Should we have Universal Basic Income?

Should we adopt Universal Basic Income? I'll weigh the evidence — from recent trials to cost projections — for and against it.

Should we have Universal Basic Income? There is no consensus among economists - the answer depends on what problem you want UBI to solve, how it is designed, and how it is paid for.

What is UBI?

The concept of universal basic income — a regular, unconditional cash payment given to all members of a society — has been around for centuries.

More specifically, it is often defined as an unconditional, regular payment made to every citizen of a country or territory, with no means-testing and no requirements on how it is spent. Unlike conventional welfare, which often comes with eligibility requirements, means-testing, and bureaucratic hurdles, UBI is truly universal

The idea has roots in Thomas More's Utopia in 1516 and Thomas Paine's Agrarian Justice in 1797, and in the 20th century was supported by figures as different as Milton Friedman, who championed a Negative Income Tax as a simpler alternative to welfare, Martin Luther King Jr., and Richard Nixon. Renewed interest today is largely fueled by fears of automation displacing jobs, with estimates that up to 800 million global jobs could be lost or transformed by 2030.

Arguments For

1.Poverty Reduction and Safety Net: UBI provides an unconditional floor beneath every citizen, virtually eliminating extreme poverty overnight. Trials consistently show that recipients do not squander the money but use it for essentials such as food, housing, healthcare, and education. Proponents describe the pros as providing a safety net for everyone, helping to reduce poverty, and potentially boosting the economy.

2.Simplicity: Dozens of overlapping, means-tested programs could be replaced by a single, automatic payment. This would reduce administrative overhead and eliminate poverty traps that punish people for earning more. Basic income is also framed as simplicity: a right for everyone versus complex benefit safety nets.

3.Entrepreneurship, Creativity and Transition Support: Financial security acts as venture capital for the population. In the Kenya GiveDirectly experiment, recipients were 35 percent more likely to start a business. As AI displaces workers, UBI provides breathing room to retrain, relocate, or experiment with new career paths without threat of eviction or hunger.

4.Health and Well-being: Chronic financial anxiety is a leading cause of depression. Experiments in Stockton showed significant reductions in anxiety and depression among recipients after just one year of $500 monthly payments.

Arguments Against

1.High Cost and Fiscal Feasibility: The cons include that it would be difficult to implement and be expensive to fund. A UBI of $1,000 per month for every U.S. adult would cost roughly $3.2 trillion annually, more than the federal government currently collects in individual income taxes. Other estimates put the cost of a UBI aligned with the poverty line at around 4.9% of GDP, and more generally roughly 10% of the country's GDP. Funding it would require steep tax increases, a national sales tax, carbon taxes, or new mechanisms such as a tax on AI-driven profits.

2.Work Disincentives: Critics fear guaranteed income will cause some people to work less. The cons include that it could incentivize people not to work, and a guaranteed income might reduce the willingness to take on low-wage jobs, potentially distorting labour markets. While most trials show only small reductions in work, skeptics worry about long-term cultural shifts.

3.Inflation Risk: Flooding the economy with trillions of new dollars could drive up rents, groceries, and other essentials, especially if landlords and retailers capture the extra income.

4.Equity and Political Concerns: Paying billionaires the same as the homeless seems wasteful, but phasing out payments reintroduces bureaucracy. Large-scale redistribution requires sustained bipartisan support that has proven elusive.

What Do Experiments Actually Show?

Results are mixed and limited by small scale and short duration:

•Finland (2017-2018, 2,000 unemployed, €560/mo): Found no meaningful employment effector a mild positive employment effect, but higher reported wellbeing, autonomy and security. Preliminary results also showed improved well-being and trust in institutions with no significant reduction in employment.

•Stockton, California SEED (2019-2021, $500/mo, 125 residents): Found higher employment among recipients, with full-time employment rising from 28% to 40% vs control 32% to 37%, and improved wellbeing. Recipients were also found to have improved mental health and job stability.

•Kenya GiveDirectly and others: Preliminary results show increases in assets, food security, and psychological well-being, and broadly, multiple pilots have produced positive results where recipients spend on necessities, health improves, and employment rates don't fall significantly.

However, together those results show that a guaranteed income produces no universal response, and pilots are small-scale and short-duration, limiting conclusions about a permanent universal program.

A major review by the British think-tank New Economics Foundation analyzing 16 projects concluded: "There is no evidence that any version of UBI can be affordable, inclusive, sufficient, and sustainable at the same time." The authors argued the money needed to pay for an adequate UBI scheme would be better spent on reforming social protection systems, and building more and better quality public services.

Alternatives to Full Universal UBI

Many economists suggest targeted alternatives achieve similar goals at lower cost:

•Negative Income Tax (NIT): This model integrates social security and taxation. Below the agreed minimum level, the income is compensated by means of taxation. Families earning above a threshold pay taxes, while those below receive "negative" taxes that gradually decrease as earned income increases, maintaining work incentives. It provides a basic income guarantee, but it is not universal and represents an alternative to the full UBI.

•While options like universal basic income exist, negative income tax stands out as the best option due to its targeted nature and ability to provide support where it is most needed.

Other middle-ground pathways discussed include starting with targeted versions for children, the elderly, or displaced workers, funding pilots through taxes on automation, or combining a small UBI with investments in lifelong education and portable benefits. Existing expansions of the Earned Income Tax Credit (EITC), guaranteed income pilots for specific low-income groups, and Universal Basic Services (health, housing, education) are also proposed.

Bottom Line

•For a national, unconditional, sufficient UBI for everyone right now? Most evidence says no — it is not yet proven to be affordable and sustainable at scale, with unresolved questions on funding, inflation, and long-term labor effects.

•For targeted, modest guaranteed income as a tool against poverty and automation? The pilots are promising — they reduce stress, improve well-being, do not cause mass work withdrawal, and allow better financial decisions — suggesting a carefully designed, targeted guaranteed income could be a useful part of the safety net, not a replacement for it.

If your concern is absolute poverty and bureaucratic complexity, a targeted guaranteed income or Negative Income Tax may deliver most benefits of UBI at a fraction of the cost. If your concern is mass automation-driven unemployment, most experts argue we should test funding models (robot tax, wealth tax, carbon tax, VAT) with larger, longer pilots before committing to universality.

Would you like me to model what different UBI levels would cost in your country, and compare it to expanding existing targeted programs?

Citations (3)

1weforum.orgNonprofits and think tanks
Why universal basic income is not the silver bullet its advocates claim
Backs: “There is no consensus among economists - the answer depends on what problem you want UBI to solve, how it is designed, and how it is paid for. What is UBI? The concept of universal basic income — a regular, unconditional cash payment given to all members of a society — has been around for centuries.”
2outsidethecase.orgBlogs and newsletters
Universal Basic Income: What the Pilots Actually Showed
Backs: “More specifically, it is often defined as an unconditional, regular payment made to every citizen of a country or territory, with no means-testing and no requirements on how it is spent. Unlike conventional welfare, which often comes with eligibility requirements, means-testing, and bureaucratic hurdles, UBI is truly…”
3substack.comBlogs and newsletters
Universal Basic Income: From Ancient Ideal to AI-Era Necessity
Backs: “Unlike conventional welfare, which often comes with eligibility requirements, means-testing, and bureaucratic hurdles, UBI is truly universal. The idea has roots in Thomas More's Utopia in 1516 and Thomas Paine's Agrarian Justice in 1797, and in the 20th century was supported by figures as different as Milton…”