Universal basic income (UBI) was once considered fringe and politically unpopular – the idea that everyone in society would get an unconditional source of money, which they could then use however they wanted, seemed unthinkable. But in recent years UBI has gained traction with multiple pilots taking place around the globe, although solid evidence about the impacts of the policy has remained elusive.
Now, research from the largest complete UBI study is finally giving us a glimpse of its effects. Kela, which is the Finnish government body responsible for unemployment benefits, implemented a two-year-long study on basic income in order to examine whether the Finnish social security system was working. What the researchers found was that the income people received made an negligible difference in employment rates, but it did make a difference to people’s wellbeing.
The study, which released preliminary results on Friday, February 8, results from the study involving 2,000 people across Finland. Participants had to be unemployed, and were paid a tax-exempt income of 560 euros. There were no other conditions to receiving the payment.
People who received a basic income saw their wellbeing as being better than the control group, with 55 per cent of the recipients of basic income saying their state of health was good or very good, while 46 per cent of the control group said the same. Broadly, people who were on basic income said that their levels of stress went down too.
“Our results weren’t that surprising as it kind of confirms what we know from other pilots,” says Minna Ylikännö, who is a lead researcher at Kela. “People’s wellbeing is enhanced when they have some kind of financial security. They feel secure, so they feel better – that’s something which we see in other countries too, not just a Finnish experience.”
The study ran in two parts – the first focused on employment, looking at whether basic income affected employment levels, and the second was a phone survey, where the researchers called the people involved to ask them about their health during the pilot study. “This is something we have to work on, because we had a bit of a problem with getting people to pick up and take the phone survey,” Ylikännö says. “The more people we have, the more reliable the results are – but when we did the phone survey, the response rates were very low.”
Given the amount of people who were involved, as well as the data that the researchers collected, other interesting connections emerged from the data too. People who were on basic income found that the welfare system was less bureaucratic than before, and as a group, they had more trust in institutions, other people, and even in their future ability to find work. That could suggest all kinds of other effects from basic income, particularly if it was to be rolled out across larger parts of society.
“Basic income is figuring more in policy debates, but we don’t have a big evidence base about what we can expect to actually happen,” says Luke O’Malley, a professor at Bath University who researches basic income. “On one hand, basic income would make it possible for more people to enter employment – and go in and out of it quite easily – but if you give people an unconditional income, perhaps they’ll focus on other things. But this study has generated some really significant empirical evidence.”
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“There are some other interesting parts about this study which we didn’t know before – for example, people who had basic income found that their trust in other people, in the government, and even in their future prospects for work went up,” says Anthony Painter, the director of Action and Research at the RSA. “So for example, there could be a positive lag effect on employment.”
But this design of the Finnish study makes it hard to know how basic income would work in other countries. In this instance, everyone who was receiving universal basic income had to be registered as unemployed – and it was 560 euros, which is less than most of the proposals for UBI. Other pilots, such as in India and Kenya, involved much larger swathes of the population across longer periods of time. Also, as the Finnish study has run for two years, it remains to be seen how the people who received basic income would feel about the process of finding work after, as well as whether anything else in their lives would change as a result.
Some of the findings, such as trust in institutions may not be replicated in other countries. Finland is a Nordic country with a relatively robust welfare system, and the labour market in Finland has its own characteristics, as it does in every country. In a country such as Brazil, or the UK, people’s relationships to institutions are quite different too. “The existing system of welfare will affect people’s labour prospects, and how the institutions work too,” says O’Malley.
However, this study isn’t the first basic income pilot – in fact, there have been trials as far back as the 1970s, with one in Manitoba, Canada. Three provinces in the Netherlands have also implemented basic income pilots, and there are two large scale studies currently underway in India and Kenya. Councils in Scotland are looking into UBI on a city-wide level, for cities like Fife or Edinburgh.
But the Finnish trial was the first that was nationwide – rather than just being in one area – and randomised. It generated empirical evidence on a large scale, partially because of the registers which the researchers used. As this was run in conjunction with an arm of the government, researchers had access to the employment data of the individuals who were involved in the experiment, which helped them measure the effect on employment, rather than relying on self reporting.
“There’s no substitute for doing detailed studies in particular contexts,” says O’Malley. This has been a significant feature of problems with basic income studies. Some groups are likely to benefit from universal basic income more than others – for example, 1,000 pounds in London could potentially have less purchasing power than 1,000 pounds in Dorset.
There would have to be some kind of conditions, as millionaires wouldn’t benefit from an additional income, and there’s the question of how it would be financed (although there is much research which has gone towards theoretical policies). Then there are practical considerations: simply having economic security doesn’t replace a robust support system. “There are some libertarian versions of UBI, but you do still need support to help people back into work, and give them some kind of community support,” says Painter. “It needs to be progressive.”
In order to better understand how people would use basic income, there needs to be more people involved – not just people who are unemployed. Young parents may use the financial security provided by UBI in a different way from recent graduates, or a recent immigrant.
“What would be valuable is a UBI pilot that gave basic income to everyone in a certain area,” says Painter. “So you get a range of life circumstances. UBI is meant to provide economic security, and so you have to ask whether it will give people the opportunity to retrain, try other kinds of jobs, even go back to school, rather than living hand to mouth.”
“The thing that public policy analysts and economists are most interested in, which is how it would affect people’s incentives, or employment, and it could create all kinds of societal changes,” says O’Malley. “Providing income security does have broader effects.”
Advocates of basic income tend not to restrict their arguments to just employment – a society where people don’t have to worry about rent or putting food on the table (theoretically) could alleviate many public health problems, and it could give people more time to pursue things that they’re interested in. Those side effects were glimpsed in the preliminary findings, as people said their levels of stress went down and their wellbeing went up.
“Even with these experiments, it’s very difficult to say anything conclusive about basic income,” says Ylikännö. “Whatever experiments we do – we’re working in a society where people behave very unexpectedly. In order to know what basic income’s effects will be, we have to implement it.
This article was originally published by WIRED UK
