Why study basic income?
Basic income has the potential to change the trajectory of people’s lives. It could provide a safety net for young adults as they transition from school to work, enable individuals to change careers or start a new business, or allow them to care for a child or elderly relative.
Basic income could also end poverty. Research suggests that negative economic, social, and psychological feedback loops keep individuals without a steady income “trapped” in poverty. Unconditional cash transfers seek to break these loops, and a new wave of rigorous studies in developing countries affirms this potential. Basic income could streamline the social safety net, remove a myriad of work disincentives, and spark entrepreneurship.
This idea garners support across the political spectrum. Libertarians argue that basic income could reform an inefficient and ineffective welfare state. Anti-poverty advocates believe basic income is the simplest plan to end poverty. Others—on both the left and the right—remain skeptical, raising concerns about the cost or the psychological and existential consequences for recipients.
Despite all the debate, the arguments for and against basic income are largely theoretical or ideological. We simply don’t know the magnitude of the costs and benefits in the US context. The lack of data and experience impedes rigorous policy analyses.
The gold standard for understanding a new social policy is a randomized controlled trial (RCT). By comparing a group of people who receive a basic income to an otherwise identical group of people who do not, we can isolate and quantify the effects of a basic income. We plan to randomly select individuals across two US states to participate in the study. Roughly half will receive $1,000 a month for up to five years; the rest will serve as a control group for comparison.
We’re working with leading experts in economics, public health, and other fields and partnering with government agencies to collect precise administrative data. Measuring how individuals spend their time and money, indicators of mental and physical health, and effects on children and social networks will help us learn how this basic level of economic security helps people cope—and even thrive—in the midst of volatility and uncertainty.
We also plan to conduct regular in-depth interviews with a subset of participants to better understand how a basic income influences people’s lives. Documenting individuals’ experiences, their decision-making processes, and the constraints they face will help us create solutions, even apart from basic income, that may be more effective. At the study’s conclusion, we will be able to answer fundamental questions about basic income and advance the debate about social spending and the future of work.
How does receiving a basic income affect the way people spend their time? Do people spend less time working and more time taking care of family members? Do people drop out of the workforce or work fewer hours and go to school or pursue additional training? Do they take a lower-paying job that they enjoy more? Using state-of-the-art passive data collection, validated with time use surveys, we will examine how recipients of basic income spend their time.
Critics of guaranteed income policies often point out that employment provides a sense of purpose and meaning for many people, as well as both short- and long-term structure for our lives. By reducing the immediate need for paid work, basic income could have negative consequences for individuals’ psychological well-being and productivity in other areas of life. If it is true that recipients spend fewer hours working for pay, exploring how they spend the additional time and how they experience those activities will help us document how any changes that result from basic income affect well-being.
Mental and physical health
How would your mental and physical health change if you had an extra $1,000 per month? Perhaps you’d be less stressed and anxious. Maybe you would use the extra cash to buy healthier food, purchase a gym membership, spend more time with your friends and family, or go to the doctor regularly for preventative care. Through mental health surveys developed by psychologists and physical health measures conducted at the study’s beginning and end, we’ll measure changes in mental and physical health.
How do people think they’re doing? Do people feel happier, healthier, more secure, or more hopeful about the future? Basic income could ease financial insecurity and have myriad effects on a participant’s self-perception. On the other hand, basic income could upset an existing dynamic and reduce well-being. We will measure these outcomes through subjective well-being surveys and in-person in-depth interviews.
Basic income means people will have a minimum income guaranteed every month, but how does their financial health change overall? Are they more resilient and better able to handle unexpected expenses like medical bills, car repairs, or other financial emergencies? Do participants pursue behaviors that promote economic self-sufficiency? Do they track expenses and put aside money into savings? Using transaction level credit and debit data, credit bureau reports, and surveys about expenditures from consenting participants, we will obtain a comprehensive picture of their financial health. This level of detail is unprecedented in a study of basic income or negative income tax.
Changes in financial, physical, and mental health could affect how you make decisions. A burgeoning literature on “scarcity” suggests that the condition of scarcity--having less when you need more--creates a distinct psychology that causes individuals to make suboptimal decisions. If you’re short on time, you’re more likely to mismanage it. If you’re short on cash, you’re more likely to make poor financial decisions. So far, most studies on scarcity have relied on short-term experimentally induced stressors on time or money. By measuring time and risk preferences throughout the course of our study, we will be able to see how long-term conditions affect decision-making.
Politics and social behaviors
Would you vote differently if you had more cash? Perhaps you would spend more time volunteering in your community or participating in civic, political, or religious groups. A basic income could lead to a more engaged civic life or prompt participants to be more trusting of other people and institutions.
Criminal activity produces large negative externalities for society and often negatively impacts offenders’ and victims’ lives and families forever. A basic income may reduce crime by reducing the incentive for offending, freeing individuals from harmful situations or relationships, or increasing the opportunity cost of incarceration.
Effect on children
A basic income could have large effects on children living in households who receive it. Parents may have more time to spend reading with their kids or helping them with homework. They may spend more on healthy food, daycare, or sports. These changes could lower children’s levels of stress and improve educational and health outcomes.