Basic Income: Does it really work? – First scientific results

“A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” The concept incorporates the belief that social and economic policy can no longer be conceived separately. The major aims of basic income are poverty relief and full employment.

This concept has become one of the most controversially debated topics. Many philosophers such as Canadian Hillel Steiner and German Richard David Precht and even entrepreneurs like Mark Zuckerberg and Richard Branson argue that a basic income could provide all members of society with a life in dignity in a working world that is subject to major unforeseen changes due to the digital revolution.

According to the Oxford study “The Future of Employment: How Susceptible are Jobs to Computerization?”, 47 percent of US employment is at risk of being automated within the next 20 years. There is also a controversial debate whether this industrial revolution will create more jobs than it will eliminate in contrast to all industrial revolutions before. Ultimately, supporters argue that a basic income could therefore lower crime rates and increase public health and social entrepreneurship.

Opponents however carry two major arguments. First, they argue that an unconditional basic income comes at tremendous financial costs and second, they argue that a basic income incentivizes phlegmatism since people can simply benefit from basic income rather than working in tough conditions. Ultimately, people with high incomes would be taxed at higher rates and would effectively subsidize “laziness”.

This concept may receive a lot of favor given the uncertainty of the future and the security it may provide to all members of society. Yet, the question is: Is there any scientific evidence that this, what is conceptualized as a basic income, actually functions accordingly in the real world?

Since no country has yet implemented a basic income on a federal basis, one can only assess pilot projects.

The first conducted basic income pilot project took place in the Namibian villages Otjievero and Omitara from January 2008 to December 2009. There, an equivalent of 12 USD per month was paid to each individual below the age of 60 without any conditions attached. After the initiation, the findings showed a significant reduction of child malnutrition and an increased school attendance. Further, the crime rates reduced by 42 percent , while the theft rate dropped by 43 percent. Further, the project showed that the locally restricted implementation of basic income led to increased migration to the Otjievero-Omitara area which suggests that a basic income can only efficiently be implemented nationally.

Currently, the Canadian state Ontario is testing one of the largest and most costly pilot projects. The initiators of the project aim to examine whether a basic income will lead to less stress, anxiety and better health among low income members of society and whether they will be able to make decisions about their future. The pilot is conducted with 4,000 participants that receive about 17,000 Canadian Dollars, the equivalent of 75% of the Canadian low income measure, per year over monthly payments. The short-term results showed an increase in food security and reduction in stress and anxiety. In the medium-term, people had an increased community participation and improved health. The long-term outcomes showed a better quality of life in general and an increased employee retention rate. Particularly, the last result is countering the argument of basic income opponents that it would encourage people to quit their jobs.

Further, there are more pilot projects conducted for example in Finland and Brazil that show similar results and they are very promising.

Yet, there is little to no knowledge regarding an effective federal funding of basic income, the impact this funding would have on the general behavior of society and considering the distortions that the effect of a pilot may have on the behavior of the participants. Hence, the results should be judged critically and viewed with healthy skepticism. Yet, in a world which is rapidly changing due to the automatization of the working environment, a basic income could play an important role in the future.

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