by Tyler Prochazka | Jun 4, 2019 | Opinion
The wave of basic income experiments in the last two years was a positive development in giving Universal Basic Income (UBI) some level of attention and political legitimacy in Western countries.
It is time to recognize the experimental wave is coming to an end.
Basic income activists in the next wave of UBI political discussions should push for policy changes in the direction of basic income. There are ongoing and completed trials testing cash transfers in countries with different stages of economic development. It makes more sense to build a foundation for policy changes as these results trickle out over the next few years rather than pushing for yet another experiment.
In Canada, the push for experiments backfired because a Conservative government canceled it before any results could be collected. I supported Ontario’s experiment and there was value in the research.
However, Ontario’s cancellation demonstrated that as activists move forward, we must recognize that experiments do not create a political constituency. In Alaska, the partial basic income policy has broad and significant support because everyone has benefited from it. Building a constituency that can be expanded and deepened is where activist energy should be placed in the next stage.
UNICEF funded experiments in India helped make basic income a real political discussion there, and now basic income inspired policies are being proposed by both of the main parties and a minimum income is set to be implemented in the state of Sikkim.
Experiments in developing countries and regions where basic income is still not well known may still be politically necessary. In Western countries, though, activist energy on more experiments rather than policy action seems ill-placed since UBI has already entered mainstream discussion in the West.
Experiments have already shown us cash transfers make people happier, healthier, and free them to pursue what they are interested in. The myths about basic income have been consistently undermined, particularly the idea that it would decrease work in any meaningful way. More experiments will keep telling us that giving people cash is generally good in most of the ways we measure positive outcomes.
How many times do we need an experiment to tell us cash transfers do not make people “lazy”?
Those who will not be convinced by the existing and upcoming experimental results will not be convinced by yet another experiment. The reaction to Finland’s experiment is evidence that unpersuadable opponents will latch onto even neutral effects on employment to prove basic income is a “failure.”
To truly put UBI to the test in America and Europe, actual policies that incorporate significant elements of basic income should be pushed. Cory Booker’s baby bonds is a start. Expanding the Earned Income Tax Credit that incorporates students and caregivers would instantly help millions. Political campaigns such as Andrew Yang’s are also important to bring the debate to a mainstream audience.
That is not to say pilot programs with the intent of expansion are not helpful. These provide valuable information to governments on how to implement basic income. Pilot programs with the primary intent of yet more research on “laziness” are the issue.
However, as the experimental wave of basic income begins to sunset, activists must look toward the next wave, which should focus on concrete policy steps that realize the spirit of basic income.
For these reasons, I see more experiments as an inefficient use of activist energy in the West. Worse, pushing experiments focused on gathering more data trades off with more useful discussions of how to bring elements of UBI to reality in the near-term.
by Andre Coelho | May 18, 2019 | News, Research
The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) just published a new report entitled “A Basic Income for Scotland”.
The report is organized in four main sections:
- How the welfare system in the UK – and in Scotland in particular – is failing to reduce poverty and economic insecurity, within its own terms.
- Presentation of the updated findings on the basic income trial presently ongoing in Fife.
- Modelling the impact of a basic income in Scotland (by Landman Economics).
- Analysing political, legal and administrative scenarios enabling a first Scotland-wide basic income experiment, in the path for its implementation in the region.
The report also features direct input from potencial beneficiaries of the Fife basic income trial (which is still under study / consideration), a precious contribution from those directly affected by the current system of means-testing conditional social security. Taking the example of Fife, Painter and his colleagues have projected that “£2400 a year would half destitution and reduce relative household poverty by 8,5%. A basic income of £4800 a year would end destitution and reduce relative household poverty by 33%.” It’s relevant to notice that the Scottish living wage is currently £9 per hour, which for a regular 8 h/day job amounts to about 1440 £/month. So, these basic income amounts under consideration are only 14 and 28% of what it takes to live comfortably in Scotland.
Anthony Painter summarizes how a basic income in Scotland could be tested within a whole set of other public policies in place:
“In A Basic Income for Scotland we map how pilots of basic income could work with a full set of supports alongside cash payments. We call this community designed system of interlocking public, community, and employer supports wrapped around basic income a ‘Civic Basic income’.”
More information at:
Anthony Painter, “The case for basic income is growing. Scotland can take it forward”, RSA, May 8th 2019
by James Herbert | Apr 27, 2019 | News
Further preliminary results from Finland’s much publicised basic income experiment have been announced: firstly, the study’s basic income recipients reported increased trust; secondly, increased agency; and thirdly (perhaps unsurprisingly), they reported an improved financial situation.
The experiment ran for two years, starting on January 1st 2017. It was administered by the Social Insurance Institution of Finland (Kela). Its main objective was to find ways to reshape the Finnish social security system in response to a changing labour market. A total of 2000 unemployed persons between 25 and 58 years of age received a monthly payment of € 560, unconditionally (to be spent as recipient saw fit) and without means testing.
BIEN has already reported on how the the experimenters observed a positive impact on reported wellbeing and a non-significant impact on employment. These latest announcements, released on April 4th, add to this. The full set of preliminary results can be found in this report.
Regarding increased trust, respondents who received a basic income had more trust in other people and in societal institutions — i.e., politicians, political parties, police and the courts — than members of the control group. On a scale from 0 to 10, the average score for trust in other people increased from 6.3 in the control group, to 6.8 amongst basic income recipients. As for trust in politicians and political parties, the average score increased from 4.0 to 4.5. For the combined category of courts and the police, the average score increased from 6.9 to 7.2.
According to Minna Ylikännö of Kela, trust in other people and in institutions is essential both to individual well-being and to the functioning of society at large.
Regarding increased agency, recipients reported greater confidence in their ability to influence their own lives when it came to personal finance and finding employment. On a scale of 0 to 5, recipients reported a score of 3.2, whereas the control group reported an average score of only 2.9.
Regarding personal finances, recipients reported an increase in their ability to live comfortably. Participants in the experiment were asked to categorise their financial situation as either ‘living comfortably’, ‘coping’, ‘finding it difficult’, or ‘finding it very difficult’. The proportion of people describing themselves as living comfortably increased from 7% in the control group to 12% amongst basic income recipients. At the opposite end of the spectrum, the proportion of people who described themselves as ‘finding it very difficult’ decreased from 17% in the control to 13% amongst basic income recipients.
All of the above-mentioned differences persisted even after background factors were controlled for. The data was gathered through phone interviews conducted immediately before the experiment was concluded. Further results are expected soon.
by Andre Coelho | Apr 17, 2019 | News
The Social movement “Basic Income Russia Tomorrow”, together with the charity foundation “Coordinates of Good”, were awarded the Wow Successful Awards 2019, in the Social Innovation chapter, on the 13th of March. This award means the movement will be able to make unconditional cash transfers for five recipients, for three months. The value transferred will be small – 6500 rubles/month (around 100 $/month) – and for a very short period of time, but such an amount can be significant for many Russians. The money involved in the experiment is the result of private donations.
This short-term unconditional cash transfer experiment starts now, in April 2019, and will be monitored by Vyacheslav Nikolaevich Bobkov, from the Institute of Social and Economic Studies of Population at the Russian Academy of Sciences.
by Guest Contributor | Apr 14, 2019 | Opinion
Minna Ylikännö
Research team leader, Social Insurance Institution of Finland
(minna.ylikanno@kela,fi)
and
Olli Kangas
Professor of Practice, University of Turku
(olli.kangas@utu.fi)
The evaluation of the Finnish BI Experiment reveals the problems in the current conditional labour market policies
The first results of the Finnish Basic Income (BI) experiment were published at the beginning of February 2019. According to the results, the benefit mimicking basic income did not have any positive employment effects when compared to the control group, i.e. those not included in the experiment. There are several possible reasons for this result.
Firstly, we must keep in mind the specific characteristics of the target group of the experiment. Both the treatment group and the control group were drawn from the unemployed job seekers receiving unemployment benefits from the Social Insurance Institution of Finland (Kela) in November 2016. In order to understand the specificity of the group, we have to take a cursory look at the Finnish unemployment system.
An unemployed individual who is a member of a voluntary unemployment fund and meets the employment condition of 26 weeks during the previous 28 months is eligible for earnings-related unemployment benefits. At the average wage level, the benefit is about 65 percent of previous earnings. The benefit can be paid up to 300-500 weekdays depending on the work history and the age of the claimant.
An unemployed individual who is not entitled to the earnings-related unemployment benefit (the right to the benefit has expired due to long-term unemployment or the unemployed individual does not yet fulfill the employment condition) can qualify for unemployment benefits paid by Kela [1]. These Kela’s ‘basic security’ benefits (basic unemployment allowance and labour market subsidy) are not income-related. In principle, the labour market subsidy is income-tested and the duration is unlimited.
At the end of the year 2017, 369,058 people received unemployment benefits in Finland. Out of them, 196,452 (53.2%) received labour market subsidy and 31,460 (8.5%) basic unemployment benefits. Hence a minority, i.e. 138,949 (37.6%), were entitled to an earnings-related daily allowance from unemployment funds.
When consulting the above percentages, we can argue that the basic income experiment covered the population group that represents a majority of unemployed job seekers in Finland. However, despite this, the experiment was targeted to the long-term unemployed or those unemployed with a very short working history. Maybe the experiment would have yielded different results if it had included those unemployed individuals receiving earnings-related unemployment benefits, not to mention low-income earners, free-lancers and micro-entrepreneurs [2].
Secondly, at the beginning of 2018, the center-right government implemented a new labour market policy measure, namely ‘the activation model’. The aim of the reform was to increase labour market participation by sanctioning the unemployed by benefit cuts if specific activation criteria are not met [3]. While the activation model contaminated the control group, the results may be distorted.
A third possible explanation is that people do not react on monetary incentives as strongly as is usually supposed e.g. in the economic literature. But once again, we must keep in mind the specific characteristics of the target group. It may be that this group would react more strongly on services than on income transfers.
The fourth explanation to the “zero” result may relate to the possibility that the effects of a basic income counteract each other. In the treatment group, the strong monetary incentive to accept jobs (€560 net a month) might have increased employment, while the less stringent conditionality might have made the BI receivers ‘lazier’. Thus, these opposite effects may have repealed each other resulting in an overall zero outcome.
Too strong an emphasis on labour market behaviour?
The proponents of basic income disagree with the above view of laziness. On the contrary, they argue that by empowering people and giving them the freedom to choose for themselves the outcomes are more positive than what is achieved through sanctioning the unemployed. As desired outcomes of basic income, they emphasize not only the increased activity in the labour market but also increased the wellbeing of the citizens.
In fact, the proponents of basic income hardly consider the activation to employment as the main aim of BI, but rather the wellbeing of its receivers. For the supporters of BI, the economic activity e.g. in the labour markets is not a sin non qua for a functional society even if it was widely considered to be the prerequisite for it, at least if we aim to obtain the present welfare state model that is financed via income tax.
When the Finnish government decided to launch the basic income experiment, its main interest was in the employment effects of BI. The government obviously wanted to see if BI is good for employment. Thus, the government’s goal was rather limited and only when discussed in the parliamentary committees, the interest was laid in the wider wellbeing aspects of BI. However, the main interest still was – and still is – in the labour market behaviour of the BI recipients.
The preliminary results for the first year do not display any employment effects, making the opponents of the BI claim that the BI does not solve a low labour supply. However, we can turn the focus upside down. The zero result is an interesting one. According to the proponents of mainstream labour market policies in Finland, we should have witnessed a clear decrease in the labour supply among the basic income recipients compared to the control group. However, we did not observe anything like that. Neither was the employment rate better in the control group that remained in the current, conditional and punitive benefits system.
Hence, in regard to the long-term unemployed (which was the case for most of the recipients in Finland’s basic income experiment), the mechanism improving their labour market status is much more complex and perhaps more attention should be paid in the wellbeing effects of the experiment than on the employment effects. This is done in many other experiments outside Finland – in the evaluation of the experiments the focus in on the sine non qua for activity, namely wellbeing.
What should then the political decision makers do based on the results? Shall they abandon basic income, if it does not increase employment, even if it improves people’s well-being? Or shall they abandon basic income, while strengthening the conditionality of the existing system in order to more effectively “activate” labour, even if it decreases people’s wellbeing? Considering the recent developments in Finland’s labour market policies, one should perhaps bet on the latter option.
[1] If the unemployed person violates the Unemployment Security Act, he/she may lose the right to the unemployment benefits and he/she may to apply for last resort social assistance of in need for financial support.
[2] Explanations why the unemployed were the target group of the experiment are given at https://tutkimusblogi.kela.fi/arkisto/3316.
[3] The activity is monitored in periods of 65 days of payment. The activity requirement are met if an unemployed person, over the course of a single payment period, has been in salaried employment for at least 18 hours, or have earned an income of at least EUR 245.64 from self-employment, or if he/she has participated in five days of employment-promoting services or some other employment-promoting activity arranged by the Employment Services.
