Should we have Universal Basic Income?

Should we adopt Universal Basic Income? I'll gather the latest evidence on its costs and pilot results to lay out the case for and against.

Universal Basic Income (UBI) is a proposal for regular, unconditional payments made by the government to the entire population or a large segment of it. Whether it should be adopted is debated, with arguments on both sides often based on competing ideas about its potential effects.

There is no consensus among economists and policymakers. The answer depends on priorities: poverty reduction and simplicity vs. cost and work incentives, and how it would be funded and designed.

Arguments In Favor

1. Simpler, more inclusive safety net:
Proponents argue UBI is less cumbersome to administer than means-tested public benefit programs, which often don't reach intended beneficiaries due to social stigma and administrative burden. It would also provide improved social safety net and access to food and healthcare, and potential to reduce childhood poverty.

Other proponents claim it offers a simple, efficient, and equitable means of addressing poverty and inequality, and provides income security which allows individuals to work more flexibly without having the financial burden of basic needs. Other claimed benefits include economic stability and increased entrepreneurship because basic needs are provided for, giving people more disposable income.

The idea has gained momentum in the past decade partly in response to fears that millions of jobs will be lost to automation, and was discussed more during the COVID-19 pandemic when recurring payment proposals were made.

2. Evidence from pilots on well-being and employment:

Arguments Against

1. Cost and funding feasibility:
This is widely cited as the primary challenge. Implementing UBI would require significant funding, which could be difficult to finance, particularly in countries with already-strained social welfare systems.

2. Work disincentives and inflation:
Counter-arguments center around the idea that populations are bound to be less motivated to work if their basic needs are met. Critics argue UBI could create a disincentive to find work for some individuals and some argue people would stop working and become dependent on payments, while supporters believe it would free people to do volunteering or caring.

Other cons include that UBI could exacerbate inflation as a widely expanded money supply would increase demand for goods and services, and that higher-income people who don't need assistance would still receive payments. In Iran, universal monthly payments introduced in 2010 to compensate for removal of fuel subsidies were initially enough to live on, but the value was very quickly reduced by inflation.

Health and social risks have also been noted: In some studies where people received payments as large lump sums, there were increases in deaths and substance abuse, and immediately after receiving annual payments in Alaska, property crime decreased but substance-abuse related crime increased.

What the Evidence Cannot Yet Show

Researchers caution that pilot studies are usually small and short term. People might be more likely to change the amount they work if payments were not due to stop in two or three years, and if everyone received payments, it could cause changes at a higher level, such as employers having to increase wages. It is very difficult to measure these "spillover" effects if only a small number of people receive payments.

The World Economic Forum review concluded: None of the studies we looked at meet all the criteria for a basic income, so they can't provide definitive evidence for its effects.

Alternatives and Design Questions

Because of cost, some proposals suggest alternatives:

Key design questions for any country considering UBI include:

In short, evidence suggests UBI can improve well-being, food security, mental health, and educational outcomes without causing large drops in employment in pilot settings, but full-scale, permanent, universal programs have not been tested at national scale, and costs and inflationary risks remain the largest obstacles to implementation.