Should we have Universal Basic Income?

Should we adopt Universal Basic Income? I'll weigh the evidence on its costs, benefits, and trial results.

Universal Basic Income - an unconditional, regular cash payment to every citizen regardless of work or need - is one of the most debated welfare reforms. Whether "we should" have it depends on what problem you want it to solve, how it is funded, and what you are willing to trade off. Pilot evidence is mixed.

What UBI Is Intended To Do

UBI is defined as a regular stream of payments made unconditionally by the government to the entire population or a large segment of it.

Proponents and critics often frame the debate as:

In more detail, the pros include providing a safety net for everyone, helping to reduce poverty, and potentially boosting the economy, while being less cumbersome to administer than means-tested programs that don't reach intended beneficiaries due to stigma and administrative burden, with potential to reduce childhood poverty.

The cons include that it could incentivize people not to work, be difficult to implement and be expensive to fund.

Arguments For UBI

1. Poverty and inequality reduction: Minimum income security would enable individuals to plan their lives better and undertake more meaningful activities rather than be trapped in distress-driven activities in search of subsistence. The idea is simple: government provides a fixed amount to every individual, proponents argue that UBI ensures basic financial security.

Global reviews of pilots note poverty dropped by 10% to 25% for recipients, especially among the poorest, and Kenya's GiveDirectly 12-year study found incomes grew by 17%.

2. Simplified welfare state: Advocates argue UBI could replace complex benefit safety nets with simplicity: basic income as a right for everyone versus complex benefit safety nets.

3. Resilience to automation and economic shocks: The idea has gained momentum particularly in response to fears that millions of jobs will be lost to automation. Supporters see UBI as a necessary monetary cushion for technological unemployment, and libertarians hope it might supplant employment regulation and the means-tested welfare state.

4. Work, entrepreneurship and well-being: Rather than encouraging idleness, some evidence finds recipients use security to make better choices: encouraging entrepreneurship and retraining without fear of losing basic income - though results are mixed.

Arguments Against UBI

1. Fiscal cost: This is the second main argument against a universal income.

2. Inflation:

3. Work disincentive:

4. Not a panacea: A 2023 meta-analysis and academic models note UBI generates large welfare losses in general equilibrium models with imperfect capital markets and labor market shocks, and that most economic and social problems are too complex to solve by handing out cash.

What Pilot Evidence Shows

There is no single "UBI" - pilots differ in amount, duration, target group, and funding - but results show a pattern: well-being improves, employment effects are small, cost remains the big untested factor.

Germany (2021-2024): Mein Grundeinkommen followed 122 people for three years who received an unconditional sum of €1,200 ($1,365) per month. People "are likely to continue working full-time even if they receive no-strings-attached universal basic income payments". Receiving a basic income was not a reason for people to quit their jobs. On average, participants worked 40 hours a week and stayed in employment — identical to the control group. Unlike the control group, those receiving a basic income were more likely to change jobs or enroll in further education. They reported greater satisfaction in their working life and felt their lives were "more valuable and meaningful" with clear improvement in mental health.

Finland (2017-2018): The government paid 2,000 randomly-selected unemployed people a monthly income of €560 with no-strings attached. Those on a basic income were no better or worse than the control group at finding employment — 49.64 days in employment vs 49.25 for the control group. But those on a basic income perceived their wellbeing as being better: 55% vs 46% perceived health as good or very good, with less stress symptoms as well as less difficulties to concentrate and less health problems.

USA - OpenResearch Unconditional Income Study (Texas/Illinois): 1,000 low-income participants were given $1,000 a month, no strings attached, for three years. The policy was no silver bullet for most economic and social problems. There was a brief improvement in mental health in year one, but this faded quickly. By year two, anxiety and stress were back where they started. Recipients, on average, banked the extra cash and enjoyed more leisure time, reducing their earned income. Yet there was little evidence that they used those extra hours to find better job matches, invest in education, or start a business.

Alaska - Permanent Fund Dividend (since 1982): The longest-running US example, paying ~$2,000 annually from oil royalties. A paper found the dividend had no effect on overall employment and even increased part-time employment slightly, as payments increase consumption, leading to more demand for labor.

Iran: Household survey data to show that the poor did not necessarily reduce their labour supply when they received cash handouts of $40 per month starting in 2010.

Crucially, critics note trials never test the higher taxes required to redistribute such sums, so they overestimate net benefits.

Should We Have It? Three Models

1. Full, universal UBI replacing welfare: The most radical version is generally rejected by economists as unaffordable without massive tax increases or cuts to health, education and other services, and with risk of inflation if supply doesn't keep up. It would also give money to those who don't need it.

2. Partial / targeted Guaranteed Income: Many newer proposals are not truly universal but target low-income, or provide a modest floor (e.g., $500-$1,000/month) as a supplement, not replacement. This reduces cost while keeping safety-net and administrative benefits.

3. Alternatives: Some economists prefer a Negative Income Tax, expanded Earned Income Tax Credit, or universal basic services (healthcare, housing, education) as cheaper, more targeted ways to reduce poverty without inflation or work-disincentive risks.

> The best argument against UBI is feasibility. You may be surprised I do not mention cost.

In other words, the question is less "does cash help people?" — it clearly reduces stress, improves health perceptions, and allows some to retrain or change jobs — and more "can we fund it sustainably and fairly, without reducing work, raising prices, or gutting other services?"

Bottom line:

Many experts therefore conclude: a permanent, unconditional payment to everyone at a livable level is not currently feasible or desirable; but carefully designed, targeted, and funded guaranteed-income pilots — tested with rigorous evaluation for effectiveness and best practices — may be a useful part of a modern safety net, especially if funded by progressive taxation, carbon/wealth/robot taxes, or dividends from common resources like Alaska's model.

What design would you support — a small universal dividend for all, a larger guaranteed income only for the poor, or strengthening existing welfare instead?