by Rebecca Rosewarne | May 26, 2019 | News
Minna Ylikännö. Picture credit to: Kela
A half-day seminar called “Finnish Basic Income Experiment – Science meets social security reform” happened on the 4th of April, hosted by Kela, to focus on the presentation and discussion of the recently concluded (the cash transfer’s stage) basic income trial’s preliminary results. At the seminar, other Kela researchers communicated their analysis on the data, such as Olli Kangas (on the overall evaluation of the experiment), Ohto Kanninen (register data analysis) and Signe Jauhiainen (subjective wellbeing and financial stress)
The results had already been discussed by Minna Ylikännö, a senior researcher at
Kela, on a podcast recorded in February, hosted by Jim Pugh and Owen Poindexter. In this conversation, Minna confirmed that the
experiment has been more limited in scope than was originally planned by Kela
researchers, and that to date there has been no observable effect on take-up of
employment (on the long-term unemployed participants in the experiment).
Answering a phone survey (around 30% of the participants), Minna refers that those
in the BI trial reported significantly higher levels of life satisfaction and
well-being, more confidence in the future and self-perceived better mental
health in comparison with the control group. Even though the data analysis
process is not over yet, this process may not a include a second phone survey.
Minna Ylikännö also recommends, in the eventual pursuit
of other basic income-type of trials, that a careful consideration of all
factors which can motivate/demotivate people to look for a job, including a
series of subjective factors which enables them to do so. In her words: “it’s
not just about financial incentives, it’s about well-being”. In the referred
podcast, the hosts commented that, in talking about basic income experiments,
people tend to project their own desires or fears, over the results which can
easily be spinned in positive and negative directions.
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 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.
by Michael Lewis | Mar 5, 2019 | Opinion
In principle, I’m a UBI supporter and have been for about 20 years. I qualify my support by saying “in principle” in order to signal that I recognize there are questions surrounding how such a plan would work in practice. At least some of them will need some pretty clear answers before we should take the plunge and implement the plan. And it may be that if we can’t answer some key questions, such as how to finance a UBI in a way that wouldn’t make currently low-income people worse off, we shouldn’t implement a UBI at all. As someone who supports UBI and who’s read most of Widerquist’s book, I’m worried about some of the commentary I’ve seen on the recently released findings from Finland’s basic income experiment.
For the full article, please visit the USBIG Blog.
by Andre Coelho | Feb 16, 2019 | News
Picture credit to: Finland Toolbox
Finland’s famous “basic income experiment” is now over. The analysis program is being rolled out, and was scheduled according to the following timetable (from Kela (Finnish Social Services)).
At the end of 2018, a phone survey was made, involving all participants (2000 experiment subjects and 5000 people forming the control group), to check on “the impact of the basic income on employment, taxable earnings, take-up of unemployment benefits paid out by Kela, and enrolment in employment services”. This survey was done according to international standards on questionnaires (e.g.: European Social Survey, International Social Survey Programme, European Union Survey). Furthermore, interviews are planned to be performed in early 2019, in order to “interpret and shed further light on some of the unanswered questions and unexpected results”. To contextualize the registry data collection, phone survey and interviews, a thorough look will also be directed to public debate and popular support (or lack thereof) for basic income. This clearly means that the investigators did more than just try to answer the overarching question posed by the Finnish government at the start of the experiment: “could basic income increase employment and simplify the social security system?” (video)
Now that the experiment is over, and while the data treatment and deep analysis is being performed, BBC put together a short video piece entitled “Did Finland’s basic income experiment work?”, asking the corollary inquiry “How free money changed people’s lives?”. In a couple of interviews with experiment participants, the message coming through is that the experiment brought promises of a better, more secure life, with less governmental bureaucracy, but unfortunately it had to end (with no prospects of expansion, let alone implementation by the current government). One of those participants, Tania, told BBC that “basic income changed my life”, since it allowed her to “stand on [her own] two feet”. Another participant, Thomas, referred that the same difficulties remained, during the experiment, for getting into paid employment, which might be related to the fact that the experiment had a very small target group of people (2000), spread along the whole of Finland. That level of scattering doesn’t allow for community effects on the introduction of a kind of basic income allowance, and so the marketplace does not adjust accordingly. This seems to be aligned with one of the preliminary conclusions just published: that the experiment did not result in higher levels of paid employment for the participants.
However, the referred published report does include important (preliminary) results of other (less objective than hours in employment) analysed variables, such as Life Satisfaction, Trust, Confidence, Physical and Mental Health, Concentration, Depression, Financial Security, Stress and Attitudes Toward unconditional basic income (UBI). International basic income activist Scott Santens has summarized these results in a convenient way, which might be put into an even more succinct list (percentages refer to differences between averages of the experiment’s treatment group and the control group, over each variable):
Life Satisfaction – observed an 8% improvement;
Trust – observed an increase of 6% in other people, 5% in the legal system and 11% in politicians;
Confidence – observed an increase of 21% of confidence in one’s future, and a 22% increase in one’s ability to influence society;
Physical and Mental Health – observed a 17% improvement;
Concentration – observed a 16% improvement;
Depression – observed a 37% reduction (measured through qualitative answers);
Financial security – observed a 26% improvement;
Stress – observed a 17% improvement (over the number of people who responded they felt “little or no stress at all”);
Attitudes Toward UBI – observed a 38% improvement over the number of people who strongly agree that a nationwide UBI would make it easier to accept job offers, and a 24% increase over the number of people who think Finland should now adopt a UBI.
It should be made clear again, if two years of the pilot itself and another of preparation were not enough to explain the real important parameters of the experiment, that what happened in Finland was not exactly a basic income (implementation) experiment. It was, as Santens put it, “a test of slightly reducing the marginal tax rates experienced by the unemployed, and also slightly reducing the amount of bureaucracy they experience”. From this to a basic income as defined by BIEN goes a long way. Nevertheless, it is remarkable that such a limited experiment, both in scope as in depth, could generate such positive preliminary results on human (generalized) wellbeing.
More information at:
Toru Yamamori, “Finland: Wellbeing improved: First results of the BI experiment”, Basic Income News, February 11th 2019
Olli Kangas, Signe Jauhiainen, Miska Simanainen, Minna Ylikännö (eds.), “The Basic Income Experiment 2017–2018 in Finland. Preliminary results”, Ministry of Social Affairs and Health, February 8th 2019
Scott Santens, “What is There to Learn From Finland’s Basic Income Experiment? Did It Succeed or Fail?”, Medium, February 14th 2019
