universal basic income essay

Why we should all have a basic income

Basic income for all Image:  Vitaly

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Consider for a moment that from this day forward, on the first day of every month, around $1,000 is deposited into your bank account – because you are a citizen . This is your basic income which is independent of every other source of income and guarantees you a monthly starting salary above the poverty line for the rest of your life.

What do you do? Possibly of more importance, what don’t you do? How does this firm foundation of economic security and positive freedom affect your present and future decisions, from the work you choose to the relationships you maintain, to the risks you take?

The idea is called unconditional or universal basic income , or UBI. It’s like social security for all, and it’s taking root within minds around the world and across the entire political spectrum, for a multitude of converging reasons . Rising inequality, decades of stagnant wages, the transformation of lifelong careers into sub-hourly tasks, exponentially advancing technology like robots and deep neural networks increasingly capable of replacing potentially half of all human labour , world-changing events like Brexit and the election of Donald Trump – all of these and more are pointing to the need to start permanently guaranteeing everyone at least some income.

A promise of equal opportunity

“Basic income” would be an amount sufficient to secure basic needs as a permanent earnings floor no one could fall beneath, and would replace many of today’s temporary benefits, which are given only in case of emergency, and/or only to those who successfully pass the applied qualification tests. UBI would be a promise of equal opportunity, not equal outcome, a new starting line set above the poverty line.

It may surprise you to learn that a partial UBI has already existed in Alaska since 1982 , and that a version of basic income was experimentally tested in the United States in the 1970s. The same is true in Canada, where the town of Dauphin managed to eliminate poverty for five years. Full UBI experiments have been done more recently in places such as Namibia , India and Brazil . Other countries are following suit: Finland , the Netherlands and Canada are carrying out government-funded experiments to compare against existing programmes. Organizations like Y Combinator and GiveDirectly have launched privately funded experiments in the US and East Africa respectively.

I know what you’re thinking. It’s the same thing most people think when they’re new to the idea. Giving money to everyone for doing nothing ? That sounds both incredibly expensive and a great way to encourage people to do nothing. Well, it may sound counter-intuitive, but the exact opposite is true on both accounts. What’s incredibly expensive is not having basic income, and what really motivates people to work is, on one hand, not taking money away from them for working, and on the other hand, not actually about money at all.

Basic income in numbers

What tends to go unrealized about the idea of basic income, and this is true even of many economists – but not all – is that it represents a net transfer. In the same way it does not cost $20 to give someone $20 in exchange for $10, it does not cost $3 trillion to give every adult citizen $12,000 and every child $4,000, when every household will be paying varying amounts of taxes in exchange for their UBI. Instead it will cost around 30% of that, or about $900 billion , and that’s before the full or partial consolidation of other programmes and tax credits immediately made redundant by the new transfer. In other words, for someone whose taxes go up $4,000 to pay for $12,000 in UBI, the cost to give that person UBI is $8,000, not $12,000, and it’s coming from someone else whose taxes went up $20,000 to pay for their own $12,000. However, even that’s not entirely accurate, because the consolidation of the safety net and tax code UBI allows could drive the total price even lower.

Now, this idea of replacing existing programmes can scare some just as it appeals to others, but the choice is not all or nothing: partial consolidation is possible. As an example of partial consolidation, because most seniors already effectively have a basic income through social security, they could either choose between the two, or a percentage of their social security could be converted into basic income. Either way, no senior would earn a penny less than now in total, and yet the UBI price tag could be reduced by about $220 billion. Meanwhile, just a few examples of existing revenue that could and arguably should be fully consolidated into UBI would likely be food and nutrition assistance ($108 billion ), wage subsidies ($72 billion ), child tax credits ($56 billion ), temporary assistance for needy families ($17 billion ), and the home mortgage interest deduction (which mostly benefits the wealthy anyway, at a cost of at least $70 billion per year ). That’s $543 billion spent on UBI instead of all the above, which represents only a fraction of the full list , none of which need be healthcare or education.

So what’s the true cost?

The true net cost of UBI in the US is therefore closer to an additional tax revenue requirement of a few hundred billion dollars – or less – depending on the many design choices made, and there exists a variety of ideas out there for crossing such a funding gap in a way that many people might prefer, that would also treat citizens like the shareholders they are ( virtually all basic research is taxpayer funded ), and that could even reduce taxes on labour by focusing more on capital, consumption, and externalities instead of wages and salaries. Additionally, we could eliminate the $540 billion in tax expenditures currently being provided disproportionately to the wealthiest, and also some of the $850 billion spent on defence .

Universal basic income is thus entirely affordable and essentially Milton Friedman’s negative income tax in net outcome ( and he himself knew this ), where those earning below a certain point are given additional income, and those earning above a certain point are taxed additional income. UBI does not exist outside the tax system unless it’s provided through pure monetary expansion or extra-governmental means. In other words, yes, Bill Gates will get $12,000 too but as one of the world’s wealthiest billionaires he will pay far more than $12,000 in new taxes to pay for it. That however is not similarly true for the bottom 80% of all US households , who will pay the same or less in total taxes.

To some, this may sound wasteful. Why give someone money they don’t need, and then tax their other income? Think of it this way: is it wasteful to put seat belts in every car instead of only in the cars of those who have gotten into accidents thus demonstrating their need for seat belts? Good drivers never get into accidents, right? So it might seem wasteful. But it’s not because we recognize the absurd costs of determining who would and wouldn’t need seat belts, and the immeasurable costs of being wrong. We also recognize that accidents don’t only happen to “bad” drivers. They can happen to anyone, at any time, purely due to random chance. As a result, seat belts for everyone.

The truth is that the costs of people having insufficient basic income are many and collectively massive. It burdens the healthcare system. It burdens the criminal justice system. It burdens the education system. It burdens would-be entrepreneurs, it burdens both productivity and consumer buying power and therefore entire economies. The total cost of all of these burdens well exceeds $1 trillion annually , and so the few hundred billion net additional cost of UBI pays for itself many times over. That’s the big-picture maths.

The real effects on motivation

But what about people then choosing not to work? Isn’t that a huge burden too? Well that’s where things get really interesting. For one, conditional welfare assistance creates a disincentive to work through removal of benefits in response to paid work. If accepting any amount of paid work will leave someone on welfare barely better off, or even worse off, what’s the point? With basic income, all income from paid work (after taxes) is earned as additional income so that everyone is always better off in terms of total income through any amount of employment – whether full time, part time or gig. Thus basic income does not introduce a disincentive to work. It removes the existing disincentive to work that conditional welfare creates.

Fascinatingly, improved incentives are where basic income really shines. Studies of motivation reveal that rewarding activities with money is a good motivator for mechanistic work but a poor motivator for creative work . Combine that with the fact that creative work is to be what’s left after most mechanistic work is handed off to machines , and we’re looking at a future where increasingly the work that’s left for humans is not best motivated extrinsically with money, but intrinsically out of the pursuit of more important goals. It’s the difference between doing meaningless work for money, and using money to do meaningful work.

Basic income thus enables the future of work, and even recognizes all the unpaid intrinsically motivated work currently going on that could be amplified, for example in the form of the $700 billion in unpaid work performed by informal caregivers in the US every year, and all the work in the free/open source software movement (FOSSM) that’s absolutely integral to the internet .

There is also another way basic income could affect work incentives that is rarely mentioned and somewhat more theoretical. UBI has the potential to better match workers to jobs, dramatically increase engagement, and even transform jobs themselves through the power UBI provides to refuse them.

A truly free market for labour

How many people are unhappy with their jobs? According to Gallup, worldwide, only 13% of those with jobs feel engaged with them. In the US, 70% of workers are not engaged or actively disengaged, the cost of which is a productivity loss of around $500 billion per year . Poor engagement is even associated with a disinclination to donate money, volunteer or help others . It measurably erodes social cohesion.

At the same time, there are those among the unemployed who would like to be employed, but the jobs are taken by those who don’t really want to be there. This is an inevitable result of requiring jobs in order to live. With no real choice, people do work they don’t wish to do in exchange for money that may be insufficient – but that’s still better than nothing – and then cling to that paid work despite being the “working poor” and/or disengaged. It’s a mess.

Basic income – in 100 people

Take an economy without UBI. We’ll call it Nation A . For every 100 working-age adults there are 80 jobs. Half the work force is not engaged by their jobs, and half again as many are unemployed with half of them really wanting to be employed, but, as in a game of musical chairs , they’re left without a chair.

Basic income fundamentally alters this reality. By unconditionally providing income outside of employment, people can refuse to do the jobs that aren’t engaging them. This in turn opens up those jobs to the unemployed who would be engaged by them. It also creates the bargaining power for everyone to negotiate better terms. How many jobs would become more attractive if they paid more money or required fewer hours? How would this reorganizing of the labour supply affect productivity if the percentage of disengaged workers plummeted? How much more prosperity would that create?

Consider now an economy with basic income. Let’s call it Nation B . For every 100 working age adults there are still 80 jobs, at least to begin with. The disengaged workforce says “no thanks” to the labour market as is, enabling all 50 people who want to work to do the jobs they want. To attract those who demand more compensation or shorter work weeks, some employers raise their wages. Others reduce the required hours. The result is a transformed labour market of more engaged, more employed, better paid, more productive workers. Fewer people are excluded, and there’s perhaps more scope for all workers to become self-employed entrepreneurs .

Simply put, a basic income improves the market for labour by making it optional . The transformation from a coercive market to a free market means that employers must attract employees with better pay and more flexible hours. It also means a more productive work force that potentially obviates the need for market-distorting minimum wage laws . Friction might even be reduced, so that people can move more easily from job to job, or from job to education/retraining to job, or even from job to entrepreneur, all thanks to more individual liquidity and the elimination of counter-productive bureaucracy and conditions.

Perhaps best of all, the automation of low-demand jobs becomes further incentivized through the rising of wages. The work that people refuse to do for less than a machine would cost to do it becomes a job for machines. And thanks to those replaced workers having a basic income, they aren’t just left standing in the cold in the job market’s ongoing game of musical chairs. They are instead better enabled to find new work, paid or unpaid, full-time or part-time, that works best for them.

The tip of a big iceberg

The idea of basic income is deceivingly simple sounding, but in reality it’s like an iceberg with far more to be revealed as you dive deeper. Its big picture price tag in the form of investing in human capital for far greater returns, and its effects on what truly motivates us are but glimpses of these depths. There are many more. Some are already known, like the positive effects on social cohesion and physical and mental health as seen in the 42% drop in crime in Namibia and the 8.5% reduction in hospitalizations in Dauphin, Manitoba. Debts tend to fall. Entrepreneurship tends to grow. Other effects have yet to be discovered by further experiments. But the growing body of evidence behind cash transfers in general point to basic income as something far more transformative to the future of work than even its long history of consideration has imagined.

It’s like a game of Monopoly where the winning teams have rewritten the rules so players no longer collect money for passing Go. The rule change functions to exclude people from markets. Basic income corrects this. But it’s more than just a tool for improving markets by making them more inclusive ; there’s something more fundamental going on.

Humans need security to thrive , and basic income is a secure economic base – the new foundation on which to transform the precarious present, and build a more solid future. That’s not to say it’s a silver bullet. It’s that our problems are not impossible to solve. Poverty is not a supernatural foe, nor is extreme inequality or the threat of mass income loss due to automation. They are all just choices. And at any point, we can choose to make new ones.

Based on the evidence we already have and will likely continue to build, I firmly believe one of those choices should be unconditional basic income as a new equal starting point for all.

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Universal Basic Income - Student Essay

Last updated 13 Jan 2019

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Here is an answer to the question: "Assess the view that the UK Government should use fiscal policy to provide a guaranteed minimum income as a strategy to reduce inequality."

Tim Harford goes bouldering with Rutger Bregman, the provocative thinker whose bestselling book argues for a universal basic income https://t.co/bckPeLuAkm — Financial Times (@FinancialTimes) March 10, 2018

In recent years talk of a guaranteed minimum income, more commonly known as a Universal Basic Income (UBI), has risen enormously. In the wake of the Global Financial Crisis, many now look to our struggling welfare systems and unpopular austerity measures in despair. Drastic measures are now being called for. Indeed a guaranteed minimum income is one of those, and yet it has supporters such as Mark Zuckerberg, Stephen Hawking and Bernie Sanders as some of its many advocates. The idea is exactly as it sounds: each and every citizen will gain a certain income per week or month, with no strings attached.

In addition to the financial crisis, the cry for a universal basic income has largely grown due to the ‘hollowing out’ effect of technology that has propelled inequality to unprecedented heights. Primarily, middle-income jobs that are more administrative have been eroded, while the more physically-demanding, lower-income tasks are by and large yet to be automated. And it is why proponents of UBI believe a cash injection into the poorest sections of society could do so much for overall living standards. For one it could stimulate entrepreneurship, because workers will finally have enough in their pocket to make proper investment. Another possibility could be more volunteering in local communities, where workers won’t have to balance three jobs at once with no time for anything else. In an age of consumerism gone mad, there seems few other options but to provide everyone with a small sum on the side in an attempt to temper aggregate demand. It might allow the average gig economy worker to not work late evenings anymore so he can see his children, or the new mother to take a few more weeks leave before rushing back to work.

UBI has in fact already been tested. In January 2017, Finland launched a two-year pilot scheme where 2,000 unemployed people have been given 560 euros (around £475) per month. One lucky beneficiary, Juha Jarvinen, 39, spoke to the BBC about how it transformed his life: “I feel like a free man. I got out of jail and slavery … I felt I am back in society and I have my humanity back”. His situation had been desperate after all. He was running a small business making wooden window frames before it went bust in the 2008 financial crash, and since then he’d hardly recovered. Now though, he’s started up a new business making drums, and it brings in around 1000 euros a month, on top of his UBI. Indeed proponents of UBI will insist for the vast majority that’s how the money is really used.

The argument for UBI is also based upon what society would look like in years to come should it not go ahead. In ten to twenty years, the number of workers being displaced by automation looks set to increase. Their redundant skills with an underfunded benefits system unable to retrain them will then increase brain drain and hysteresis. With GDP growth then suffering, capital investment will dwindle yet further, and tragedies such as the fire at Grenfell Tower last June where cheap materials proved vastly inadequate will only occur more often. But with UBI, the burden on our existing welfare state will be greatly relieved, as families will no longer drain our health care and range of benefits like before. The estimated cost of UBI will therefore have to be contextualised on two counts – not only through it relieving public services but also through the lack of maintenance costs that the benefits system still endures. A world of UBI might seem impossible right now. In fact the same was said before the minimum wage, and even the NHS – where it seemed ridiculous to give the rich something they could already afford. Doubters of UBI should not get too confident.

Indeed they shouldn’t – the pace of economic progress and political upheaval suggests exactly that. But it might also suggest that an argument that floated around for decades might just have passed its sell-by date, because the labour market is not as it was. Only around fifty years ago, the workplace was a male-dominated arena, workers had one job for life and technology was still in its early stages. With all the complexities we therefore face, the notion that we must wipe the slate clean with a universal basic income that caters equally for such diverse circumstances is too simplistic. Already, despite its rigorous means-testing that one would hope should send the money where it’s most in need, we have a failing benefits system that’s desperately underfunded. Thus to provide equally for the families with elderly relatives or young children and those without would only seek to widen inequality by diluting whatever help available to the most deserving. Billionaires would even get a little more.

On the most discounted rate of £75 a week per citizen in the UK, the policy would total to £120 billion, 5% of GDP and to balance the books experts say the marginal rate of income tax would have to hit 75% - far exceeding the next highest tax rate of 60.2% in Denmark. Granted, the current benefits system has its inefficiencies: each year according to the National Audit Office around £230m is spent on sanctioning that saves an estimated £130m, leaving around £100m of government money wasted. But by comparison to UBI the scale of current funding worries are next to nothing. The incentives to work with UBI in place would be almost non-existent, and the long term effects of dependency and emigration of skilful labour could take generations to recover again.

The social benefits claimed by UBI proponents are also misguided. While cutting working hours or even becoming redundant might sound liberating, income won’t be the only loss. People also gain purpose, status, skills, networks and friendships through work. Delinking both income and work, while rewarding people for staying at home is simply a catalyst for social decay. With high unemployment, crime, drugs and broken families will continue to grow and with it so too will pressure on public services. Politically, the idea is also quite a dangerous one. UBI as a utopian thought-experiment sounds so awe-inspiring that real discussion about the future of jobs could well be postponed. The growing clamour in more populous countries with larger inequality could also take on a more populist stance, where leaders on the left will sell it as if it’s a flawless cure for all ills.

To say that UBI is not the answer is not to reject the legitimate concerns of vulnerable workers though. Other solutions must instead be looked at, such as higher marginal rates of taxation. Inevitably, the question is always whether the rich will tolerate it, and on the scale that’s required the answer seems not. In Canada, where UBI was trialled, the majority of respondents in a poll of 1,500 who were open to UBI still were unwilling to pay higher tax to finance the program. The cut from 50 to 45% income taxation in the UK in 2013 after the HMRC estimated the former would probably raise no more revenue also suggests returning to that figure or even beyond would be unwise – equally so if it is used to fund UBI. Bumping the 40% rate to 45% for £46k+ earners is a safer bet but also runs the risk of the same unintended consequences, stifling entrepreneurship that UBI sought to improve and potentially teasing the rich to venture abroad for lower rates.

A rise in VAT tax from 25 to 30% has also been discussed as an alternative, to reduce aggregate demand slightly and help reign in the UK’s long-hours culture – in fact research shows Britons work on average 43.6 hours a week, above the European average of 40.3 and France’s limit of just 35. Alternatively, the government could put greater emphasis on demerit goods such as fast food and sugary drinks, in an attempt to contain the obesity epidemic, thereby at least providing some social benefit.

Complications also arise here, as the inelastic demand for many of these goods would call for a greater level of tax and with that greater potential for backlash. More importantly, much of the consumption of these goods is because they are cheap, and taxing them would be regressive, thus widening inequality rather than reducing it. The same goes for a VAT tax, since the poor spend a higher proportion of their income than the rich.

Other possibilities must be considered, perhaps looking at one of the root causes of growing inequality: technology. With conglomerates such as the ‘FAANG’s (Facebook, Amazon, Apple, Netflix and Google) concentrating such a large section of wealth, and start-ups in general locating in cities because of higher multiplier effects, the government could launch training schemes specifically for entrepreneurship in rural areas, for example. Collaborating with the tech firms that are based rurally could help springboard that project. The patent box initiative, allowing lower rates of corporation tax for certain inventions, could also reserve rights to part of the wealth should the firm become the next tech giant.

Another step towards reducing inequality could be introducing what’s known as Universal Basic Assets (UBA), which identifies a fundamental set of resources every citizen should have access to – such as financial security, housing, health care and education – in order to achieve economic prosperity. When divided into three categories: private, public and open, it’s clear that public assets such as public education and health care are hugely important, and through encouraging more capital flows through distributive initiatives, such as cooperatives and employee-stock-owned companies, greater funding can be put aside. The Government could also give people ownership of their data, so they can use it as an asset which they – not Facebook or Google, for example – can leverage, and capture economic value. Critics might say it will discourage entrepreneurship, but ultimately it merely seeks to redistribute new assets to the workers who are fulfilling these firms, and not the original asset holders.

In many ways, the great debate about Universal Basic Income and its alternatives, and its powers to reduce inequality is a worthwhile one whatever stance one takes. As inequality reaches new heights though, the hype around UBI and other suggestions like it have received precious little rigorous examination. Finland’s small-scale experiment of 2,000 unemployed citizens answers few questions, and nor does a similar trial in Ontario, Canada. Nevertheless the number and scale of pilots is starting to see an uptick. Y Combinator’s 5-year trial for 3,000 Americans and Scotland’s investment of over £250m into projects in Edinburgh and Glasgow are just some showing promise.

So perhaps the verdict on whether UBI really does work still awaits us. But lessons can also be learnt from what we know now. The first is that there is much reform still to be done with the benefits system – be it improving conditionality, sanctioning, providing support for people re-skill, or schemes to improve less-affluent workers’ capabilities with technology. Indeed the labour market as a whole could do with better regulation over zero-hours contracts and greater job security, perhaps by handing incentives to employers to minimise turnover. Whatever the solution to reduce inequality and poverty might be, it mustn’t be oversimplified, as is the danger with shouts for a UBI like it’s a silver bullet. But neither must it be ignored.

Suggestions for further reading on this issue

Why Basic Income alone will not be a panacea to social insecurity https://t.co/lr7FSm7YKg — LSE British Politics and Policy (@LSEpoliticsblog) October 22, 2018

Yes, Universal Basic Income can help #endukpoverty , says @anthonypainter https://t.co/LJTukg9W0K — The RSA (@theRSAorg) May 1, 2018

A lack of ambition ended Finland's experiment with a universal basic income https://t.co/AL6bwCDk2F pic.twitter.com/hX0dj7y51G — Bloomberg Opinion (@opinion) April 29, 2018

The ending of the experiment in Finland has drawn media attention for the wrong reasons https://t.co/4WRaeizWSk — The Economist (@TheEconomist) May 1, 2018

Here's how a universal basic income could work pic.twitter.com/hbhT9T5HdJ — Business Insider (@BusinessInsider) May 10, 2018

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The Deep and Enduring History of Universal Basic Income

Support for universal basic income (UBI) has grown so rapidly over the past few years that people might think the idea appeared out of nowhere. In fact, the idea has roots going back hundreds or even thousands of years, and activists have been floating similar ideas with gradually increasing frequency for more than a century.

Since 1900, the concept of a basic income guarantee (BIG) has experienced three distinct waves of support, each larger than the last. The first, from 1910 to 1940, was followed by a down period in the 1940s and 1950s. A second and larger wave of support happened in the 1960s and 1970s, followed by another lull in most countries through about 2010. BIG’s third, most international, and by far largest wave of support began to take off in the early 2010s, and it has increased every year since then.

Before the First Wave

We could trace the beginnings of UBI into prehistory, because many have observed that “prehistoric” (in the sense of nonliterate) societies had two ways of doing things that might be considered forms of unconditional income.

First, nomadic, hunting and gathering societies of less than 60 people have often been observed to treat all land as commons , meaning that everyone can forage on the land but no one can own it. A similar right to use land has existed in many small-scale agrarian communities right up to the enclosure movement, which was not complete in Europe until the 20th century and is not complete around the world today. The connection between common land and UBI is that both institutions allow every individual to have access to the resources they need to survive without conditions imposed by others.

Second, most observed small-scale, nomadic, hunter-gatherer societies had strong obligations to share what they had with others. If someone camping with the group found more food than they and their immediate family could eat in one meal, they had to share it with everyone in the camp, including people who rarely or never brought back food for the community. The food shared around camp could be seen as a “basic” income.

Some trace the beginning of UBI history to ancient Athens, which used revenue from a city-owned mine to support a small cash income for Athenian citizens.

The modern definition of UBI stipulates the grant must be in cash, and because small-scale hunter-gatherer or agrarian communities do not have cash economies, they do not have UBIs. But these practices show how the values that motivate much of the modern UBI movement are not new to politics but have been recognized and practiced for a very long time.

Some writers trace the beginning of UBI history to ancient Athens, which used revenue from a city-owned mine to support a small cash income for Athenian citizens. This institution sounds like a UBI, except that the meaning of citizen was very different in ancient Athens. Citizens were a small, elite portion of the population. Noncitizens, such as slaves, women, and free noncitizen males, were the bulk of the population and virtually all of its labor force. A UBI for the elite is no UBI at all.

Proposals that begin to fit the modern definition of UBI begin in the 1790s with two writers, Thomas Paine and Thomas Spence. Paine’s famous pamphlet “Agrarian Justice” argued that because private ownership of the land had deprived people of the right to hunt, gather, fish, or farm on their own accord, they were owed compensation out of taxes on land rents. He suggested this compensation should be paid in the form of a large cash grant at maturity plus a regular cash pension at retirement age. That amounts to a stakeholder grant plus a citizens pension: nearly, but not quite, a UBI.

From a similar starting point, Spence carried the argument through to a full UBI, calling for higher taxes on land and a regular, unconditional cash income for everyone. If anyone can be said to be the “inventor” of UBI, it is Thomas Spence, but his proposal remained obscure, and the idea had to be reinvented many times before it became widely known.

Joseph Charlier, a Belgian utopian socialist author, reinvented the idea of UBI in 1848, suggesting the socialization of rent, with the proceeds to be redistributed in the form of a UBI.

Henry George, a late 19th-century economist, set out to solve the problem of persistent poverty despite economic progress. He proposed taxing land value at the highest sustainable rate and using the proceeds for public purposes. At one point, he suggested that part of the proceeds could be distributed in cash to all citizens, but UBI was never a central part of his proposal.

BIG proposals remained sparse until the early 1900s.

The First Wave

By the early 20th century, enough people were discussing BIG to constitute its first wave — or at least its first ripple — of support. The idea was still new enough that most advocates had little knowledge of each other, and they all tended to give their versions of the program a different name.

In the United Kingdom, Bertrand Russell and Virginia Woolf both praised the idea in their writings without naming it. In 1918, Dennis and E. Mabel Milner started the short-lived State Bonus League, which briefly attempted to get a conversation started with pamphlets and other publications, including what was probably the first full-length book on UBI: Dennis Milner’s 1920 publication “Higher Production by a Bonus on National Output.”

Several economists and social policy analysts, especially in Britain, discussed UBI, often under the name social dividend , in the 1930s and early 1940s. These included James Meade (economist and later Nobel laureate), Juliet Rhys-Williams (writer and politician), Abba Lerner (economist), Oskar Lange (economist), and G. D. H. Cole (political theorist, economist, and historian). It was apparently Cole who coined the term basic Income in 1935, although that term did not become standard for more than 50 years.

Major C. H. Douglas (a British engineer) included UBI under the name national dividend in a wider package of proposed reforms he called social credit . His ideas were most prominent in Canada, where the Social Credit Party held power in two western provinces on and off between 1935 and 1991, but the party abandoned support for Douglas’s proposed dividend not long after it first took power.

In 1934, Louisiana senator Huey Long debuted a Basic Income plan he called Share Our Wealth. He seems to have come up with the idea on his own; there is no evidence that he was influenced by the ideas spreading around the United Kingdom in those years. Long’s plan might have served as the basis for a presidential run in 1936 had he not been assassinated in 1935.

Although some of these early advocates were highly respected people, they were unable to get any form of BIG onto the legislative agenda in this era. As World War II drew to a close, most Western democracies built up their welfare systems on a conditional model, typified by the British government’s famous Beveridge Report, which recommended fighting poverty, unemployment, and income inequality with a greatly expanded welfare system based on the conditional model. Discussion of BIG largely fell out of mainstream political discussion for nearly two decades.

The Second Wave

Discussion of BIG was kept alive between the first and second waves largely by economists who increasingly portrayed it as an interesting theoretical alternative to existing social policies.

During the second wave, the phrases income guarantee and guaranteed income were often used without indicating whether the guarantee was a negative income tax (NIT) or a UBI. When specified, it was most often an NIT. However, the second wave was extremely important in directing international attention toward the idea of creating a world in which everyone would have an income above poverty level.

The second wave took off in the early to mid-1960s, when at least three groups in the United States and Canada separately started promoting the idea at about the same time. First, feminists and welfare rights activists, including Martin Luther King Jr., mobilized people frustrated by inadequate and often demeaning conditional programs. The feminist and welfare rights movements for BIG were closely tied together because there was widespread belief that existing welfare programs were inadequate, punitive, and too closely tied to the belief that “typical” families were “headed” by a “male breadwinner” with a “housewife.” Feminists led a large grassroots effort to replace U.S. welfare programs with BIG, and it became an official demand of the British Women’s Liberation Movement by the 1970s.

Some futurists saw a guaranteed income as a way to protect workers from disruptions to the labor market caused by the computer revolution.

Second, futurists such as Robert Theobald and Buckminster Fuller saw a guaranteed income as a way to protect workers from disruptions to the labor market caused by the computer revolution. This effort foreshadowed the automation argument for UBI in the 2010s, but it dropped off considerably in the 1980s and 1990s.

Third, several Nobel Prize–winning economists — including James Tobin, James Meade, Herbert Simon, James Buchannan, and Milton Friedman — and many other prominent economists began arguing that a guaranteed income would represent a more effective approach to poverty than existing policies. To them, BIG would have been an attempt to simplify and streamline the welfare system while also making it more comprehensive. The interest from economists made BIG a hot topic among policy wonks in Washington and Ottawa.

The mainstream media started paying attention to NIT around the time Lyndon Johnson declared War on Poverty . Politicians and policy advisors began to take up the idea. The Canadian government released several favorable reports on guaranteed annual income in the 1970s. For a short time, many people saw some kind of BIG as inevitable and as the next step in social policy: a compromise that everyone could live with. People on the left viewed it as the final piece of the welfare system — a policy that would fill in the remaining cracks. Centrists, conservatives, and people from the burgeoning libertarian movement saw it as a way to make the social safety net more cost-effective and less intrusive.

In 1971, the U.S. House of Representatives overwhelmingly passed a bill introducing a watered-down version of NIT. It missed becoming law by only 10 votes in the Senate. The next year, presidential nominees from both major parties endorsed a variety of similar proposals: Richard Nixon supported the watered-down NIT, and George McGovern briefly proposed a genuine UBI. The similarity of the two nominees’ positions probably made BIG less of an issue in the campaign than it would have been if one of them had opposed it.

Although Nixon won the 1972 election, BIG never got another vote. It died partly because it had no groundswell of support outside the politically marginalized welfare rights movement. Its proponents in Congress made little effort to sell the proposal to the public at large. Many prominent guaranteed income supporters viewed Nixon’s version with skepticism, seeing it as too small with too many conditions to fit the model. In the absence of a wider movement for BIG, politicians paid little or no political cost for letting Nixon’s plan die and letting the idea fade from public discussion.

Although the second wave was most visible in the United States and Canada, the discussion spilled over into Europe, even as the second wave waned in North America. A high-level government report in France focused on NIT in 1973. At about the same time, James Meade and others managed to draw attention to the idea in the United Kingdom. In 1977, Politieke Pariji Radicalen, a small party in the Netherlands, became the first party with representation in parliament to endorse UBI. The next year, Niels I. Meyer’s book “Revolt from the Centre” launched a substantial wave of support in Denmark.

People often look back on the second wave of the BIG movement as a lost opportunity because no country introduced a full UBI or NIT, but the second wave had some major successes. The United States and Canada conducted the world’s first BIG implementation trials. The United States created or expanded several programs that can be seen as small steps in the direction of BIG, including food stamps, the EITC, and the Child Tax Credit. All these programs provide income supplements to low-income people. Although they have restrictions and conditions that UBI and NIT don’t, they represent steps toward BIG because they have fewer conditions than most traditional social policies and because they were proposed or expanded as compromise responses to the guaranteed income movement.

In 1982, the State of Alaska introduced the Permanent Fund Dividend (PFD). The PFD provides yearly dividends, varying usually between $1,000 and $2,000 per year to Alaska residents. Despite being very small, Alaska’s PFD is the closest program yet to meeting the Basic Income Earth Network ’s definition of UBI — falling short only by requiring people to fill out a form to verify that they meet the residency requirement.

Not only did these policies help a lot of people, but their success also provides evidence that can help to push social programs slowly in the direction of universality. But by the late 1970s and early 1980s, politicians such as Ronald Reagan and Margaret Thatcher dramatically changed the conversation. They successfully vilified virtually all welfare recipients as frauds , no matter how well they might have satisfied programs’ need-based criteria. As a result, many people stopped talking about how to expand or improve the welfare system and started talking about whether and how much to cut it. In response, the left largely went on the defensive. Any suggestion that the existing system might be replaced by something better could at that time be seen as lending support to people who wanted to cut existing programs and replace them with nothing.

In 1980, the United States and Canada canceled the last of their implementation trials. Canada stopped analyzing the data that it had spent years and millions of dollars collecting. For the next 30 years, with a few notable exceptions, mainstream politics in most countries included virtually no discussion of BIG.

Between the Waves

The 1980s, 1990s, and 2000s were downtime for BIG in world politics, but there were significant exceptions, when proposals briefly gathered attention in one place or another. These exceptions and the growth of academic interest in UBI were extremely important to building what became the third wave of the BIG movement. In 1982, a British parliamentary committee considered a UBI proposal. National waves of support happened in the Netherlands, Denmark, and postapartheid South Africa at various times. But for the most part, discussion of UBI took place outside the political mainstream.

Proposals continued to come out in various circles, but they were more easily ignored in this period. For example, Leonard Greene, an aviation expert and successful entrepreneur, wrote two books and sponsored a demonstration project in which he gave a small UBI to several families, but he received little, if any, media response. When I had the pleasure of meeting him, he described his 10-year-old son’s reaction to UBI, “So what you’re saying is that income doesn’t have to start at zero.” I’ve used that phrase ever since.

As one 10-year-old put it, “So what you’re saying is that income doesn’t have to start at zero.”

One place the UBI discussion grew steadily in this period was in academic journals. In 1984, a group of Britons, led mostly by academics, formed the world’s first national UBI network, the Basic Income Research Group (now the Citizen’s Basic Income Trust ). In 1986, a group of academic researchers established a group that was initially called the Basic Income European Network (BIEN). Philippe Van Parijs (a Belgian philosopher) and Guy Standing (a British economist) were the most active leaders of BIEN for the first 20 or 25 years of its existence.

From the founding of BIEN to the present, UBI, rather than NIT, has dominated the BIG movement. However, in the last few years, the NIT model has come back. In some countries, the BIG discussion is dominated by NIT, usually under other names, such as guaranteed income.

The academic debate grew substantially between the mid-1980s and the 2000s, especially in the fields of politics, philosophy, and sociology. By the mid-2000s, national groups existed in at least two dozen countries, including the United States, where the U.S. Basic Income Guarantee (USBIG) Network had been established in December 1999. Because so many UBI networks around the world wanted BIEN affiliation, the network changed its name to Basic Income Earth Network in 2004. Yet UBI stayed mostly outside the political mainstream.

I became interested in UBI as a high school student in 1980, just as the second wave of discussion was dying down. I started writing about it professionally after finishing graduate school in 1996, when the idea seemed hopelessly out of the mainstream. For those of us taking part in UBI events in the late 1990s and early 2000s, it felt less like a movement and more like a discussion group.

Even the activist contingent within BIEN and other networks concentrated more on discussion than action, believing (probably correctly) that they had to increase public awareness before they could gather the critical mass of support needed to make political action viable. Isolation from mainstream politics distracted supporters from how much their movement was growing. But as supporters would learn in retrospect, they were helping to lay the groundwork for a takeoff.

The Third Wave

Interest in UBI has grown enormously since 2010. The discussion crossed over into the mainstream international media by the mid-2010s. In some places, the crossover began earlier. Those of us who were volunteering at BIEN’s Basic Income News service noticed a substantial increase in media attention in late 2011 and early 2012, and media attention has grown steadily since. It is impossible to attribute the third wave of the UBI movement to any single source. It is the confluence of many widely dispersed actions and events, which I will try to sketch here as well as I can.

The financial meltdown of 2008, the subsequent Great Recession, and the Arab Spring sparked a new climate of activism. Public attention turned to poverty, unemployment, and inequality. UBI supporters suddenly had a much more welcoming environment for activism.

By 2008, a national wave of UBI support had begun to swell in Germany. Prominent people from across the political spectrum all began to push different UBI proposals in very public ways. That year, UBI activists in Germany, Switzerland, and Austria attracted the critical mass necessary for effective UBI activism and jointly organized the first International Basic Income Week . This event has taken place every year since and has spread around the world, now including actions as far away as Australia and South America.

In 2008, the Namibian Basic Income Grant Coalition , funded mostly by private donations from the Lutheran Church, began a two-year pilot, giving a small Basic Income to every resident of a rural Namibian village. This project coincided with a smaller one in Brazil and was followed by a much larger one in India in 2010 (both also largely or entirely funded by private donations). These trials attracted substantial media attention both locally and internationally. They helped inspire the privately and publicly funded experiments later conducted around the world.

Just as the Indian experiment faded from the headlines, European activists introduced UBI to the European mainstream media by pushing two citizens’ initiatives, one in Switzerland and one in the European Union, both of which attracted hundreds of thousands of signatures. The EU initiative recruited across Europe and collected signatures from every EU member state. The Swiss initiative collected enough signatures to trigger a national vote, which was held in 2015. Although neither initiative ultimately passed, they both built an infrastructure for UBI activism across Europe and attracted enormous international media attention, which in turn sparked additional activity and attracted more support.

At about this time, journalists around the world started paying attention to UBI, greatly increasing its visibility. By 2015, a third wave was visible to people who were paying attention, and all subsequent activism for UBI owes something to the cumulative results of the actions up to that point.

However, the chain of activism building on activism was only one of many sources of growth in the UBI movement. One of the movement’s most important strengths is its diversity: Support comes from many different places and from people who do not usually work together, follow similar strategies, or adhere to similar ideologies.

By the time the UBI experiment was underway in Namibia, economists and sociologists had already begun reassessing the results of the 1970s NIT experiments in the United States and Canada, bringing renewed press attention to BIG and helping to spark new interest in the idea.

Another source of momentum for UBI came from developing countries that had been streamlining and easing the conditions of eligibility for redistributive programs by creating what are now known as conditional cash transfers (CCTs). Although these programs were conditional, the results from easing conditions were so positive that they significantly bolstered support for further steps toward UBI, not only in lesser-developed countries of the Global South but all around the world. At least one CCT program, Brazil’s Bolsa Familia, inspired by the senator and UBI advocate Eduardo Suplicy, was introduced explicitly as a step toward UBI.

Support comes from many different places and from people who do not usually work together, follow similar strategies, or adhere to similar ideologies.

The third wave of the UBI movement is more identifiably left of center than the second wave, which involved many people who portrayed BIG as a compromise between left and right. But some right-of-center support has boosted the movement as well. For example, a group of philosophers and economists calling themselves Bleeding Heart Libertarians wrote a significant amount of pro-UBI literature in the 2010s.

Mirroring the futurism discourse of the 1960s, new attention to the automation of labor and the related precariousness of employment brought many new adherents to UBI. As unemployment reached new highs during the Great Recession and job openings lagged behind the overall economic recovery, many people, especially in high-tech industries in the United States, began to worry that the pace of automation was threatening large segments of the labor force with high unemployment, low wages, and gig-economy precariousness. Labor leaders, activists, academics, and tech entrepreneurs have all proposed UBI in response, making automation-related labor market changes one of the prime drivers of recent interest in UBI, especially in the United States. Some entrepreneurs, such as Chris Hughes of Facebook and the late Götz Werner of the German drugstore chain DM, have put their money where their mouth is, supporting UBI research, activism, and experimentation, giving an unquestionable boost to the movement.

Another way technology has affected the UBI debate is through cryptocurrencies (privately issued, all-electronic mediums of exchange). Some people see cryptocurrency as a way to bypass central banks entirely and provide users with a UBI in the newly created currency.

Environmentalism has also played a major role in the growth of interest in UBI. Two of the most popular proposals for combating climate change are the tax-and-dividend and cap-and-dividend strategies, both of which involve setting a price on carbon emissions and distributing the revenue to all citizens — thereby creating at least a small UBI. Some environmentalists see UBI as a way to counteract the depletion of resources by giving people a way out of the cycle of work and consumption. These kinds of proposals have received support from both Republicans and Democrats.

Growing interest in UBI, and to some extent tech industry money, have inspired a new round of UBI and UBI-related pilot projects in Finland, Kenya, Canada, the Netherlands, Germany, the United States, and many other places. UBI experiments are both a product and a driver of the current wave of support for UBI. This new round is characterized mostly by many small experiments rather than the few large experiments of the 1970s. Part of the reason is that many of the contemporary experiments are privately financed and therefore have to work on more limited budgets.

One exception is GiveDirectly’s enormous project in Kenya . This nonprofit has raised enough funds to finance a UBI of 75 cents per day for 20,000 people for 12 years, in an area where many people live on a dollar per day or less. When complete, this study will be the largest and longest UBI experiment ever conducted.

Between 2017 and 2020, UBI support got a large boost from Andrew Yang’s campaign for president of the United States. He was the first major-party candidate to endorse UBI since 1972, and the first ever to make UBI the centerpiece of their platform. For a political outsider, Yang did extremely well, qualifying for debates and recruiting a large network of supporters. Partly inspired by Yang, many candidates for lower offices also endorsed UBI in 2020 and 2022.

U.S. activism for UBI took off in October 2019, when activists in New York organized a UBI march from Harlem to the South Bronx. Hundreds of people, including myself , participated in the New York march, while 30 cities around the world joined in with their own marches. The march was so successful that organizers decided to make it an annual event. The 2022 march took place on September 24 at the climax of Basic Income Week.

Just as Yang suspended his campaign in 2020, UBI got yet another boost from an unexpected source. The COVID-19 outbreak and the related economic meltdown gave impetus for a temporary, emergency UBI. Suddenly mainstream politicians across the world were discussing UBI.

UBI was particularly well suited to the COVID situation. It functions as a cushion for people who are unable to work either because of social distancing or because of the economic downturn, and at the very same time it functions as a bonus for the essential workers asked to remain on the job during a pandemic. In both ways, it helps reduce the severity of the recession by stimulating the economy from the bottom up. To some extent, these policies represented politicians catching up with activists who had been calling for quantitative easing for the people (rather than for bankers) since the start of the Great Recession in 2009.

As late as perhaps 2015, it remained unclear whether the third wave would match the size and reach of the second. By 2019, the answer was obvious: Grassroots support and international media attention are more extensive than ever. The third wave represents the first truly global wave of UBI support. The first two did not extend much beyond the United States, Canada, and the United Kingdom, but the third wave involves major campaigns on all inhabited continents.

The Pattern

This look at the ups and downs of the UBI movement shows that UBI has tended to enter the mainstream conversation at times when people were concerned with and open to new approaches to address inequality, poverty, and unemployment. UBI has tended to recede from the mainstream conversation when public attention turned to other issues, or when other ways of addressing inequality became dominant. The first wave subsided when policymakers settled on the attempt to build a comprehensive welfare system on the conditional model. The second wave subsided (at least in the United States and Canada) not in the prosperous economy of the mid-1980s but in the troubling times of the late 1970s, when right-wing politicians convinced large numbers of people that redistributive programs should be cut instead of improved.

The biggest danger to the third wave appears to be growing nationalism. If nationalist politicians can convince enough voters to blame immigrants and foreign competition for growing inequality, they can effectively distract people from mobilizing around better social policies.

Karl Widerquist , a professor of philosophy at Georgetown University-Qatar who specializes in distributive justice, is the author of “ Universal Basic Income ,” from which this article is excerpted.

This article draws heavily on Widerquist’s essay “ Three Waves of Basic Income Support ,” published in “The Palgrave International Handbook of Basic Income,” edited by Malcolm Torry.

The pros and cons of universal basic income

By Melissa Stewart

Unconditional cash payments to residents are more of a floor to stand on than a safety net, say these Carolina scholars in light of a proposed pilot project to give $500 per month to formerly incarcerated Durham, North Carolina, residents.

The idea of governments giving residents no-strings-attached cash payments is picking up steam, due in part to the economic impact of the coronavirus pandemic. Last June, Mayor Michael Tubbs of Stockton, California, created Mayors for a Guaranteed Income, a coalition to “advocate for a guaranteed income — direct, recurring cash payments — that lifts all of our communities, building a resilient, just America.”

Durham Mayor Steve Schewel joined the group. In January, Schewel announced that Durham was one of 30 U.S. cities being considered to receive a $500,000 slice of a $15 million gift from Twitter co-founder and CEO Jack Dorsey. The money would fund Universal Basic Income pilot projects, such as the  Stockton Economic Empowerment Demonstration . Durham council member Mark-Anthony Middleton announced that  Durham’s proposed project  would guarantee $500 per month to 55 formerly incarcerated residents until the pandemic ends and the city’s economy recovers.

Before the pandemic hit, 2020 Democratic presidential candidate Andrew Yang put UBI, also known as guaranteed basic income, on the map by making it his signature policy. His proposed “Freedom Dividend” — $1,000 per month payments to every American adult — was a response to job displacement by automation.

For a deeper understanding of this issue, The Well spoke with two Carolina faculty members who have studied UBI.  Fabian Wendt , a teaching assistant professor in the College of Arts & Sciences’ philosophy department and the philosophy, politics & economics program, first came across UBI while studying theories of distributive justice.  Doug MacKay , associate professor in the College’s public policy department, grew interested in UBI through research into paternalism in the U.S. social safety net.

What is universal basic income?

Wendt:  It is a regular cash payment by the government that is given on a monthly or annual basis. It’s unconditional in several respects. In contrast to many other welfare programs that you only get when you prove your willingness to work, a UBI would be unconditional in that respect. It would also be unconditional on what money you make, what you have in general and on what contribution you made to finance the UBI. Finally, it would be unconditional on your family situation, on whether you’re married or not.

UBI is probably best conceived as a floor to stand on, not as a safety net. A safety net is only meant to catch you when you need it, which requires some institution to test whether you really need it, and that opens up all these worries about paternalism, bureaucracy and so on, whereas the UBI would be a floor to stand on for everybody.

MacKay: I completely agree with Fabian’s description. UBI is a platform to stand on and to build a life on. But it’s not something that’s going to allow you to live a great life. The sort of numbers that we’re talking about are, at most, $1,000 a month per person. People will still have a strong motivation to work.

What are the goals of UBI?

MacKay:  The goals really differ, depending on the policymaker but also on who’s proposing it. I think for a lot of folks on the left, they see it as more a platform to build your life on. So it’s going to be there for you when you when you need it.

If you think about the pandemic, when people are losing their jobs, it takes a long time for government to react. Had we had a basic income in place, that would have been a way of ensuring people are secure, have the ability to meet their basic needs and live a dignified human life. They don’t need to appeal to various agencies. They have consistency in terms of being able to afford housing, food and so on. It’s an anti-poverty measure.

You also see from people on the left the idea of UBI as promoting freedom. Oftentimes we talk about freedom as being freedom from constraints. Some folks on the right, libertarians in particular, emphasize the need for government to stay out of our lives. And thinkers on the left often point out that if people are just leaving you alone, you might be unlimited in terms of choices, but you’re not actually going to be able to do anything unless you have resources. So the idea is that if people have a platform to build their lives off, they have resources every month. They can actually do things. They can meet their needs. They can pursue various projects.

On the right side of the political spectrum, people see UBI as potentially realizing a number of goals. One, they emphasize this is anti-paternalistic in nature. There’s an element of government not interfering with the lives of individuals by imposing all these conditionalities on them, but rather just letting them be free to live their lives as they see fit with the income.

The other thing that folks on the right emphasize is the way UBI might allow you to shrink the size of government. People on the left often think of basic income as something we’re going to add to the safety net and keep much of the safety net intact. People on the right often see it as a replacement: We’re going to give people a guaranteed income, and we’re going to get rid of a whole host of social safety net programs that cost a lot of money and require a lot of people to administer.

Wendt:  One thing I found interesting about Andrew Yang’s proposal was his idea to let people choose whether they either take the UBI or keep the benefits from current programs.

Another thing different proponents will disagree upon is how high UBI should be. A thousand dollars a month was Yang’s proposal, but you could also go much lower or much higher. Maybe even “as high as is sustainable,” as [Belgian philosopher and economist and chief UBI proponent Philippe] Van Parijs would say.

Its sustainability will depend on how high it is pitched, but also on how it’s financed. It seems very natural to think that it would be financed through the income tax. That would make it a close relative to a negative income tax proposal, which was popular in the 1960s and ’70s. [The influential American economist] Milton Friedman was a famous advocate of that. But Andrew Yang and others propose a mix in terms of how it’s financed. It could also be a sales tax or capital income tax or some other way.

Andrew Yang put UBI on the map, but what’s driving it and why now?

Wendt:  UBI has often been seen as a response to the challenge of automation — the worry that many people are going to become unemployed and replaced by machines. For example, truck drivers will lose their jobs once there are automated trucks. In the end, that’s not a new concern, though. People have worried that machines would replace jobs at least since the 19th century, but usually new types of jobs were always created elsewhere.

The idea of a UBI was brought up last spring as a response to the pandemic — an emergency UBI. The coronavirus hit so hard. Many people felt like this was a chance to get some serious reform of the welfare state going. In the end we got the stimulus checks instead, which were not completely different, but a one-time thing, and not unconditional. The checks depended on how much you earned.

One thing to emphasize is also how UBI would empower women. It gives working mothers cash to pay for childcare, for example, or it makes it easier to leave an abusive husband if you have something to rely on that is independent from the family situation.

MacKay:  The other thing I would point to are concerns about income inequality. I don’t think this is necessarily a great solution to the problem of income inequality, but I think the economic anxiety leads people to UBI.

Is there evidence that UBI works?

MacKay:  There’s been a variety of studies. There were a couple of really famous experiments in the ’70s in Canada and here in the United States. There was a really interesting study in Manitoba in the late ’70s, where they had a whole town that was subject to a guaranteed income policy — a floor that families would not fall below. A lot of randomized controlled trials in low-income countries have been using cash transfers since the late ’80s, early ’90s. Some of these are conditional cash transfers. In Mexico, for example, you might get a cash transfer from the government if you send your kids to school and take them for yearly doctor visits. And there was one recently in Finland, where they gave $500 per month to unemployed folks.

These are high-quality studies. The evidence has shown that the UBI programs are pretty effective in a number of different ways. The caveat I would give is that they happen in different contexts, and the interventions are very different.

Wendt:  An experiment in Kenya is the largest. It involves around 20,000 people and unconditional cash payments that cover basic needs. It started in 2017 and will last 12 years. There are four different groups. One group gets the cash for the whole 12 years. Another group gets paid up front rather than on a monthly basis, I believe. Another group receives payments for a shorter period of time. And then there’s a control group that doesn’t get any cash. Some people reported that it has changed how women see their role in the household, because they felt entitled to have a say over how to spend the money.

What are the main points of criticism against UBI?

MacKay:  A big one is a reciprocity worry — that in order to get access to public benefits, you should be at least willing to participate in the labor market.

Think of the earned-income tax credit. That’s a cash transfer that goes to low-income Americans. But to get access to it, you need to be participating in the labor force. A lot of programs like SNAP [the federal government’s Supplemental Nutrition Assistance Program, also known as the Food Stamp Program] and TANF [Temporary Assistance for Needy Families, another federal program] have work requirements attached to them. The Trump administration was trying to attach a work requirement to Medicaid programs, as well. The thought is, you should only get access to public benefits if you are participating in the formal labor market and earning an income.

The question they ask is: Why should some group of individuals be participating in the labor force and paying taxes to fund a UBI for other people who aren’t participating in the labor market? One of the responses to this is that UBI recognizes all those forms of contribution to society that aren’t remunerated. Think about parents taking care of their children or poor people taking care of elderly family members. There’s lots of ways in which people contribute to society. And you can think of a UBI as reciprocating in that sense, remunerating people for those contributions.

Wendt:  Another common worry is that UBI is a waste of money on the wealthy. Why should all of those wealthy people get a monthly check? If the goal is to do something about poverty, then why UBI, since the rich by definition are not poor? That’s an understandable concern for sure. But the reply there is that depending on how the UBI is financed, the rich will not be net beneficiaries. They will contribute more to finance the UBI than what they get as their monthly check.

What do you think about the Durham proposal?

MacKay:  This is the first time I’ve heard of a guaranteed income program that’s aimed at people coming out of prison. I think it makes perfect sense. Part of the justification here is that people with a felony record face a lot of difficulty in terms of accessing other public programs. I think they’re actually banned for at least some period of time from federal housing programs and from receiving SNAP benefits. Felons face a lot of difficulty getting jobs. Employers can legitimately ask if they have a record and deny them employment on that basis. So it makes a lot of sense that you would target this type of pilot project at those folks. If you think about who needs a platform in American society, it’s going to be people who don’t have access to these other programs and are economically vulnerable in terms of not being able to get a job. And so I think it makes a lot of sense that you would target the program this way.

Oftentimes we discuss UBI as a major transformation to society, as a sort of utopian policy. That draws a lot of attention. But I think the discussion might lead to a simpler idea — just using cash payments in more of our social safety net programs. That might be more sustainable, more cost effective, than trying to try to implement a full UBI type policy. For that reason, what’s happening in Durham — a guaranteed income for a very narrow group of individuals — is really interesting.

One thing the pandemic has shown us is that the government got a little bit more comfortable with giving cash payments to people. Another thing I’m really excited about are these proposals to expand the child tax credit, both coming from [Mitt] Romney and also coming from the Democrats, which you might think of as a basic income for kids. Every month, they would get a certain amount of money, maybe a few hundred dollars. The parents decide how to spend it, but the thought is it’s kind of like a baseline for kids. We don’t want to spend too much time focusing on the big UBI utopian policy proposals and miss that there’s a lot of interesting and potentially really important, cost-effective policy proposals around using cash payments in very targeted ways.

By Logan Ward, The Well

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Dissertations, Theses, and Capstone Projects

Essays on universal basic income.

Nana Mukbaniani , The Graduate Center, City University of New York Follow

Date of Degree

Document type.

Dissertation

Degree Name

Sangeeta Pratap

Committee Members

Randall Filer

Lilia Maliar

George Vachadze

Subject Categories

Macroeconomics

Universal Basic Income, Wealth Distribution, Precautionary Savings, Heterogeneous Agents, Inequality, Minimum Consumption Requirement

Universal Basic Income (UBI) is a program in which individuals receive a regular sum of money, usually from the government. The transfer amount is thought to be unconditional of income and enough to cover all subsistence needs. Such a system is easy and cheap to administer because the government does not need to check the eligibility of each applicant. UBI programs are growing as more cities, states and countries (Stockton, California, Newark, New Jersey, Ontario, Canada, Kenya, Finland, Germany, Spain, China, etc) implement experiments of such programs. The idea of a UBI is gaining ground in the U.S.. One of the main responses of the U.S. to high unemployment caused by the COVID-19 pandemic and quarantine was a modified version of a temporary country-wide UBI program in 2020 (CARES Act). 30 mayors across the U.S. created a coalition - Mayors for a Guaranteed Income - to explore cash payment programs and address the racial wealth inequality. UBI is actively discussed to be a potential policy that can mitigate adverse impact of accelerated automation on wages and employment. Thus, it is important to understand what we have learned from UBI experiments, what macroeconomic models predict in the UBI environment, and what is the best approach to implement such programs. This dissertation consists of three chapters. In the first chapter I review the literature on a Universal Basic Income (UBI) policy. I explore the UBI experiments that have been conducted worldwide, their limitations, and lessons that we have learned from them. I also review the macroeconomic models that address the idea of unconditional transfers, their limitations and the required future developments to evaluate how UBI works in a more complex and realistic environment. In the second chapter, I use general equilibrium model of heterogeneous agents to evaluate the impact of the UBI system, on aggregate levels and distributions of wealth, consumption, labor, and welfare. I contrast this with a targeted transfers system where people need to meet certain eligibility criteria (usually, income) to qualify for transfers. I find that in the UBI system with $1,000 monthly payments, the level of aggregate capital falls by 16% and the inequality of wealth increases no matter how the UBI system is financed: through taxes or through foreign aid. Guaranteed payments induce people to save less because of less precautionary needs. As precautionary savings motive is stronger for the asset poor, people in the lowest wealth quintiles reduce their savings more, which increases the inequality of wealth. Even though the welfare of the least skilled and the asset poor increases significantly because of unconditional transfers, the tax-financed UBI system requires a consumption tax rate to be equal to 43% that slightly reduces the welfare of the wealthier. Even though consumption tax rate is unrealistically high, the effective consumption tax rate (consumption tax net of transfers) decreases on average and aggregate welfare increases by 15.7% as measured by consumption equivalent variation. A hybrid model with both targeted transfers and partial UBI (monthly payments of $500) with low, 5% capital income tax rate (to encourage savings) is more efficient as it provides significant, almost 8% gain in welfare with only 22% consumption tax rate and without compromising output or welfare of the asset rich. In the third chapter, I study the impact of a Universal Basic Income (UBI) policy on aggregate output and welfare when there is an automation of production technologies. When the productivity of robots increases, robots substitute for labor and thus, the share of labor in value added decreases. I use general equilibrium models with heterogeneous agents who face idiosyncratic earnings risk and Cobb-Douglas technology with Traditional Capital and Labor Services. Traditional capital does not include robots and can be employed in production only with labor services. Labor services is a CES nest of robot capital and Human capital that can substitute each other. I calibrate the economy to match the evolution of the labor share in the last three decades. If the productivity of robots doubles, I find that output increases in the new equilibrium and the welfare of wealth poor households decreases significantly resulting in more than 6% decrease in aggregate welfare (measured as consumption equivalent variation, CEV). In such a setting, the transition to a UBI system increases welfare significantly, by more than 15%, however, reduces output by 12% because it reduces the precautionary savings motive. The hybrid system in which every household receives 50% of subsistence requirement and the eligibility threshold for targeted transfers equals 50% of subsistence requirement works well as it is less detrimental to output while increasing aggregate welfare by 4% as CEV. Further increase in output in the UBI and Hybrid systems can be achieved by a lower capital income tax rate.

Recommended Citation

Mukbaniani, Nana, "Essays on Universal Basic Income" (2021). CUNY Academic Works. https://academicworks.cuny.edu/gc_etds/4321

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Money for nothing: Why a universal basic income is a step too far

Subscribe to the center for economic security and opportunity newsletter, isabel v. sawhill isabel v. sawhill senior fellow emeritus - economic studies , center for economic security and opportunity @isawhill.

June 15, 2016

The idea of a universal basic income (UBI) is certainly an intriguing one, and has been gaining traction. Swiss voters just turned it down . But it is still alive in Finland, in the Netherlands, in Alaska, in Oakland, CA, and in parts of Canada.

Advocates of a UBI include Charles Murray on the right and Anthony Atkinson on the left . This surprising alliance alone makes it interesting, and it is a reasonable response to a growing pool of Americans made jobless by the march of technology and a safety net that is overly complex and bureaucratic. A comprehensive and excellent analysis in The Economist points out that while fears about technological unemployment have previously proved misleading, “the past is not always a good guide to the future.”

Hurting the poor

Robert Greenstein argues , however, that a UBI would actually hurt the poor by reallocating support up the income scale. His logic is inescapable: either we have to spend additional trillions providing income grants to all Americans or we have to limit assistance to those who need it most. 

One option is to provide unconditional payments along the lines of a UBI, but to phase it out as income rises. Libertarians like this approach since it gets rid of bureaucracies and leaves the poor free to spend the money on whatever they choose, rather than providing specific funds for particular needs. Liberals fear that such unconditional assistance would be unpopular and would be an easy target for elimination in the face of budget pressures. Right now most of our social programs are conditional. With the exception of the aged and the disabled, assistance is tied to work or to the consumption of necessities such as food, housing, or medical care, and our two largest means-tested programs are Food Stamps and the Earned Income Tax Credit.

The case for paternalism

Liberals have been less willing to openly acknowledge that a little paternalism in social policy may not be such a bad thing. In fact, progressives and libertarians alike are loath to admit that many of the poor and jobless are lacking more than just cash. They may be addicted to drugs or alcohol, suffer from mental health issues, have criminal records, or have difficulty functioning in a complex society. Money may be needed but money by itself does not cure such ills.

A humane and wealthy society should provide the disadvantaged with adequate services and support. But there is nothing wrong with making assistance conditional on individuals fulfilling some obligation whether it is work, training, getting treatment, or living in a supportive but supervised environment.

In the end, the biggest problem with a universal basic income may not be its costs or its distributive implications, but the flawed assumption that money cures all ills.

Economic Studies

Center for Economic Security and Opportunity

Simon Hodson

May 8, 2024

Wendy Edelberg, Noadia Steinmetz-Silber

May 2, 2024

Richard V. Reeves, Ember Smith

April 26, 2024

• Previous Article
• 1 0000000404811396 https://isni.org/isni/0000000404811396 International Monetary Fund

Contributor Notes

This paper discusses the definition and modelling of a universal basic income (UBI). After clarifying the debate about what a UBI is and presenting the arguments in favor and against, an analytical approach for its assessment is proposed. The adoption of a UBI as a policy tool is discussed with regard to the policy objectives (shaped by social preferences) it is designed to achieve. Key design dimensions to be considered include: coverage, generosity of the program, overall progressivity of the policy, and its financing.

“ I implore any of my fellow country-men who read this book not to object: `It can’t be done’. ” Meade (1964)

“ The balancing of efficiency and equity – the challenge with which James Meade grappled throughout his lifetime as an economist – does not admit easy solutions. ” Atkinson (1996)

• I. Introduction

This paper contributes to the ongoing debate by reviewing the main features of a universal basic income (UBI) and proposing a framework for policy discussion. After summarizing the main features of a UBI and the debate around it, the paper puts forward an analytical approach for its assessment. It further brings the analytical framework to the data through static microsimulations—i.e., that do not incorporate behavioral responses—of the redistributive impact of introducing a UBI in different types of countries.

Recognizing that the literature and the policy discourse both lack a unified definition and assessment methodology of a UBI, the present paper clarifies the salient features and key objectives which are associated with the different types of benefits often referred to as UBI. Looking to the pros and cons put forward by UBI proponents and opponents allows a better understanding of how to design a framework for assessing the relative desirability and merits of a UBI as an instrument for redistributive policy.

Discussing an approach for assessing the role and desirability of a UBI is, indeed, the core of this paper. The proposed approach is built around three key dimensions commonly used in the assessment of social policies, namely generosity, coverage, and progressivity. The framework therefore provides a consistent language and metric for rationalizing the different positions in the scholarly and policy debate, but also for highlighting the tradeoffs faced by policymakers. The final part of the paper brings the analytical framework to the data, further clarifying the usefulness of a unified language and metric in providing discipline to the policy discourse. Simulations show that while a UBI of significant amount (calibrated for example at 25 percent of median market income per capita) would have a significant favorable impact on distributional outcomes, key tradeoffs in program design and resource allocation need to be considered when comparing current programs, UBI or alternative schemes (and their financing).

The rest of the paper is organized as follows. Section II takes stock of the many definitions of UBI and highlights the key relevant characteristics that define a UBI type of program and around which most of the debate is articulated. In Section III , weaknesses and limitations of current safety nets are evidenced, signaling that there is room for improvement, and perhaps, new redistributive instruments. The analytical framework is detailed in Section IV and illustrated with microsimulations on household surveys data in Section V . Section VI concludes with a policy discussion.

• II. Definition and Debate

The literature offers heterogenous definitions of a UBI, which reflect differences in approaches and conceptual frameworks. Beyond the theoretical debate, this heterogeneity is mirrored in current “UBI” experiments taking place in different countries: in Finland, the government financed

a monthly cash benefit of 560 euros for eligible unemployed adults in view of assessing how a cash transfer may affect labor decisions of unemployed individuals; in Kenya, the NGO GiveDirectly is set to give every adult of one particular village 22 dollars/month for 12 years; in Stockton California, the mayor’s office plans to redistribute a monthly cash benefit to “a select number of residents. 2

The plurality of these experiments allows to elicit key features that are relevant to the definition and understanding of a UBI:

Why? What goals? A UBI could be used as a tool to achieve redistributive objectives, i.e., to tackle poverty and inequality, and to broaden the coverage of income-support programs (allowing social protection systems to reach parts of the population currently left out). If designed as a one-time endowment, it may be regarded as serving the purpose of improving equality of opportunity at an early stage of life.

Who? The “universality” in the name of the tool suggests at the same time a broad pool of benefit recipients, and a condition-free benefit. However, how broad the boundaries should be is not exempt from passionate discussion. For example, should participation be limited to the country citizens or to residents? What does “participating” or “belonging” to a group mean and how is it checked?

What? How much? The appropriate level of transfers also needs to be defined and is linked with the policy objectives. In general, the magnitude of the transfer can be related to the needs that the program is supposed to cover; and it is also affected (and most likely constrained) by the amount of resources that can be raised to finance the program. As benchmarking each individual’s many needs is impracticable, common benchmarking methods calibrate the transfer as a fraction of a country poverty line or median income. This type of benchmarking further raises the question of whether to modulate the transfer value across different types of individuals (e.g., a lower value for children than for adults or a lower value for active individuals than for children and elderly). Finally, the nature of the transfer is also subject to interpretation as in-kind transfers could be chosen over cash transfers, and vice versa.

When? This dimension looks at the timing of disbursement but is also linked to the nature of the program that considers, in particular, whether transfers should be made on a regular basis (monthly/yearly) or as a one-off.

Depending on how the above features are chosen and combined, scholars have proposed and discussed various forms of UBI, which complicates the comparison of the relative merits of an instrument that changes across analysis and is assigned different objectives ( Figure 1 ). For instance, Thomas Paine’s (1797) “ground-rent” resembles a categorical capital grant aimed at fighting the transmission of poverty from one generation to the next. Milton Friedman (1968) saw the “negative income tax” as a unique instrument to replace the entire American welfare state to overcome administrative inefficiencies. Atkinson’s (1996) “participation income” departs from Meade’s (1964) “citizen income” in two ways: (i) it complements rather than substitutes existing social programs and minimum wage; and (ii) it is conditioned on a form of social participation to secure political support. Van Parijs (1992) is a strong advocate of a complementary, regular, universal, unconditional and generous cash transfer distributed to every individual. Across this broad spectrum of positions however, the two most common traits of a UBI are i) the aim of reaching a vast portion of individuals/households in society, ii) in an ‘unconditional’ way (or under a very broad conditionality, as is the case for example of the “participation income”).

UBI Key Features and Scholarly Position Examples

Citation: IMF Working Papers 2018, 273; 10.5089/9781484388815.001.A001

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In what follows, it is chosen to consider as a UBI a benefit regularly (e.g., yearly or monthly) paid out in cash unconditionally to all residents in a country. Under such a program all residents would receive the same amount, with the benefit being benchmarked as a fraction of median equivalent income. Depending on the financing method considered (see Section V below) the UBI could be complementing existing social spending programs or substituting some of them. Looking at Figure 1 , the UBI considered in the present paper is mostly located on the right side of the chart.

As noted above, proponents and opponents of the UBI have often highlighted different aspects of the instrument, with many arguments in favor mirroring those against.

Advocates of UBI-schemes argue that they can help address poverty issues better than means-tested programs; they also defend the UBI as a strategic instrument that can support the implementation of structural reforms ( Coady and Prady 2018 ). Indeed, means-tested programs’ effectiveness in reducing poverty can be weakened by several structural factors: high information and administrative costs requiring high and reliable capacity to target eligible households and monitor complex programs ( Sala-i-Martin and Subramanian 2013 ); multiple obstacles (high

compliance costs, bad information, social stigma…) that affect take-up by eligible households ( Atkinson 2015 ); the need to keep fiscal costs under control that often results in high marginal withdrawal rates that, in turn, tend to discourage labor market participation ( Friedman 1968 ; Brewer, Saez, and Shephard 2010 ). In principle, simple UBI-schemes could save on administrative costs, increase transparency of transfer systems and make the latter less subject to third-party’s capture. 3 Beyond efficiency improvement, a UBI can be strategically used to build large public support for difficult structural reforms ( Subramanian 2017 ) and to renew a fairer social contract ( Sala-i-Martin and Subramanian 2013 ). 4 Finally, the discussion around the UBI has intensified in recent years in relation to the debate on the future of work and the transformational impact of technological developments. 5

Opponents mainly underline the fiscal dilemmas that the financing of a UBI would bring about; they also point at the negative impact on work incentives the scheme could potentially generate. Given tight fiscal constraints faced by many governments, leakages of resources to wealthy households (which are implicit and embedded in truly universal UBI type of schemes) can be seen as a luxury that countries can hardly afford, in particular because of possible crowding out of scarce resources that would be better allocated to other priorities ( Sen 1992 ). On top of its opportunity cost, the introduction of a UBI could discourage people from working, reflecting labor supply elasticities and tax rates. These disincentives would translate into high inefficiencies that would increase the fiscal cost of a UBI. 6

• III. Weaknesses and Limitations of Existing Safety Nets

Design advantages of a UBI are often put forward as a fix to important limitations and weaknesses of current social protection systems. Notable weaknesses are large coverage gaps of poor households, sizeable leakages of resources to richer households, and inability of programs to lift recipients out of poverty, often signaling low program generosity.

Regarding the generosity dimension of existing safety nets, resources currently devoted to social assistance programs 7 vary significantly by region and country, with advanced economies spending on average more than emerging and developing ones. Public spending is 2.7 percent of GDP on average for EU countries, against 1.6, 1.4, and 1.5 percent of GDP on average in upper middle income, lower middle income and low-income countries respectively ( Figures 2 and 3 ). Within country groups variation of spending is significant ( Figure 3 ).

Social Assistance Spending – Middle and Low-Income Countries

(Region averages in percent of GDP)

Social Assistance Spending – European Countries

(Percent of GDP)

Significant leakages and under-coverage issues are non-trivial in many current income-support programs worldwide. In middle and low-income countries, under-coverage of households at the bottom of the income distribution and coverage of households at the top of the income distribution are sizeable ( Figure 4 ): 8 empirical evidence indicates that coverage of the poorest quintile in the population is lowest in low income countries. Relatively large coverage of high income groups also highlights the low efficiency of existing programs in excluding better off households from receiving benefits. These issues (even though to a lesser extent) can be observed in advanced economies as well. One third of total spending on means-tested assistance programs in the EU goes to the top six income deciles, a significant leakage ( Figure 5 ). Such leakages have potentially sizeable fiscal and economic effects as they may crowd out much needed resources, at the detriment of both eligible beneficiaries (reducing social programs’ effectiveness in tackling poverty and inequality) and other growth-enhancing spending like health and education.

Coverage of Social Assistance Programs by Income Level

(Region averages in percent of households in quintile)

Incidence of Means-Tested Social Benefits (excluding pensions) – Average EU 28

(Percent of total spending by deciles, 2016)

Evidence for advanced and emerging economies suggests that non-take-up of social benefits by eligible recipients contributes to coverage gaps and broader concerns about the effectiveness of existing tax-and-transfer systems. Indeed, high non-take-up rates reduce the probability that income support programs reach their intended goals (e.g., poverty reduction), lead to treatment inequality among eligible individuals, and reduce the capacity to anticipate accurately the fiscal costs of policy reforms. High non-take-up rates also distort individual labor, consumption and investment decisions. Analyzing recent estimates of non-take up rates of monetary benefits (either means-tested or non-means-tested) in European countries, Dubois and Ludwinek (2015) find that most conservative estimates are above 40 percent, irrespective of benefit types. 9 The literature suggests that non-take-up of benefits could reflect several factors: stigma associated with program participation, high transaction costs and information barriers, funding constraints and generosity of benefits (with larger benefits positively affecting take-up). 10 The available evidence does not offer clear indications of what types of barriers matter the most, even though it suggests that concrete and practical transaction costs may be more relevant than stigma ( Currie 2006 ). Some of these financial and non-financial barriers can hamper take-up also of universal schemes (e.g., universal child benefit), suggesting that the implementation of universal programs is not free from problems and should also aim at minimizing participation obstacles. 11

Weaknesses of existing redistributive programs can potentially generate sizeable economic distortions and disincentive effects, which may weigh on economic efficiency. While evidence indicates that social safety nets contribute to provide meaningful support for vulnerable parts of the population ( World Bank 2015 and Bastagli et al. 2016 ), still limited resources and sizeable coverage gaps are significant obstacles to further tangible progress. Evidence also indicates that marginal and participation taxes for the eligible population may be large in advanced economies, suggesting that disincentives to work can be sizeable under current systems. For example, considering the combined effect of taxes and transfers, effective participation taxes can vary between 30 and 85 percent in European countries (with the higher values in Nordic countries; Immervoll et al. 2007 ). 12 In 2015, the average marginal effective tax rate (METR) in EU27 countries on earned income in the bottom quartile was 28 percent, increasing on average by 2 percent between 2011 and 2015, albeit with large variations across members. 13

• IV. An Analytical Approach for Assessing UBI

The analytical framework proposed in the present paper focuses mainly on the potential distributional impact of a UBI program. From the assessment perspective it implies that it is necessary to analyze the financing of the program, in addition to the effects of the UBI transfers. In other words, a comprehensive assessment of the UBI is required to understand its impact, looking at expenditure and resource mobilization mechanisms together. For instance, if the UBI were to complement existing programs, additional tax or resource revenues would have to be raised for its financing; if the UBI were to substitute other spending items, then there would be a need to identify what programs would be scaled down to divert resources to UBI

Our analytical framework is designed to shed light on the salient tradeoffs policymakers face when considering the implementation of a UBI. These tradeoffs involve three key dimensions commonly used in the literature to discuss performance of social spending ( Figure 6 ):

Generosity : the relevance/magnitude of transfers as a source of income for the recipients, also in particular for those at the bottom of the income distribution (the size of the box in Figure 6 );

Coverage : the share of individuals covered by the program, typically with a focus at the bottom of the income distribution (on the vertical axis in Figure 6 );

Progressivity : which indicates the share of resources captured by households at different points of the income distribution (on the horizontal axis in Figure 6 ). We consider programs that are able to channel more resources to the vulnerable part of the population as progressive.

Analytical Framework

Coverage and progressivity are key dimensions that shape a transfer program’s distributional impact and its effectiveness in tackling poverty and inequality when these are a concern. Generosity, on top of its impact on reducing poverty and inequality, is an important determinant of a program fiscal cost/need for resources. Furthermore, benefit levels, together with program design (e.g., conditionalities), are key drivers of potential income effects and behavioral distortions. The specific performance of existing social protection (and tax) systems with respect to these three dimensions is key when assessing the impact, a UBI would have, as countries may face more or less binding tradeoffs and constraints stemming from their fiscal position and the design of their current programs and tax schedules. The main tradeoffs to which policymakers’ need to pay attention are:

leakages to richer households vs. effective coverage of poor households,

generosity vs. (potential) work disincentives,

fiscal cost vs. alternative use of available resources,

implementation challenges vs. objectives.

How policymakers balance these tradeoffs shapes the effectiveness (i.e., achieving goals), efficiency (i.e., distortions minimization) and fiscal sustainability of the policy package.

A visual representation of the analytical framework based on the three dimensions discussed above is shown in Figure 6 . A graphical representation is useful to discuss policy tradeoffs as it shows how various dimensions interplay. For a given generosity level (i.e., fixed resource envelope- or the size of the box), the relative desirability/merits of a UBI will depend for example on a country’s progressivity (on the horizontal axis) and coverage (on the vertical axis) of its existing safety net. For well performing safety nets (top-right corner of Figure 6 ), the need for a UBI is not obvious. However, when coverage gaps (e.g., from non-take-up rates) are considered a relevant policy concern and inclusiveness an important policy objective, some scholars have advocated UBI-type of schemes as a complement to existing programs, provided additional resources can be raised in ways that would not undermine the progressivity of the global tax-and-transfer system, or hamper fiscal sustainability. 14 For poorly performing safety nets (bottom-left corner of Figure 6 ), low progressivity and low coverage may reflect targeting difficulties, implementation bottlenecks and resource constraints. Whether a UBI could improve on the current situation will depend on specific potential implementation issues related to its rollout, and, crucially, on the possibility of raising the needed additional resources (e.g., through the removal of inefficient subsidies). Expansion of the fiscal envelope for income support programs in these cases would also help mitigate potential losses of current beneficiaries that would be triggered by the replacement of current programs with a UBI. 15 For safety nets with mixed performance (bottom-right and top-left corners of Figure 6 ), two types of coverage-progressivity tradeoffs appear relevant with different implications for a UBI desirability:

When coverage is high, but progressivity is low, a UBI would most probably have better distributional outcomes if progressivity cannot be easily increased within the current system (i.e., if eliminating leakages in the existing set up is not possible or alternative design would not tackle the problem effectively) Energy subsidies are an example of such a case: they are universal, but benefits are regressive, mostly appropriated by rich households who consume more than poor ones. In principle, at the same fiscal cost, a UBI would deliver better distributional outcomes. Losers with respect to the existing system would likely be bunched among high income households. It remains to be seen whether other alternatives would be available that would further increase progressivity and the relevance of implementation challenges for both a UBI or an alternative program;

In the case of highly progressive programs, but with very low coverage at the bottom of the income distribution there may be a need for understanding whether the fiscal envelope can be expanded. With a fixed envelope, moving towards a UBI would likely generate large losses at the bottom of the income distribution (coverage expansion would be mirrored by high losses for households benefiting from existing programs). UBI and alternative designs would again need to be assessed based on resources availability and implementation constraints.

V. Bringing the Analytical Approach to the Data

• A. Country Selection and Assumptions

This section aims at giving empirical content to the discussion of the analytical framework for the analysis of UBI by providing salient illustrative examples of how the framework can be brought to the data. For the empirical assessment a sample of eight countries has been selected; the analysis is based on microdata from the standardized Luxembourg Income Study (LIS) archive. 16 For all selected countries, the latest year available in Fall 2017 has been used. Besides data availability, countries selection criteria have aimed at ensuring heterogeneity in terms of geographical area, development stage (emerging and advanced economies), generosity (i.e., current level of spending) and progressivity of current non-contributory transfers. Given that discussion of specific country cases is beyond the scope of the paper, results are presented without identifying country names Using actual data, instead of artificial generated country examples, allows to anchor the discussion to policy dimensions that are relevant for present policy debates and that account for actual strengths and weaknesses of existing social protection systems. For example, the sample accounts for heterogeneity in the magnitude of resources spent on non-contributory social assistance programs. In the selected sample ( Figure 7 ), advanced economies spend on average three times more than emerging economies on non-contributory transfers (3 vs. 1.1 percent of GDP) and the coverage of households in the bottom two income quintiles is broader (65 vs. 44 percent of households on average in advanced vs. emerging countries).

Generosity, Progressivity and Coverage of Non-Contributory Transfers

(Percent of GDP; percent of households in bottom four income deciles 1 )

The simulations used for assessing the impact of introducing a UBI are partial static equilibrium exercises: only households are considered (no firms or production side of the economy) and behavioral responses (e.g., changes in labor supply or consumption patterns) are not accounted for. As mentioned, this empirical approach, as many other available empirical assessments of UBI implementation ( Levy et al. 2013 or OECD 2017a ), does not account for household behavioral responses and results should therefore be considered as short-term assessments. However, it is recognized that behavioral responses are relevant to assess the relative desirability of a UBI.

As discussed above, potential inefficiencies brought about by a UBI should be evaluated as well as distortionary effects of existing programs which are in some cases characterized by high labor market participation taxes (see Section III ). Indeed, behavioral responses to a UBI will reflect both labor supply elasticities (on the intensive—numbers of hours worked—and extensive—decision to work or not—margins) and tax rates (especially participation tax rates), and their magnitude and direction will depend on the design of existing tax and transfer programs and on the measures identified to finance a UBI. Furthermore, behavioral responses will generally vary across

income levels and types of individuals. 17

The empirical evidence suggests also that behavioral effects will depend on the structural characteristics of the economy under consideration that, in turn, will determine the magnitude of possible offsetting forces. Based on selected household types, OECD (2017b) shows that in a sample of ten OECD countries a UBI would reduce participation taxes for singles with two children and one-earner couples (with no or two children), while increasing it for two-earner couples. 18 Using micro-simulation models that incorporate labor supply responses, Immervoll et al. (2007) show that, in aggregate, inefficiency losses may be sizeable if a UBI complements highly distortionary existing safety nets in selected European countries; Colombino et al. (2008) show that both a UBI and non-means-tested in-work benefits financed by progressive taxes would perform better than current safety nets in selected European countries. 19 , 20 IMF (2017) analysis based on a general equilibrium model indicates that a UBI would not necessarily generate lower growth compared to other programs. 21

• B. Gross Fiscal Cost and Redistributive Impacts

To begin with, for the selected countries sample we estimate the gross fiscal cost of a UBI whose yearly amount is calibrated as 25 percent of the country net median market income per capita (i.e., earned market income minus direct taxes paid). 22 This amount is then distributed to all residents in a country, without further conditions or targeting criteria (e.g., a one-year old and a 30-year old receive the same amount, irrespective of their individual or household income). This exercise gives a sense of the magnitude of the necessary resources to finance a UBI program calibrated in a comparable way for a heterogeneous set of countries.

A UBI calibrated at 25 percent of net median market income per capita would substantially reduce inequalities and poverty, but at a substantial gross fiscal cost ( Table 1 ). All things being equal, the reduction in inequality would be substantial (around -5 percentage points of the Gini index) and rather similar across countries; the reduction in poverty would be higher in emerging economies than in advanced ones in our sample (-10.4 percentage points on average vs. -7.5) suggesting “diminishing returns” to a UBI in this respect. The gross fiscal cost would be sizeable and on average higher in richer economies than in poorer ones (6.5 percent of GDP vs. 3.8).

Gross Fiscal Cost and Redistributive Impacts of a UBI

• C. Three Financing Scenarios

If a first-step analysis is useful to grossly gauge how much would a UBI cost and how effective it would be in tackling poverty and inequality, a meaningful assessment requires: (i) considering the performance of existing programs; and (ii) including the impact of different ways to finance a UBI. In a second step of the empirical analysis, the microsimulations incorporate financing options. In this set of simulations, we consider the introduction of a UBI whose fiscal cost is calibrated considering the current observed level of spending for non-contributory programs (universal and means-tested) in each country ( Table 2 ). Three financing options are considered, so that the program is fully financed and the UBI net fiscal cost is set to be 0: (i) the UBI substitutes existing non-contributory transfers; (ii) direct income taxes are increased; (iii) an additional proportional tax on disposable income is levied. In the last two options, the UBI complements current programs, expanding the overall spending on social protection. 23 As in subsection IV.B , the UBI is distributed to all residents in a country without conditions or targeting criteria.

Calibration of a UBI on Current Non-Contributory Transfers and Coverage and Progressivity of Existing Programs

The relative distributional properties of the UBI and of existing non-contributory transfers, can be compared for each of the three financing options indicated above. The comparison is based on the three dimensions which are the pillars of the proposed analytical framework: i) the progressivity of the resource allocation, ii) the coverage of vulnerable households at the bottom of the income distribution, and iii) the generosity of benefits.

A convenient place to start is with corner-case countries that perform at opposite corners of Figure 6 . Country B is an example of L-L-L country, i.e., low coverage, low progressivity, low generosity country. Country G is an example of H-H-H country, high coverage, high progressivity, high generosity. In a relatively poor-performing case such as Country B ( Figure 8 ), low coverage and progressivity mean that a large share of vulnerable individuals are not included in current programs, and at the same time that a large share of resources is captured by the rich. In this case, substituting a UBI to current social assistance programs, while keeping the same fiscal envelop , would result in large gains in coverage at the bottom of the income distribution without significant welfare gains or losses (i.e., individual benefits will remain very low), signaling that a key issue is the inadequacy of the current generosity level and fiscal envelope (an estimated 0.2 percent of GDP based on the resources for non-contributory transfer programs as captured in LIS data).

Low Generosity-Progressivity-Coverage of Existing Transfers vs. UBI: Country B

In many emerging and poor economies, where existing safety nets are small and ineffective, two important issues should be considered as key aspects when evaluating the desirability of a UBI or of alternative transfer schemes: (i) whether (and how) additional resources could be raised; (ii) whether significant implementation issues would hamper the introduction of a UBI. On the mobilization of additional resources, we note that even if financing were to come from a proportional income tax, average net gains would be substantially higher for poorer households ( Figure 8 , panel c). The progressivity of the overall package would be enhanced if transfers were to be financed by an increase in progressive direct taxes on income (results not reported in the chart). In a relatively well-performing case such as Country G ( Figure 9 ), substitution with a UBI would significantly reduce the current distributional impact of public policies as losers would be bunched at the bottom of the income distribution, and gainers at the top. For this type of countries (typically advanced economies), some scholars have been proposing UBI as a complement rather than a substitute to fairly generous current programs (an estimated 5.2 percent of GDP for non-contributory programs in LIS data for Country G), bringing about the question of how to raise additional resources in an equitable way and in a fiscally sustainable manner.

High Generosity-Progressivity-Coverage of Existing Transfers vs. UBI: Country G

Moving to country-cases where reforming current safety nets imply balancing more demanding tradeoffs between different redistributive dimensions of interest, the relative desirability of a UBI will depend on how much these tradeoffs prevent current programs from achieving their redistributive objectives. In Country C for example, current spending on non-contributory programs (an estimated 2.3 percent of GDP in LIS data) is fairly progressive and generous but coverage at the bottom two income deciles remains about 65% ( Figure 10b ). 24 However everything else equal, if a UBI were to substitute current non-contributory transfers, more than 60 percent of households in the bottom two deciles would incur an average welfare loss of 34 percent ( Figure 10c ). By comparison, financing a complementary UBI through an additional proportional income tax would preserve the progressivity of a UBI which would, by design, increase household coverage at the bottom of the income ladder. The key would be whether resources would be enough to avoid generating losses for households currently covered by the system. The accommodation of the coverage-progressivity tradeoff and the choice of the financing mechanism can therefore shape the results very differently.

Trading Off Coverage and Progressivity of Existing Transfers: Country C

How the choice is made can depend not only on policymakers’ objectives and social preferences, but on how other policy options fare in terms of ability to reach vulnerable households and implementation constraints.

As mentioned above, the performance of existing safety nets matters. An illustrative example is the comparison between Country C and Country D ( Figure 11 ). Coverage in the bottom two deciles is similar (about 65%), but in Country D progressivity of current spending is much lower and so is generosity (an estimated 1.0 percent of GDP based on LIS data vs. 2.3 in Country D). In fact, it might be less fiscally costly in Country D to replace current non-contributory transfers by universal transfers generous enough to avoid losses for household in the bottom 20% of the income distribution than in Country C. As above, such a substitution should be consistent with policy objectives, implementation issues and administrative costs (of UBI or potential alternatives).

Trading Off Coverage and Generosity of Existing Transfers: Country D

A case that we do not illustrate here is that of countries that can contemplate the implementation of a UBI as a substitute to universal but regressive policies (as is the case for energy subsidies mentioned in Section IV ). In this case, gains will not be achieved in terms of coverage (which would remain universal before and after the reform), but by improvements in the distributive performance (a shift from a regressive to a progressive program). The desirability of a UBI scheme in these cases would need to be assessed on the basis of advantages and disadvantages in terms of implementation challenges vis-à-vis feasible alternatives and potential fiscal resources constraints. 25

Summing up, results from our microsimulations highlight how empirical analysis focusing on the key dimensions for assessing performance of transfer programs may guide policy discussion. In countries where there is no proper safety net, a UBI can be part of the debate as an option for the design of income-support mechanisms. Its relative merits and feasibility should be assessed against those of alternative feasible options and evaluated given fiscal constraints and implementation challenges. In countries where current social safety nets perform much better and administrative capacity is high, there may anyway be room for sizeable improvement. Some scholars have been putting forward UBI-type programs as a possible option if inclusiveness is of high concern and lack of coverage and non-take-up seen as an issue.

In the framework considered in this paper, this leads to looking at the issues of fiscal sustainability and to a distributive assessment that needs to include financing mechanism and social spending policies in a comprehensive way. 26 Finally, in all countries, the consideration of a UBI as part of a structural reform plan should similarly be based on a detailed analysis of current tradeoffs associated with existing redistributive programs and fiscal sustainability of financing options. Beyond the tradeoffs analyzed above, policymakers may face other conceptual, implementation and policy choices (e.g., whether to give up the subsidization of goods like food or energy, or how to fight/avoid corruption) that the introduction of a UBI may be related to and support.

• VI. Conclusions and Policy Discussion

The joint empirical analysis of the relative redistributive performance of a UBI, existing social safety nets and available financing options is powerful in highlighting the tradeoffs faced by policymakers when assessing social spending programs along key dimensions:

i. coverage at the bottom of the income distribution vs. leakages to richer households,

ii. generosity of transfers vs. incentives and economic distortions,

iii. fiscal cost vs. alternative use of scarce fiscal resources.

The fourth aspect that weighs heavily in shaping policy choices is how to reconcile objectives and implementation challenges.

The saliency of each of these tradeoffs depends on each country specific circumstances, in particular on its position in the coverage/generosity/progressivity space ( Figure 2 ), its capacity to raise resources in a progressive and sustainable manner and the ability to roll out a (more or less) complex program. Social preferences, together with constraints, determine how these tradeoffs are called.

The relevance of these tradeoffs and the design of a transfer program has implications that go beyond the performance of the specific scheme. They are related to and impact how a country overall benefit-tax system affects individual behaviors, 27 bearing far-reaching implications for labor market, consumption and investment decisions that will in turn impact back the fiscal sustainability of the tax-and-transfer system. As mentioned, inefficiencies (e.g., disincentives to work) are relevant issues also under existing safety nets—that are rarely universal and unconditional—and their current financing mechanism. For this reason, a broader discussion is needed, that would move beyond just looking at UBI in isolation to assessing whether a policy package encompassing a UBI would increase or decrease the distortionary impact of government policies and or improve/reduce the performance of a safety net. As important is the thorough assessment of implementation capacity both for targeted and universal type of programs. In short, efficiency and equity impact of a UBI cannot be gauged in isolation.

Beyond the discussion presented in this paper and short-term considerations, other issues also point to the usefulness of broadening the horizon when discussing universal programs and looking for ways to make social protection systems adequate for facing future challenges. For example, in an economic environment where job security decreases and income volatility increases, expanding available insurance mechanisms for those who are out of work may become an important policy objective; similarly, where there is a need to generate public support while protecting vulnerable households from undesired side effects of structural reforms that impact large segments of the population. protecting vulnerable households from undesired side effects of structural reforms that impact large segments of the population.

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The authors would like to thank the many colleagues of the Fiscal Affairs Department who participated in discussions on UBI and redistributive policies, in particular during the drafting of the Fall 2017 IMF Fiscal Monitor. They would also like to thank Gabriela Inchauste, Christoph Lakner and Martin Ravallion for their comments during the preparation of the analysis and the World Bank colleagues that participated in the Poverty Practice seminar when a previous version of this work was presented. They are also grateful for comments received by Teresa Ter-Minassian and participants to the 20 th Banca d’Italia Workshop on Public Finance held in Spring 2018. The views expressed in this paper are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

To date, Alaska’s oil dividend scheme, in place since 1982, is the only lasting (large scale) implementation of universal benefit. Other schemes have been experimented over the years with mixed outcomes. Between 1974 and 1977, the Canadian city of Dauphin gave a monthly stipend of 60 percent of the poverty threshold to a tenth of its population, before stopping because of fiscal pressures. In June 2016, the introduction of a UBI was rejected by a popular vote in Switzerland. In 2017, experiments of UBI-type of transfers were launched in Finland, India, USA and Kenya.

There is little rigorous empirical evidence on current safety nets’ administrative costs and cost structures. Furthermore, comparability between studies is low. See Caldes et al (2006) .

Short-lived UBI type of schemes (or broad categorical transfers as universal child benefits) implementations in Iran and Mongolia signal, however, that implementation difficulties or ill-designed and under-financed schemes can backfire, threatening to reverse important structural reforms.

On the latter see the G20 note on the future of work, measurement and policy challenges ( IMF 2018b ).

Labor disincentive effects of some sort (either from income or substitution effects) are inherent in any type of transfer scheme. Unconditional transfers are generally less distortionary at the margin. However, an assessment of the distortionary impact requires a comprehensive assessment of the tax-transfer schedule, which for some type of households may be fairly complicated.

To frame the UBI discussion we look at social safety nets/social assistance programs, disregarding for example those programs (mainly pensions) whose objective is to ensure income smoothing over the life-cycle. In reality, the boundaries between social assistance and social insurance programs are often blurred but considering income redistribution as a key objective a UBI type of program, this first order approximation is adequate for the purpose of the analysis presented in this paper.

The limitations of the effectiveness of targeting mechanisms that are common in low-income and developing countries is pointed out for example in Brown, Ravallion, and Van de Walle, 2016 . They underline how means testing for example excludes many poor people from benefits and does not do better than a basic-income or other simpler method would do.

Anecdotal evidence is consistent with this broad picture. In India, only 40 percent of citizens apply for the benefits they need, with application costs and complexity reported as the main hurdles ( Demirguc-Kunt and others, 2017 ). In the United Kingdom, take-up rates for entitlements vary between 55 and 95 percent ( Gandy and others, 2016 ).

The literature also offers models in which ‘complexity’ of the transfer programs is explicitly used by policymakers as a screening and monitoring device to extract a better signal on true eligibility in a situation in which there is imperfect information. In these models ‘complexity’ and incomplete take-up may be an optimal equilibrium outcome (Jacobsen and Kopczuk, 2011).

See IMF 2018a for a discussion on how digitalization can help address non-take-up issues.

“Participation” taxes summarize the tax levied on labor market entry. They are affected by: i) wage rates; ii) income tax rates schedules; and iii) design of existing government transfer programs (e.g., means testing thresholds and withdrawal rates of benefits as labor income increases).

Computation on EUROMOD statistics on distribution and decomposition of disposable income.

See for example Atkinson (2015) , or Sen’s (1992) views on UBI as something suited for rich countries that can afford it.

See Coady and Prady (2018) for an assessment of the impact of replacing the PDS program in India by a UBI.

Harmonized into a common framework, Luxembourg Income Study datasets contain household- and person-level data, from about 50 countries, both advanced and emerging. Country microdata are collected from household surveys and therefore subject to several limitations—e.g., underrepresentation at the top and bottom of the income distribution. However, LIS harmonization and country-coverage allows for comparability of social assistance benefits income data.

The empirical literature shows that in general prime-aged men and singles’ labor supply is more inelastic, while married women with children show the largest labor supply elasticities.

Sample countries are Australia, Canada, Finland, France, Italy, Japan, Netherlands, Switzerland, UK and USA. Besides different withdrawal rates of current transfer programs, heterogeneity across country reflects the possibility of losing existing tax-allowances and joint or individual taxation of labor income at the household level.

These models, while incorporating household behavioral responses, are still partial equilibrium models that disregard general equilibrium feedbacks.

Welfare functions and Gini indexes are among the criteria considered by Colombino et al. (2008) to score policies. In some countries with large welfare states, the implied increase in the top marginal tax rates could be substantial and induce a reduction in female labor market participation.

See IMF (2017) for simulations using a general equilibrium model calibrated on the US and Bolivian economies. For instance, jointly accounting for behavioral responses, financing modalities, and potential tradeoffs between equity and efficiency, introducing a UBI of one percent of GDP in the US would have a negligible effect on total hours worked (marginally positive if the UBI is financed by a reduction in unproductive spending; marginally negative if it is financed via proportional consumption taxes), and a positive impact on total demand (especially for non-tradable services).

We also simulated several other levels of UBI amount (i.e., 10, 20, 30, 40 and 50 percent of net median market income per capita). These levels are set arbitrarily. As a benchmark, one can think also of the LIS relative poverty threshold set at 50 percent of the per capita equivalent median market income, or levels currently being experimented in different countries: in Finland, selected unemployed recipients are given €560 per month.

Mobilizing revenue presents its challenges, in particular in emerging and developing economies. And doing so effectively requires well designed revenues mobilization strategy that can support expenditure expansion.

Coverage of vulnerable households may be incomplete either because eligibility rules exclude the poor, or because eligible households do not take up the benefit they are entitled to, or because of both types of exclusion.

See Coady and Prady (2018) .

Other recent studies that also use microsimulation techniques corroborate the view that consideration of existing social protection and tax systems is an essential component. Brown and Immervoll (2017) also use microsimulation techniques: 1) to underline the importance of assessing together existing social protection and tax systems for a meaningful understanding of the impact of UBI programs; and 2) to assess alternative incremental reforms to improve current assistance systems in European countries against a UBI alternative.

Which are not captured by the static simulations presented in the paper.

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Essays on Universal Basic Income

Brief description of universal basic income.

Universal Basic Income (UBI) is a social concept that proposes providing all citizens with a regular, unconditional sum of money, regardless of their employment status or income level. It has gained attention as a potential solution to poverty, inequality, and automation-related job loss. UBI has the potential to transform society by ensuring financial security for all individuals.

Importance of Writing Essays on This Topic

Essays on Universal Basic Income are crucial for academic and personal exploration as they encourage critical thinking, research, and debate on a topic that has far-reaching implications for society. By writing essays on UBI, students and scholars can contribute to the discourse on economic and social policy, and develop a deeper understanding of the potential impacts of UBI on individuals and communities.

Tips on Choosing a Good Topic

• Consider the practical implications of UBI: Explore how UBI can address poverty, inequality, and unemployment.
• Examine the ethical considerations: Investigate the moral and ethical implications of implementing UBI.
• Analyze the economic impact: Delve into the potential effects of UBI on the economy, labor market, and government expenditure.

Essay Topics

• The impact of Universal Basic Income on poverty reduction
• Ethical considerations of implementing Universal Basic Income
• Universal Basic Income and its effect on workforce participation
• The economic implications of Universal Basic Income
• Universal Basic Income as a solution to automation-related job loss
• The role of Universal Basic Income in promoting gender equality
• Universal Basic Income and its impact on healthcare access
• The feasibility of implementing Universal Basic Income in different countries
• Universal Basic Income and its potential effects on entrepreneurship
• The psychological and social impact of Universal Basic Income on individuals and communities

Concluding Thought

Writing essays on Universal Basic Income provides an opportunity to engage with a topic that has the potential to reshape societal structures and address pressing economic and social challenges. By exploring the various aspects of UBI, individuals can contribute to the ongoing dialogue and shape future policy decisions. Get involved in the conversation by delving into the world of Universal Basic Income through your essays.

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Think about the federal government’s $1,200 coronavirus relief stimulus checks . Now imagine every adult in the U.S. receiving them on a regular basis.

Such is the driving idea behind creating a recurring income stipend commonly known as universal basic income (UBI), an idea that’s come into focus during the coronavirus pandemic and throughout 2019, when Democratic presidential candidate Andrew Yang campaigned on a promise to establish a form of UBI that he called the “Freedom Dividend.”

Here’s everything you need to know about UBI, including what it is, the pros and cons, how it works and how likely you could see a policy like this coming to the U.S. — and padding your wallet.

What is universal basic income?

UBI is a government-mandated program in which every U.S. citizen receives a certain amount of money on a regular basis. In other words, it’s a government guarantee that everyone receives a minimum income, whether they’re working or unemployed.

Those checks aren’t means-tested; hence, the term “universal.” If there is criteria on who is eligible for a payment or if payments are sent on a smaller scale, it would simply be referred to as basic income (BI).

That’s the main reason how UBI is different from other entitlement programs including Social Security and welfare, according to Ryan Hughes, founder at Bull Oak Capital.

“UBI is a government payment that would be paid to every adult, regardless of economic means,” Hughes says.

What are some examples of UBI?

Current events have recently cast a brighter spotlight on UBI and BI, but the idea has been around for centuries, with some estimates suggesting philosophers in the early 16th century first discussed the idea of creating a minimum income.

A 2017 pilot program in Finland gave 560 euros for two years to 2,000 unemployed adults aged 25 to 58. When it comes to the U.S., officials in Chicago considered creating a pilot program in which 1,000 low-income families received $1,000 a month. Alaska also gives residents a permanent annual dividend to everyone in its state.

Surprisingly, former President Lyndon B. Johnson’s administration spearheaded an economic policy that might technically belong in the same family as UBI or BI, testing out a “negative income tax” for low-income families in New Jersey and Pennsylvania, rural Iowa and North Carolina, as well as Gary, Indiana, Seattle and Denver.

“Usually, some citizens are selected at random to receive the payments over a limited time period,” says Herman Brodie, founder and owner of Prospecta Limited, a United Kingdom-based consultancy firm. “Yet this doesn’t capture the impact of what could be a critical feature of UBI, namely the knowledge that everyone gets it and that it is unlimited.”

Advantages and disadvantages of UBI

Proponents of creating such a program cite it as a fast-track out of poverty, especially helping low-income earners afford essentials in cities where cost of living might outpace minimum wage increases. It might also help put more money in the hands of U.S. workers, who’ve seen the share of income they receive as compensation for their labor rapidly decline since the 1990s .

Other experts say it might help close income inequality in the U.S. All of that might then prop up the U.S. economy, with consumption not so heavily reliant on the nation’s top earners’ willingness to purchase. Experts say that’s only bound to get worse after the pandemic , perhaps adding to proponents’ urgency for establishing a program similar to UBI.

Tesla CEO Elon Musk cited it as a way to help out individuals who’ve lost their jobs due to automation and driverless cars, the disruptive innovation he’s spearheading at his Silicon Valley firm.

But critics of the program have said it could potentially discourage individuals from working and send budget debts and deficits skyrocketing, perhaps leading to an equally crippling inflationary stretch. UBI payments might have to be offset by higher taxes and reduced spending, which theoretically could also have an equally restrictive effect on the economy.

Some critics have argued that instead of creating a UBI program, policymakers might want to instead expand access to Medicare or other entitlement programs.

How UBI could affect other entitlement programs

The entitlement programs equation is adding to even more confusion about what UBI might look like.

More fiscally-conservative taxpayers might demand that UBI replace entitlement programs altogether, which currently cost an estimated $1.1 trillion, according to the Heritage Foundation , a right-leaning think tank. However, Democrats have spoken out against the idea of kicking low-income individuals off those social-safety nets , while even farther left-leaning proponents of the program suggest footing the bill simply by raising new tax revenues.

For Yang’s “Freedom Dividend” pillar, the candidate proposed consolidating some welfare programs and implementing a value-added tax of 10 percent on large corporations to pay for his version of UBI, according to the former candidate’s website . Yang also argues that, by giving every American a minimum income, it would reduce homelessness, incarceration and health care costs.

How likely is UBI to take hold in the US?

That being said, the complications and challenges of implementing such a wide-scale program mean it’s unlikely for UBI to happen in the U.S. anytime soon, even as it’s been recently brought back to national attention by high-profile public figures.

An August 2020 poll from the Pew Research Center also found the majority of U.S. adults (54 percent) oppose establishing a UBI payment of about $1,000 per month for all adults , whether they have a job or not. Less than half (45 percent) say they favor the proposal.

Treasury Secretary Steven Mnuchin says the Trump administration still supports the idea of sending another round of payments, while a bipartisan team of Congressional lawmakers drafted a list of policy priorities for the next stimulus bill that includes another round of $1,200 payments to individuals .

For now, that means your wallet might only get a taste of UBI if it’s through another round of stimulus checks or any future economic impact payments sponsored by the federal government.

Learn more:

• The budget deficit, explained — and how to prepare for a rising tax burden down the road
• What is economic stimulus and how does it work?
• Negative interest rates, explained — and how they work

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Fourth stimulus check update: Latest White House comments, California governor’s proposal

Home / Essay Samples / Economics / Universal Basic Income

Universal Basic Income Essay Examples

Advantages of universal basic income for the future society.

Many people have suffered from financial and economic problems throughout the globe. The idea of a universal basic income (UBI) has sparked this trend. The UBI is an actual cash payment for all people (2016), the economist states. Indeed, the idea behind the UBI is...

Benefits of Universal Basic Income for United States Citizens

The concept of universal basic income (UBI) has been in discussion for decades and resurfaced as a preeminent leading solution in releasing the financial burdens and serves as an incremental anti-poverty intervention for United States citizens. Historical figures such as Thomas Paine (founding father of...

Universal Basic Income: Give Cash to the Poor

Universal basic income (UBI), in other literature referred as basic income, citizen’s income and unconditional basic income is a regular cash payment, paid periodically by a political community to all its members on an individual basis without means test. The Basic Income Earth Network (BIEN,...

The Benefits of Universal Basic Income for Canadians

Elon Musk, founder of Tesla Motors said“Robotics will take away most people’s jobs, so a universal income is the only solution.” Mark Zuckerberg, and Bill Gates have also made similar comments to Elon’s, depicting an autonomous future that will take over jobs such as factory...

Minimising Fraud and Errors in the UK Benefit System

The project is tailored to consider the current benefit systems in the UK and give particular considerations to reformations in the Universal Incomes and its replacement with a more transparent Universal Basic Incomes (UBI). Protection of frauds and potential errors associated with the current system...

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