An Update on Basic Income Experiments

Last year, I wrote on preliminary results from Finland’s basic income experiment (“Preliminary results from Finland’s basic income experiment … social ‘science’ is hard,” newsletter #30). Two things have happened since then. First, the final results have come out.* Second, a city in California, Stockton, has conducted a similar experiment.

The final results of the Finnish experiment were similar to the first year results, in that there was negligible impact on employment. However, the results did indicate that there was substantial improvement in perceived economic security and mental wellbeing. Ultimately, the results of the experiment can not be separated from the design flaws I discussed in the initial article; still, it seems that while there were some positive outcomes, a basic income did not have the desired effect of increasing employment (the hoped-for outcome was that with a guaranteed income that wouldn’t go away after you got a job, recipients would be more inclined to take lower-paying jobs).

The Stockton experiment was different than the Finnish one in a few significant ways. First, the Finnish experiment was targeted at the unemployed, whereas the Stockton experiment was on Universal Basic Income (UBI), and so the benefit was provided to people, regardless of whether or not they were currently employed (though it targeted at census tracts below the median household income for the city). Second, while it had flaws, the Finnish experiment was large and randomized. The Stockton experiment only covered 125 people. That said, while the mental changes were similar to the Finnish experiment, the economic outcomes were significantly different. The percentage of employed people in a control group increased from 32% to 37%, while in the group that received the UBI money the change was from 28% to 40%.

Given the small size of the Stockton experiment, more work will need to be done before we can draw meaningful conclusions; however, this result seems good enough to encourage other experiments. It will be really interesting to see how this plays out, particularly from a cultural perspective (will it turn out that Americans are more likely to benefit from UBI than people in countries with strong safety nets, like Finland? Will it be because of difference in attitude towards work, or different causes for unemployment, or something else entirely? Will we see similar experiments in other countries, and how will those work out? It would be really interesting if UBI was successful in some cultures, but not others, and therefore not a universal solution.

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Chris Richardson has strong opinions on just about everything. Just ask.