”
As its data, the article quotes Kela official Marjukka Turunen (Head of Legal Affairs Unit) as saying, “There was this one woman who said: ‘I was afraid every time the phone would ring, that unemployment services are calling to offer me a job’,” and, “This experiment really has an indirect impact, also, on the stress levels [of people] and the mental health and so on.”
These quotes originate in a recent interview on WNYC’s podcast The Takeaway, in an episode on automation and the future of work, in which host John Hockenberry interviewed Turunen about Finland’s basic income experiment, having presented basic income as a possible policy response to technological unemployment. After stressing the potential of basic income to promote employment (by avoiding the welfare trap and reducing bureaucracy and paperwork), Turunen related the anecdote above in reply to a question in which Hockenberry turned about the effects of basic income on feelings of confidence and self-respect.
In comments to Basic Income News, Turunen explained that this situation involved a participant who agreed to participate in a media interview and volunteered this information to the reporter. While some participants themselves offer feedback to Kela, Kela itself is not allowed to divulge this information to the media, nor to provide any personal information about the study participants. However, this does not prevent participants themselves from volunteering to talk about the experiment to media, as in the present situation.
Thus, it is important not to mistake this unsolicited feedback from experiment participants for official and formal results–which are still more than a year and half away. As Turunen comments,
We do not have any results yet, not until the end of next year; these insights are coming from the customers themselves willing to talk about this in the media. And these are only insights, the results must be very carefully analyzed according to the information we only get at the end of next year.
More Information:
Kela, Basic Income Experiment 2017–2018. (Official website on the experiment.)
Olli Kangas, et al, “Public attention directed at the individuals participating in the basic income experiment may undermine the reliability of results,” Kela blog, January 16, 2017.
“The Shift: Exploring America’s Rapidly Changing Workforce,” The Takeaway (podcast), May 4, 2017. (Marjukka Turunen’s remarks in context.)
Reviewed by Russell Ingram
Photo (Helsinki) CC BY-NC 2.0 Mariano Mantel
Most transfer payments go to people who are not at the time also paying taxes to support it. For example, almost no one both pays for and receives Unemployment Insurance, the Earned Income Tax Credit, Temporary Assistance for Needy Families, disability insurance, Medicaid, and so at the same time. The vast majority of people pay for Social Security at one time and receive it at another time. The net issue so important to UBI is negligible or nonexistent for all these policies.
