by Kate McFarland | Mar 23, 2017 | Research
Three University of Manitoba economists, Wayne Simpson, Greg Mason, and Ryan Godwin, have jointly authored a new research paper about the Manitoba Basic Annual Income Experiment (“Mincome”), a trial of a guaranteed income that took place from 1974 to 1979.
The Mincome experiment consisted of randomized studies in Winnipeg and rural Manitoba, as well as a saturation study in the town of Dauphin, where all residents were eligible for participation in the study. Participants received an income supplement that was phased out as personal earnings increased, and several combinations of minimum income level and taxation rates were tested. The guaranteed income scheme tested, a negative income tax, is equivalent in its distributional effects to a basic income that is taxed back with personal income over a certain amount. Decades after Mincome ended, its outcomes were analyzed by economist Evelyn Forget. The results are now frequently mentioned as evidence of the effectiveness of basic income / negative income tax.
At present, the province of Ontario is preparing a new major trial of a guaranteed income (which, as in Mincome, is likely to be designed as a negative income tax). In a lengthy discussion paper about the new trial, project advisor Hugh Segal notes that the Dauphin saturation study, showed “population health improvements, the potential for government health savings, and no meaningful reduction in labour force participation.”
In their new article, Simpson, Mason, and Godwin re-examine Mincome, and consider how it might answer questions about contemporary experiments in Ontario and elsewhere.
Abstract
The recent announcements of the Ontario Basic Income Pilot and Finland’s cash grants to jobless persons reflect the growing interest in some form of guaranteed annual income (GAI). This idea has circulated for decades and has now been revived, no doubt prompted by concerns of increased inequality and employment disruptions. The Manitoba Basic Annual Income Experiment (Mincome), conducted some 40 years ago, was an ambitious social experiment designed to assess a range of behavioural responses to a negative income tax, a specific form of GAI. This article reviews that experiment, clarifying what exactly Mincome did and did not learn about how individuals and households reacted to the income guarantees. This article reviews the potential for Mincome to answer questions about modern-day income experiments and describes how researchers may access these valuable data.
Wayne Simpson, Greg Mason and Ryan Godwin (2017), “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later,” Canadian Public Policy.
Reviewed by Cameron McLeod
Photo: Northern Lights in Manitoba, CC BY-NC-ND 2.0 AJ Batac
by BIEN | Jan 16, 2017 | News
Councilors of the small Ontario town of Smiths Falls voted on December 19 last year to reject participation in its province’s basic income pilot, to the objection of residents and the town’s mayor. A petition requesting a re-vote is currently circulating online. The story begins, however, in 2008.
That year The Hershey Company shuttered its Canada operations, at the time based in Smiths Falls, largely for cheaper Mexico-based labor. This exit of the area’s biggest customer precipitated the same by other businesses, and although the ensuing purge of jobs merely reflected a manufacturing decline already underway in the province, the disappearance of five hundred positions at Hershey’s alone, accounting for nearly 6% of the town’s population, catalyzed especially forward-looking pain. That year the town operated at a surplus of C$11.2m, and by the town’s most recent reported fiscal year, its once budget excess had trudged through increasingly tight leverage to a deficit of C$1.3m (albeit improved since 2013). Today the town struggles with unemployment above the national rate, and a third of children live below the poverty line.
Given also an aging population and petering labor force – per census data the town’s median age increased by 2.1 years in the five years leading up to 2011, and the overall population declined by 2% – it could be in the interest of Smiths Falls’ residents to entertain a basic income system. Indeed the petition created by resident Carol Anne Knapp has so far gathered 113 supporters, with a goal of one thousand. This is despite the council’s three-two vote, with two councilors absent, against mayor Shawn Pankow advocating to Ontario’s finance minister for participation in the program. Pankow has meanwhile expressed interest in holding a public meeting on the topic this month, health officials in tow.
A prominent councilor, Dawn Quinn, cast one of three “nay” votes. According to Jordan Pearson, writing for Motherboard, her vote was at least partly informed by her credo of frugality, stating that “folks sit around in Tim Hortons all day instead of looking for jobs, and they should consider buying a tin of Tim Hortons coffee to make at home instead of buying a cup.” On that point Pearson continues, “[Quinn added] they could consider shoveling snow to earn some extra money.” Similarly conveying Quinn’s underlying sentiment, Kate Porter quotes her in CBC News: “They need to be able to learn how to take that money and stretch it […] we need more of that kind of thinking.” So it appears the belief that basic income causes squander was, at least for one decision maker, a reason for the council’s vote outcome.
There is, however, some evidence from a bordering province that suggests this perspective is dogmatic, as reflected in Knapp’s petition letter requesting that a “new vote be based on science and evidence.”
Nearly forty years ago, Dauphin, a similarly small town in the Canadian province of Manitoba, underwent a five-year minimum income (dubbed “mincome”) experiment. Mincome was also similarly basic income-lite. Rather than a true guarantee, which is regardless of preexisting income status, mincome subsidized only those poor enough and was reduced for those who earned above a threshold. Likewise, Ontario’s pilot makes whole those earning below a set threshold. Even so, the experiment provides refutation to Quinn’s apprehension of lethargic congregations at Tim Hortons.
Evelyn Forget (credit to: Ecocide Alert)
According to Evelyn Forget, an economist at the University of Manitoba and academic director of the Manitoba Research Data Centre, primary earners in Dauphin worked only marginally less within the five-year study, and much of the other reductions in labor force participation was comprised of women who extended maternity leaves and male high school students who simply stayed in school rather than work. Additionally, hospitalizations, in particular for mental health problems, dropped significantly (nearly 9% across the board) and would alleviate the burden on healthcare programs today.
Quinn acknowledges, though remains unpersuaded by, the Manitoba findings and is further dissuaded by cost – a concern currently aggravated by budget shortfalls. She protests that Smiths Falls became financially saddled after a 1970s investment in low-to-moderate income (LMI) housing, giving rise to her concern about opting into another government-borne program. A ten-year housing plan published in 2014 by Lanark County and Smiths Falls, however, notes that 74% of the county’s dwellings requiring major repairs were constructed prior to 1971. Coupling two observations then – 60% of LMI housing was developed under the program to which Quinn is referring; and renting in lieu of owning has been on the rise since Hershey’s departure – the 1970s investment appears to have provided an arguably necessary safety net.
Expenses, furthermore, reflect precarity when business output, curbed by economic disempowerment of consumers, constrains municipal revenues. In pursuing a conservative bottom line, rejecting basic income has a potentially truncating effect on the top, and budget woes thereby persist. On this, councilor Lorraine Allen, one of two “yea” votes, says the proposal would enable residents to “shop more, buy more groceries, perhaps be more involved in things that they couldn’t before.” Hence her vote for the program.
Still, the short-lived nature of the pilot is consistent with another of Quinn’s concerns: that a pilot implemented, then taken away, could prove negligibly meaningful. In the town’s 2015 operations approximately C$2.4m was spent on social and family services. Tucked inside these costs were, in addition to unspecified uses, assistance to the elderly, childcare and the social housing expenses which Quinn resents of the 1970s. If the Ontario program follows the recommendation by former senator Hugh Segal (a monthly allowance of C$1,320), the combined cost to eligible individuals could perhaps exceed the town’s existing social and family services expenditures. This mainly reinforces the need for cooperation between municipality and province-level governments to realize success from basic income. Eating the full burden, what Ontario offers is more generous than that. But in order for such a program to live past a test phase, the council of Smiths Falls would first have to heed the needs of its residents – and try.
Thanks to Genevieve Shanahan for reviewing this article.
Cover photo by wyliepoon.
More information at:
AreaScore, “Smiths Falls unemployment,” 2016.
Carol Anne Knapp, “Smiths Falls council reverse the decision regarding basic income,” Care2 Petitions, December 21, 2016.
City-Data, “City data of Smiths Falls,” 2011.
Evelyn Harford, “Basic income pilot project a no-go for Smiths Falls town council,” InsideOttawaValley, December 20, 2016.
Jesse Ferreras, “Ontario basic income should be $1,320 per month, adviser says,” The Huffington Post, November 4, 2016.
Jordan Pearson, “Why a struggling town voted against a basic income,” Motherboard, December 22, 2016.
Kate Porter, “Smiths Falls residents fight for guaranteed income pilot project,” CBC News, December 22, 2016.
Lanark County, “Lanark County and the town of Smiths Falls ten year housing and homelessness plan 2014-2024,” 2014.
Sarah Gardner, “On the Canadian prairie, a basic income experiment,” Marketplace, December 20, 2016.
Statistics Canada, “Census subdivision of Smiths Falls, T – Ontario,” 2011.
The Canadian Press, “Ontario floats idea of guaranteed minimum income to ease poverty,” CBC News, March 14, 2016.
Town of Smiths Falls, “2009 consolidated financial statements,” 2009.
Town of Smiths Falls, “2015 consolidated financial statements,” 2015.
by Jenna van Draanen | Oct 20, 2016 | News
The 9th Annual Dalla Lana School of Public Health Student-Led Conference, entitled “Secure Income, Secure Heath” is happening October 21st and 22nd, 2016. The conference will take place at the Health Sciences Building on the University of Toronto campus, 155 College Street, Toronto, Ontario. This event is partially sponsored by the Basic Income Canada Network and will be featuring several presentations on basic income.
Each year, students of the Dalla Lana School of Public Health host a conference to examine a critical and timely public health issue. This year, the conference organizers are trying to create an, “action-oriented and critical platform to address one of the gravest societal issues, income insecurity.” Dr. Evelyn Forget, a well-known basic income scholar, will be one of the keynote speakers at the conference.
For more information on the event see the conference website:https://www.dlsphconference.com/
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
