Guide A Guaranteed Annual Income. Evidence from a Social Experiment

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Reviews 0. Funding for this project came from several sponsors both national and international.

Policy Brief #10 - PCLC

These sponsors are presumably associated with the Namibian BIG Coalition , although published findings did not specifically disclose donors Osterkamp It should be noted the Namibian BIG Coalition is a coalition intellectually dedicated to the core ideas of the UBI movement, with membership composed of organisations such as trade unions, missionaries, and NGOs.

Additionally, this project was not at all funded by the Namibian federal government, which has been consistently dismissive of both the possibilities and results of a BIG program Haarmann and Haarmann 7. Empirical studies pertaining to Otjivero and the BIG project are limited to the assessment reports published by researchers affiliated with the Namibian BIG Coalition in September and April , on data six and twelve months after the beginning of the project respectively. Both the lack of breadth in research and the association of its authors pose some serious issues in objectively assessing the outcomes of Otjivero Osterkamp.

However, despite this there are still some key positive lessons from the experience of this rural Namibian village. In January , every resident of Otjivero began receiving unconditional cash payments for a two-year period, after which the payments were markedly lowered. The only people who did not receive these transfers were those over the age of 60 years, as these people qualify for state pensions.

Additionally, researchers claim the age and gender distribution of Otjivero are representative of Namibia as a whole, hence justifying its choice for the BIG project locale Ibid. Payments were administered electronically via the Namibian postal service, forcing all recipients to become integrated into the formal banking system, another benefit of this BIG Ibid Social indicators such as school enrollment rates improved dramatically Ibid The number of children not attending school because of financial struggles practically halved; as is shown in Graph 2.

Some limitations

What all these outcomes reflect is the impact universal incomes can have on a community, even one as small as Otjivero. However, what must also be noted in these assessment reports is the clear lack of academically consistent empirical methods, both in their design and results.

Osterkamp gives a compelling critique of the two assessment reports on the Otjivero BIG project. Osterkamp challenges the design of the research carried out by Haarmann et al. Most notably, this clear lack of transparency in methodology means there is no viable way of cross-referencing or independently evaluating their findings.

No copies of the data sets constructed from sample surveys, nor the interviews used to create them, were ever made accessible to the public, as the researchers refused to release their database on the grounds of privacy for the residents of the village Osterkamp By compromising on the quality of research, one compromises the scope of impact a project can have and may be the reason for relatively few other UBI experiments in Africa.

Simply put, the lack of credibility in these reports has hampered the likelihood of governments to seriously contemplate the usefulness of UBIs in achieving social improvement despite the incredibly positive results researchers derived from them. Thus, in response, the Ahmadinejad administration in began plans to replace a substantial proportion of subsidy expenditures with cash subsidies, with the intent of reducing production inefficiencies and inequality in Iran.

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Given the extreme size of the subsidy program in Iran, this put the country in a unique position in establishing a UBI where the government needed only to redistribute current expenditures instead of incurring new revenue streams. On 19 December , these price subsidies were immediately halved to maximize public support for the reforms.

Unsurprisingly, this caused huge price increases throughout Iran, causing the price of bread and energy to rise by factors of anywhere between two and nine Salehi-Isfahani and Mostafavi-Dehoozi 7. Also unsurprising is Iran experienced large fluctuations in inflation see below. Despite still running in its current form, falling commodity prices have put considerable strain on the Iranian government to provide a UBI for all citizens.

In these continuing circumstances resulted in an unpopular decision by parliament to cut payments to 24 million Iranian citizens. The initial results of this program, prior to the cut to its universality, were quite impressive and made substantial impacts on the rate of poverty and inequality in Iran without any significantly adverse impacts on labour supply, a common critique of UBI initiatives. One study concludes that this UBI has had a substantial impact on poverty indicators, causing the percentage of individuals living below the poverty line the headcount ratio to fall from Inequality also declined; Soleimaninejadian and Yang found a drop in the Gini coefficient from 0.

Despite all these encouraging economic results, a serious impediment to an institutional acceptance of UBI has been the sustained issues Iran has had with inflation since the implementation of a UBI.

Much of the blame for inflation falls upon the subsidy reforms. However, one of the greatest curses of these subsidy reforms has been their timing, only months after transfers began Iran was hit with tough international sanctions by the U. The sanctions caused a prolonged period of economic recession and a subsequent spiralling of inflation rates. Additionally, Salehi-Isfahani points towards fiscal irresponsibility of the federal Iranian government in causing another much more damaging bout of inflation in Good may be used to refer to anything — it is a general term that expresses positive value about something or assigns positive value to something.

Nevertheless, in philosophy the term takes on special meaning and that meaning is particularly related to ethics. Whilst the subsidy reforms had a substantial impact on inflation, the U.

Overall, what we see in Iran is quite strong evidence in support of implementing more large scale UBIs throughout the world. Firstly, and most interestingly, Iran has no ideological attachment to the idea of a UBI in the same manner as other typically European countries do, particularly regarding arguments about the human right to an income Tabatabai Essentially, the Iranian UBI arose out of a political desire to re-establish government provisions for its citizens, something that was only possible due to the incredibly extensive pre-existing pool of government revenues already being used as state expenditures.

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Would other countries, primarily those highly liberalized and free-trade orientated, ever be able to establish a UBI under this mechanism? Most likely not. Despite the funding issue, Iran serves as a sterling example of what can be achieved with UBI. Evidence suggests the implementation of UBI leads to a decrease in poverty and inequality, without impacting levels of employment. These factors are independent of the mechanics of the universal transfer scheme, and as such should be judged independently on its own merit.

In terms of publicly funded UBI projects, saw the launching of experiments in Canada and Finland, as well as in Spain. In Finland, a basic income experiment was launched on 1 January concerning an experimental size of 2, persons randomly selected between the ages of 25 and 58, pulled from the existing pool of unemployment benefit recipients in Finland. This experiment will not conduct any interviews or questionnaires of participants throughout the duration of this project in an effort to avoid observer effects , instead opting to gather analysis autonomously via register data.

No results of this experiment will be published until In April , Canada also began a basic income experiment, its second iteration in Canadian history, this time in the region of Ontario. Additionally, the only criteria for program selection is low-income status and is not contingent on being a current welfare recipient. By October , this program had enrolled people , with plans for expansion of up to 4, people throughout various locales within Ontario. Surveys will be completed regularly by participants which will concern several economic, social, and psychological outcomes unlike in Finland with payments being distributed monthly.

This experiment is planned to continue for three years, where findings are expected to be published in Of the 1, treatment households, will need to participate in one of four active social policies to receive their basic income. The other will receive their payments unconditionally in an effort to test the merits of a UBI on social outcomes.

Whilst not all experiment participants will receive unconditional income payments, this experiment will serve as particularly useful in providing a direct comparison between existing means of welfare provision and UBI, something which is particularly lacking in existing literature.

Aside from publicly funded UBI experiments, several privately funded experiments are also looking to expand the empirical literature of UBI in the context of both advanced and developing economies. The Silicon Valley venture capital firm Y Combinator set out a finalised proposal for an experiment in September to go forth in In terms of measurement, the proposal claims that the experiment will engage in both interviews with participants throughout the experiment as well as a comprehensive quantitative analysis of all relevant register and interview data both during and after completion of the experiment.

Instead of simply choosing a sample from one socio-economic level, or from the existing pool of social welfare recipients, this experiment looks to be the most encompassing of the term universal. The ability to implement such a varied sample is certainly a major strength of privately funded experiments, in that they do not need to politically justify the merits of universality to a population in a pilot project. Specifically, on its website GiveDirectly explains this experiment will be focused on testing the effects of a UBI on both long and short-term outcomes by providing it for 12 and 2 years respectively to the villages concerned.

These long-term transfers will be made to 40 villages, whilst 80 villages will receive the short-term transfers, further complemented by a village control group.

Universal Basic Income: More Empirical Studies

By comparing these two treatment groups, GiveDirectly claims it can effectively measure the impact of permanency in income, something particularly important in consideration of business start-ups or individual investment in human capital. Given the relative scope of these short-term transfers, initial results publication is expected in , after these short-term transfers have ceased. In August , Nikiforos et al. The model found that implementing a UBI in the U. To show this, Nikiforos et al. Additionally, this paper also latches onto the growing consensus in macroeconomic academia by assuming that 3 the U.

Who Really Stands to Win from Universal Basic Income?

These assumptions have serious implications for the possible impact a UBI could have on the U. To justify their first assumption, Nikiforos et al. Marinescu concludes that the only impact a UBI has on working patterns is that it makes them more flexible, and that whilst this creates minor reductions in labour supply, these are complemented by other much more significant increases in quality of life for the recipients. Evidence for this sentiment is also clear within the Iran case study. However, it is purely through this labour supply relationship that Nikiforos et al.