Results of universal basic income experiments

Interest in Universal Basic Income Grows as Pilot Programs Gain Momentum

Interest in universal basic income (UBI) has surged in recent years, with many now exploring pilot programs to determine if local experiments could be scaled up to the federal level.

The concept of UBI, which involves providing individuals with income without requiring labor in return, has been around for decades. However, it gained significant attention during Andrew Yang’s presidential campaign and the government’s stimulus spending during the COVID-19 pandemic.

Exploring UBI Pilot Programs

Several pilot programs for UBI have been conducted, although critics argue that these experiments are flawed for various reasons. They claim that the local programs’ structures prevent them from being scientifically sound, making it even more challenging to implement UBI on a broader scale.

Proponents of UBI argue that direct payments to individuals could lift families out of poverty and reduce economic barriers to employment. They also believe it could help families overcome healthcare and education challenges. However, critics contend that a national UBI program would be prohibitively expensive and could burden taxpayers.

Allison Schrager, a senior fellow at the Manhattan Institute, points out that there has not been a single study or pilot program that truly represents UBI or sheds light on its viability on a larger scale. She explains that most studies are limited in duration and contingent on specific characteristics.

Prominent UBI Pilot Programs

Despite the criticisms, some programs are often cited as UBI-like pilots. One notable example is the Stockton Economic Empowerment Demonstration, which took place in Stockton, California, in February 2019. The program provided 125 residents with $500 per month.

The results of the Stockton program were positive, with participants experiencing less income volatility and an increase in full-time employment compared to the control group. Beneficiaries reported that the monthly payments helped cover basic necessities and allowed them to focus on achieving economic security.

However, Robert Rector from the Heritage Foundation argues that the Stockton experiment suffered from selection bias, as participants were not randomly selected but rather volunteered to participate.

Richard Auxier from the Urban-Brookings Tax Policy Center acknowledges the value of programs like Stockton in demonstrating how direct payments can impact various aspects of individuals’ lives, such as healthcare and education outcomes. However, he emphasizes that these pilots are not universal and should be considered alongside other programs and proposals.

Alaska Permanent Fund and GiveDirectly

Another example often mentioned by UBI proponents is the Alaska Permanent Fund, which pays out the Permanent Fund Dividend to all Alaskans regardless of income level. While it has been praised for reducing poverty rates, critics argue that it differs from UBI as the payments vary each year and are not financed by taxpayers.

The largest UBI pilot program is being conducted by GiveDirectly in Kenya, where 20,000 individuals across nearly 200 villages have received funds. Initial results during the pandemic showed promising improvements in well-being, although the study is ongoing.

The Potential of UBI

Supporters of UBI argue that it could address the flaws in the current welfare system, which often disincentivizes work due to high implied marginal taxes. They believe that providing benefits to everyone, regardless of income, would eliminate these negative incentives.

However, implementing a national UBI program faces significant challenges, including the substantial financial resources required and the need to reevaluate the entire welfare system.

Richard Auxier emphasizes that the conversation around UBI must consider its cost and the programs it would replace, making it a complex issue to tackle.

Source: The Washington Examiner

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