Getting money from the government with no strings attached made Finnish people happier, but it didn’t improve their chances of getting a job.
Those are the results of a study released Friday on Finland’s pilot program with universal basic income, or UBI. The country ran an experiment involving 2,000 randomly selected unemployed people who received monthly payments of about $685 (560 euros) from January 2017 through December 2018.
In the U.S., buzz around universal basic income has only grown as several Democratic contenders for the 2020 presidential nomination have touted versions of UBI. They join a bevy of Silicon Valley leaders, including Facebook’s FB, +0.57% Mark Zuckerberg and Tesla’s TSLA, -0.56% Elon Musk, who have championed the concept.
Some American cities are trying out or considering UBI. Chicago is mulling a version that would give $1,000 a month to 1,000 low-income families. The $12 million price tag would be funded by a combination of taxpayer dollars and philanthropy. Residents of Alaska already receive regular payments from the government, funded by oil reserve royalties. The amount varies. Alaskans got $1,100 in 2017, down from an all-time high of $2,072 in 2015.
Critics question how larger versions of such programs would be funded, and argue that receiving a monthly handout from the government could discourage people from seeking paid work. In Finland, expanding UBI to all citizens could raise taxes by 30%, a report by the Organization for Economic Cooperation & Development found.
Finland’s pilot was a bit of a dud: when officials asked for more government funding to expand it, their request was rejected. The study, released Friday, examined how the payments affected the program’s recipients.
Recipients of the payments reported an increased sense of well-being, improvements in physical and mental health, and less stress than the control group. They also reported more confidence in their financial situation.“They were also more confident in their future and in their ability to influence societal issues,” said Minna Ylikännö, lead researcher at Kela.
Their chances of getting a job seemed unaffected by the money, the study found. Employment status is a key question because critics of UBI say it would make people less likely to get jobs — why would they if they were receiving a regular paycheck from the government?
“[W]e can say that during the first year of the experiment the recipients of a basic income were no better or worse than the control group at finding employment in the open labor market,” said study coauthor Ohto Kanninen, research coordinator at the Labour Institute for Economic Research.
Researchers cautioned that the results were “preliminary” and that “it is not yet possible to draw any firm conclusions regarding the effects of the basic income experiment.”
Ioana Marinescu, an assistant professor of economics at the University of Pennsylvania who studies UBI, also noted that the results were only preliminary. But the reports of increased well-being among the UBI recipients were striking to her, she said. “There were pretty impressive improvements in subjective well-being,” Marinescu said.
One key goal of the Finnish pilot program was to figure out whether a basic income system could replace the country’s existing unemployment insurance program. The Finnish government wanted to know whether a basic income model “could promote more active participation and provide a stronger incentive to work than the present system.”
While recipients of the basic income fared no better or worse at finding jobs, they did end up working on average a half day more than people in a control group, the study found. They also felt more confident about their chances of getting a job, the study found. The study was conducted by Kela, the government benefits agency that ran the program.
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