Evidence & Examples of Universal Basic Income

UBI in Action: Real-World Evidence and Economist Endorsements

In my previous blog post, I introduced the concept of universal basic income (UBI) and highlighted its relevance in today’s world. Now, let’s delve deeper into the evidence and examples that demonstrate the potential benefits of UBI for individuals and society.

A Rich Historical Context

UBI is not a novel or untested idea. Its roots trace back to ancient times, and it has been explored across diverse cultures, religions, and ideologies. Over the years, UBI has been subject to rigorous study and experimentation, yielding promising results. Let’s examine some notable examples:

The Alaska Permanent Fund

Since 1976, the Alaska Permanent Fund has been distributing a yearly dividend to all Alaskan residents using state oil revenues. The dividend amount has varied, ranging from $331.29 to $3,284 per person per year. Research shows that this program has several positive effects:

• Reducing Poverty and Inequality: The dividend helps lift individuals out of poverty and narrows income gaps.

• Crime Reduction: By providing financial stability, the fund contributes to lower crime rates.

• Enhancing Well-Being: Alaskans report increased happiness and trust due to the dividend.

Remarkably, the Alaska Permanent Fund enjoys widespread support across political and ideological lines.

The Mincome Experiment

From 1974 to 1979, the Mincome experiment took place in Dauphin, Manitoba, Canada. During this period, residents received a guaranteed income, which varied based on family size and income level. Key findings from the experiment include:

• Work Effort and Labor Market Impact: Contrary to concerns, the income did not significantly discourage work effort for most recipients. However, young mothers and students did reduce their hours to prioritize family and education.

• Health and Education Improvements: The unconditional income positively influenced health outcomes, educational attainment, and overall well-being. Hospital visits decreased, mental health improved, and school enrollment rates rose.

• Strengthening Family Stability: Mincome contributed to stable family environments.

Namibia Basic Income Grant (BIG)

The Namibia Basic Income Grant (BIG) made waves by providing a monthly cash transfer of 100 Namibian dollars (approximately $12) to all residents of Otjivero, Namibia, from 2007 to 2009. Funded through donations from churches and NGOs, this unconditional and universal grant had far-reaching effects.

Transformative Impacts

1. Poverty Reduction: The BIG significantly reduced poverty, with the poverty rate plummeting from 76% to 37%.

2. Nutrition Improvement: Malnutrition rates dropped dramatically, from 42% to 10%.

3. Education Boost: School attendance rates surged, reaching an impressive 92% (up from 62%).

4. Crime reduction: “Overall crime rates - as reported to the local police station - fell by 42% while retail stock theft fell 43% and other theft reduced 20%.”

The Namibia BIG exemplifies how a modest monthly cash transfer can create a positive ripple effect across various aspects of life.

Iran Cash Transfer Program

In 2010, Iran introduced a groundbreaking policy akin to UBI—the Targeted Subsidy Programme. This nationwide cash-transfer initiative provided a fixed sum to all Iranians, regardless of age, sex, or work status. Here are the key features:

• Monthly Transfer: Iranians received a fixed sum equivalent to ~$45/month ($171.89 in 2024 dollars) per person.

• Subsidy Reform: The program replaced subsidies on food and fuel.

• Unconditional and Universal: Every citizen benefited.

Outcomes and Complexities

1. Labor Supply: The program led to a 7% reduction in labor supply, primarily among women and young people. They wisely used the income to pursue education or engage in home production.

2. Consumption Patterns: On average the reform of removing energy subsidies while providing a basic income reduced household expenditures by 7-9 million Rials while reducing inequality and poverty.

Iran’s quasi-UBI experiment offers valuable lessons for global implementation, reshaping the social contract and addressing poverty and inequality.

India Basic Income Pilot

Empowering Villagers in Madhya Pradesh, The India Basic Income Pilot aimed to alleviate poverty and enhance well-being in rural communities. Here are the key details:

• Monthly Cash Payment: Adults received 200 rupees (approximately $4), while children received 100 rupees (about $2).

• Funding Source: The program was backed by the Self-Employed Women’s Association, a trade union and NGO that’s in partnership with UNICEF.

• Unconditional and Universal: Every eligible villager received the payment.

Positive Outcomes

1. Poverty & Debt Reduction: The program significantly narrowed the poverty gap, achieving a remarkable 32% reduction. Recipients of the basic income were also found to be able to reduce indebtedness by double that of the control group.

2. Improving Health: Health expenditure rose by 38%, leading to improved well-being, and the study found more improvements in housing, sanitation, and a 14% improvement in food security. Furthermore, more disabled people found inclusion in  society. Furthermore, recipients were found to not spend on alcohol or tobacco any more than control populations.

3. Business Investment & Personal Savings: Personal savings nearly triples, new business start-ups doubled, and farmers increased spending in higher quality seeds, fertilizers and pesticides.

4. Education Boost: School attendance rates surged by an impressive 68%.

5. Empowering Women: Women found it easier to access and operate SEWA Co-operative accounts than the Nationalised Bank Accounts. Cash grants led to an increase in own-account work, and a relative switch from wage labour to own-account farming and small-scale business. This was especially true for scheduled caste households and for women workers. Providing individual grants gives individuals more autonomy and bargaining power within the household, which – as the results confirm - is particularly important for women, the elderly and the disabled. It also ensures more complete financial inclusion, since an account is opened for each individual in the family.

GiveDirectly Experiment

Since 2011, the GiveDirectly experiment has been making a difference in the lives of poor households across Kenya, Uganda, and Rwanda. Key features include:

• Generous Transfers:

  • Households received unconditional cash transfers averaging approximately $50 per month. This amount represents around 9% of the median income in these regions.

  • The cash transfers were sustained over varying durations, ranging from 2 to 12 years.

• Funding:

  • The program was made possible through donations from individuals and organizations committed to alleviating poverty.

  • By channeling funds directly to recipients, GiveDirectly minimized administrative costs and ensured that the majority of resources reached those in need.

• Various Test Groups:

  • The experiment employed a rigorous design, dividing participants into distinct groups:

  • 5,000 recipients were promised a monthly income for 12 years.

  • 9,000 recipients were promised a monthly income for 2 years.

  • 9,000 recipients received a lump sum payment equivalent to the total amount they would have received over the 2-year period.

  • 12,000 recipients served as the control group and received no income during the study.

Tangible Benefits

• Monthly UBI Empowered Recipients:

  • Contrary to concerns about idleness, a monthly UBI made recipients more productive. They invested, became more entrepreneurial, and earned more.

  • The common fear of “laziness” never materialized; recipients did not work less or increase alcohol consumption.

• Effectiveness of Different Designs:

  • Both a large lump sum and a long-term UBI proved highly effective.

  • The lump sum enabled significant investments.

  • The guarantee of 12 years of UBI encouraged savings and risk-taking.

  • Even the short-term UBI design, while the least impactful, still had a positive impact on most measures.

• Comparing UBI Designs:

  • On nearly all important economic measures, a 2-year-only UBI performed less well than giving cash as a large lump sum or guaranteeing a long-term UBI.

  • Governments should consider changing how they deliver cash aid, as short-term monthly payments (the most common method) were found to be the least impactful design.

Finland Basic Income Experiment

From 2017 to 2018, Finland conducted a bold experiment by providing a monthly income of 560 euros (approximately $630) to 2,000 randomly selected unemployed Finns. Key insights include:

• Government Funding: The income was fully funded by the Finnish government.

• Partial Unconditionality: While not fully universal, it was an unconditional income.

• Well-Being Impact: Employment remained largely unaffected, but other aspects improved.

Notable Effects

1. Stress Reduction: Participants reported a 16% decrease in stress levels.

2. Health Enhancement: Self-reported health improved by 7%.

3. Trust in Institutions: Confidence in institutions increased by 8%.

The Stockton Economic Empowerment Demonstration

The Stockton Economic Empowerment Demonstration (SEED) provided a monthly income of $500 to 125 randomly selected residents of Stockton, California, from 2019 to 2021. Funded by private donations, this unconditional and targeted income had significant effects:

• Employment Boost: The full-time employment rate increased by 12 percentage points.

• Mental Health Impact: Mental health, utilizing Kessler 10 scores, improved by 13 percentage points for basic income recipients while the control group worsened by 4.8%.

These findings, along with other ongoing basic income pilots in the USA, affirm that UBI is both feasible and beneficial, dispelling common misconceptions.

Benefits of Universal Basic Income (UBI) for Individuals and Society

The advantages of UBI are multifaceted, touching upon various aspects of well-being and societal progress. Here’s how UBI would positively impact individuals and society:

Reducing Poverty and Fostering Prosperity

• Guaranteed Minimum Standard of Living: UBI ensures that every person receives a basic income, providing a safety net against poverty. This financial stability allows individuals to cover essential needs while pursuing other income sources, such as work, savings, or investments.

• Closing the Wealth Gap: By narrowing the divide between the rich and the poor, UBI promotes fairness and inclusivity. It creates a more level playing field where everyone has a chance to thrive.

Enhancing Health and Well-Being

• Access to Basic Necessities: UBI grants individuals the means to meet fundamental needs—food, shelter, clothing, and healthcare. This access directly impacts physical health.

• Mitigating Health Challenges: Poverty exacerbates physical and mental health issues. UBI reduces malnutrition, disease, depression, and suicide rates, leading to overall well-being.

• Boosting Happiness: Knowing that basic needs are covered provides security, freedom, and dignity, contributing to increased happiness.

Empowering Education and Lifelong Learning

• Equal Opportunity: UBI incentivizes education, training, and lifelong learning. Individuals can pursue their interests and abilities without financial constraints.

• Removing Barriers: By reducing enrollment costs and other financial hurdles, UBI enhances the quality and outcomes of education.

• Fostering Curiosity and Creativity: With more time and resources, learners can explore and discover new horizons.

Fostering Innovation and Entrepreneurship

• Capital and Confidence: UBI provides individuals with the financial means and self-assurance to launch or expand their businesses, projects, or creative endeavors. Passion and talent find fertile ground when economic barriers are removed.

• Economic Efficiency: By reducing waste and friction caused by poverty, bureaucracy, or inequality, UBI enhances overall economic performance. A thriving entrepreneurial ecosystem fuels growth.

Strengthening Democracy and Civic Engagement

• Amplifying Voices: UBI empowers every citizen to express themselves and actively participate in public life. Informed opinions and diverse perspectives enrich our collective decision-making.

• Mitigating Polarization: Economic insecurity often fuels conflict. UBI fosters a more civil and open discourse, bridging gaps and promoting understanding.

• Building Community: Trust and cooperation flourish when individuals feel heard and valued. UBI nurtures a sense of solidarity among people.

Promoting Diversity and Inclusion

• Universal Recognition: UBI ensures that everyone, regardless of background or identity, is a respected member of society. Recognition and acceptance become universal.

• Cultural Richness: When people are free to pursue their goals and share their experiences, our culture thrives. UBI encourages diverse expressions and creativity.

• Empathy and Compassion: Economic anxiety and desperation often breed fear and hatred. UBI cultivates empathy, fostering a compassionate society.

A Path to Environmental Stewardship

• Incentivizing Eco-Friendly Practices: UBI provides individuals with the means to make environmentally conscious decisions. With financial security, people are more likely to adopt sustainable behaviors. UBI encourages mindful consumption, leading to less waste and resource depletion. Individuals can invest in cleaner energy sources, contributing to a greener future.

• Mitigating Poverty-Driven Environmental Damage: Poverty often drives destructive practices like deforestation, pollution, and overexploitation. UBI reduces the need for desperate measures to survive. When basic needs are met, communities can prioritize conservation efforts, protecting vital ecosystems. UBI’s positive impact on mental health and overall well-being fosters a deeper connection to nature.

• Cultivating a Culture of Care: UBI heightens people’s understanding of the natural world and its finite resources. Gratitude and responsibility follow. When everyone has a stake in the environment, we collectively work toward its preservation. UBI ensures that future generations inherit a planet where both people and nature thrive.

In summary, UBI isn’t merely an economic policy—it’s a powerful force for positive transformation and a catalyst for responsible living. As we envision a world where every individual is uplifted let’s champion policies that reflect our shared humanity.

Support for Universal Basic Income (UBI): Voices of Renowned Economists

Universal basic income (UBI) transcends mere ideology—it garners support from influential economists and thinkers across the spectrum. Here are some notable advocates of basic income in both the present and past:

1. Angus Deaton: “Deaton is currently a Senior Scholar and the Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus at the Princeton School of Public and International Affairs and the Economics Department at Princeton University…Awarded the Nobel Memorial Prize in Economic Sciences for his analysis of consumption, poverty, and welfare.”

2. Thomas Piketty: “A French economist who is a professor of economics at the School for Advanced Studies in the Social Sciences, associate chair at the Paris School of Economics and Centennial Professor of Economics in the International Inequalities Institute at the London School of Economics.”

3. Christopher Pissarides: “He is Regius Professor of Economics at the London School of Economics, and Professor of European Studies at the University of Cyprus…In 2010, along with Peter Diamond and Dale Mortensen, he received the Nobel Prize in Economics, ‘for their analysis of markets with theory of search frictions.’"

4. Peter Diamond: “An American economist known for his analysis of U.S. Social Security policy and his work as an advisor to the Advisory Council on Social Security in the late 1980s and 1990s. He was awarded the Nobel Memorial Prize in Economic Sciences in 2010, along with Dale T. Mortensen and Christopher A. Pissarides. He is an Institute Professor at the Massachusetts Institute of Technology.”

5. Thomas Straubhaar: “a Swiss economist and migration researcher. He is a professor for international economic relations at the University of Hamburg.”

6. James Baker: “An American attorney, diplomat and statesman. A member of the Republican Party, he served as the 10th White House Chief of Staff and 67th United States Secretary of the Treasury under President Ronald Reagan and the 61st U.S. Secretary of State before returning as the 16th White House Chief of Staff under President George H. W. Bush.”

7. Martin Feldstein: “He was the George F. Baker Professor of Economics at Harvard University and the president emeritus of the National Bureau of Economic Research (NBER). He served as president and chief executive officer of the NBER from 1978 to 2008 (with the exception of 1982 to 1984). From 1982 to 1984, Feldstein served as chairman of the Council of Economic Advisers and as chief economic advisor to President Ronald Reagan”

8. Robert Reich: “An American professor, author, lawyer, and political commentator. He worked in the administrations of presidents Gerald Ford and Jimmy Carter, and served as Secretary of Labor from 1993 to 1997 in the cabinet of President Bill Clinton. He was also a member of President Barack Obama's economic transition advisory board. Reich has been the Chancellor's Professor of Public Policy at the Goldman School of Public Policy at UC Berkeley since January 2006.”

9. Henry Paulson: “An American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the chairman and chief executive officer (CEO) of major investment bank Goldman Sachs. He served as Secretary of the Treasury under President George W. Bush.”

10. Greg Mankiw: “An American macroeconomist who is currently the Robert M. Beren Professor of Economics at Harvard University. Mankiw is best known in academia for his work on New Keynesian economics…Mankiw is a conservative, and has been an economic adviser to several Republican politicians. From 2003 to 2005, Mankiw was Chairman of the Council of Economic Advisers under President George W. Bush. In 2006, he became an economic adviser to Mitt Romney, and worked with Romney during his presidential campaigns in 2008 and 2012.”

11. Jeremy Rifkin: “An American economic and social theorist, writer, public speaker, political advisor, and activist. Rifkin is the author of 23 books about the influence of scientific and technological changes on the economy, the workforce, society, and the environment.”

12. Arvind Subramanian: “An Indian economist and the former Chief Economic Advisor to the Government of India, having served from 16 October 2014 to 20 June 2018. Subramanian is currently a Senior Fellow at the Watson Institute for International and Public Affairs at Brown University…A former economist at the International Monetary Fund, Subramanian is a widely cited expert on the economics of India, China, and the changing balance of global economic power.”

13. Gareth Morgan: “A New Zealand businessman, economist, investment manager, philanthropist, public commentator and former political figure…Morgan worked for the Reserve Bank of New Zealand in the early 1980s, before founding economics forecasting company Infometrics Limited in 1983…Gareth Morgan has been a UNICEF NZ Ambassador and major donor since 2007 and has instigated a number of specific programmes in conjunction with UNICEF since that time.”

14. Thomas Paine: “An English-born American Founding Father, French Revolutionary, political activist, philosopher, political theorist, and revolutionary. He authored Common Sense (1776) and The American Crisis (1776–1783), two of the most influential pamphlets at the start of the American Revolution, and he helped to inspire the Patriots in 1776 to declare independence from Great Britain…He published the pamphlet Agrarian Justice (1797), discussing the origins of property and introducing the concept of a guaranteed minimum income through a one-time inheritance tax on landowners.”

15. Henry George: “an American political economist and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of the Progressive Era. He inspired the economic philosophy known as Georgism, the belief that people should own the value they produce themselves, but that the economic value of land (including natural resources) should belong equally to all members of society.”

16. James Tobin: “An American economist who served on the Council of Economic Advisers and consulted with the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He contributed to the development of key ideas in the Keynesian economics of his generation and advocated government intervention in particular to stabilize output and avoid recessions…Tobin received the Nobel Memorial Prize in Economic Sciences in 1981 for ‘creative and extensive work on the analysis of financial markets and their relations to expenditure decisions, employment, production and prices.’”

These economists represent a chorus of support for UBI, spanning different perspectives. Their endorsement underscores that UBI is not a fringe idea but a serious and sensible policy worthy of our attention.

Conclusion

In this blog post, we’ve explored evidence, examples, and the multifaceted benefits of UBI for individuals and society. I hope this post has provided you with insights and inspired you to engage in the ongoing conversation. In my next installment, we’ll delve into the ideological and political implications of UBI, transcending traditional divisions and debates. Stay tuned, and remember: UBI is for you, me, and everyone.