Yesterday I explained how universal basic income (UBI) works, and summed up the arguments for and against.
Today, we’re looking at the actual evidence.
Over the last few years, a number of UBI pilots have popped up around the world, and the results are starting to inform policymakers.
So, what do those results tell us?
The failed Finnish experiment
The UBI experiment that grabbed all the headlines was Finland’s 2017 trial.
Mainly because, in April this year, the Finnish government announced it wouldn’t be extending the trial past its planned 2018 end date.
Many commentators took this as a sign Finland had decided UBI wouldn’t work. However, the Finnish government later issued a statement to the contrary.
“It seems that there is some misinformation spreading in international media about the Finnish basic income experiment,” says Miska Simanainen, a researcher at Kela, the Finnish government agency behind the trial. “There are currently no plans to continue or expand the experiment after 2018, but this is not new information,” he adds.
Instead, the Finnish government will wait for the results from this initial trial before making any decisions about a wider roll-out of the initiative. The results from the trial will be available by the end of 2019 or the beginning of 2020, Simanainen explains.
So, the jury is out on Finland’s experiment.
Although, I should note that Finland’s UBI trial wasn’t really UBI at all. It wasn’t in any way universal.
Money – the equivalent of £475 per month – was given to a random sample of 2,000 unemployed Finns. They would continue to receive this money whether they found employment or not for the duration of the trial.
Initially Kela had planned to also give this money to a random group of employed people as well. This would have made the results much more reliable.
It would have then been a true UBI experiment. However, during the planning of the trial, Finland’s government changed and the new government didn’t see the merit in a real trial.
So, although the results, when they come out in a couple of years, will give us an idea of how UBI affects those currently unemployed, it will tell us nothing about how UBI actually affects society.
The problem with UBI trials
In fact, as you start researching these UBI trials around the world, you come up on this problem time and time again. Most of the “pilots” and “trials” are really nothing of the sort.
They are all a twisted interpretation of UBI. Very, very few stick to its simple premise: a basic income for everyone, issued regardless of an individual’s social or economic standing, and enough to keep them above the poverty line.
Basicincome.org defines it as:
A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.
That is, basic income has the following five characteristics:
- Periodic: it is paid at regular intervals (for example every month), not as a one-off grant.
- Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.
- Individual: it is paid on an individual basis—and not, for instance, to households.
- Universal: it is paid to all, without means test.
- Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work.
Results from the world’s biggest UBI trial
One pilot which does seem to meet the real definition is happening in Kenya.
As you can imagine, money goes much further Kenya than it does in Finland, and so this has enabled the charity GiveDirectly to set up a massive UBI pilot.
From Business Insider last November:
Beginning November 13, 40 villages will receive roughly $22.50 per month, no strings attached, for 12 years. At the same time, 80 different villages will get the same amount for just two years, another 80 will get a lump sum equal to the two-year amount, all totalling roughly 16,000 recipients. A hundred villages will get no money.
The study will produce some of the most comprehensive data yet about what happens when people are given money for nothing. It’ll help answer questions such as: Do people stop working? Do they start businesses? Are they more likely to spend money on drugs and alcohol — or education?
The study will also collect community-wide data to learn if the added financial security reduces negative aspects of poverty like violence and theft.
“The past 19 months since we announced our plans to test UBI have been remarkable,” GiveDirectly CFO Joe Huston wrote on the organization’s blog. “The debate over basic income continues to rage, from sceptics who call it ‘a senseless act of preemptive self-sabotage’ to optimists calling it ‘to the 21st century what civil and political rights were to the 20th.'”
On GiveDirectly’s site, it lists other major UBI experiments around the world, and tracks if they were true UBI or not. As you can see below, none of them are or were.
GiveDirectly’s trial is well under way now and set to run for the next 12 years. This pilot should provide the first real data into the effects of UBI, and hopefully inspire more true UBI trials.
Business Insider did a long and detailed write-up on the plan in January. You can read it here if you’re interested.
But what about the results from the less-than-perfect trials?
Futirusm.com has a webpage listing a number of UBI trials, past and present, and what they showed.
As I have said, none of these are true UBI experiments, but it’s worth looking into how they went to give us at least some idea of the effects of UBI.
Location: Dauphin, Manitoba, Canada
Hospital visits decreased. Education increased.
Big (Basic Income Grant)
Location: Omitara, Namibia
Poverty level decreased. Child malnutrition decreased. Crime rare decreased. Education increased. Healthcare clinic use increased. Economic activities increased.
Madhya Pradesh unconditional cash transfers project
Location: Madhya Pradesh, India
Basic living condition increased. Food sufficiency increased. Nutrition increased. Education increased. Economic activities increased. Illness and debts decreased.
Location: Quatinga Velho, Brazil
Health and nutrition increased. Housing increased. Self-esteem increased. Confidence in the future increased.
So, as you can see, the results from these pilots are universally positive. I would imagine the results of Kenya’s real UBI programme will also be, given the above.
Still, it would be good to see a true UBI programme in a rich country. And that’s exactly what’s happening, right here in the UK.
Scotland’s new UBI pilot
Late last year, Scotland announced it was to set up a UBI trial. From what I can gather, this will be a true UBI experiment.
In September 2017, the Scottish Government announced in its Programme for Government that it would support local authority areas to explore a Citizen’s Basic Income Scheme by establishing a fund to help areas to develop their proposals further and establish suitable testing.
The amount of funding offered is £250,000 over the two financial years 2018/19 and 2019/20. This complements funding already committed by local authority areas.
While plans are at an early stage, it has been agreed that four local authority areas – Fife Council, City of Edinburgh Council, Glasgow City Council and North Ayrshire Council – will work together to research and explore the feasibility of local pilots of Basic Income in Scotland.
The four areas collaboratively prepared and submitted a joint bid to the Citizen’s Basic Income Feasibility Fund on 29 March 2018. The Scottish Government confirmed on 21 May 2018 that they would provide £250,000 over two years to support the feasibility work in Scotland.
And this July a spokesperson for the Scottish Government confirmed it was going ahead:
Scottish Ministers have awarded funding to four local authorities in Scotland to undertake feasibility studies and to develop pilot models. This funding covers the financial years 2018-19 and 2019-20.
The local authorities will submit a final business case, including proposed pilot models, to Scottish Ministers for consideration by March 2020 – this will set out full details of the ethical, legislative, financial and practical implementation of the pilot on the ground. A decision will be made at this stage whether to contribute to funding the proposed pilots.
It’s great to see the UK is now leading the charge on UBI trials.
As automation increases and worker morale (hopefully) becomes more and more important, UBI may go down as one of the most important developments in history… if it works.
Until next time,
Editor, Exponential Investor