What we know and don't about basic income

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This article is authored by John Crowley and Iulia Sevciuc.

 


  • COVID-19 came with a surging interest in UBI. Developed and developing countries engage with UBI as an emergency response and as a standing policy tool.

  • UBI is not new. Data on performance, impacts, and financing of UBI exists but its flow and use are hindered.

  • Gaps exist in system-wide understanding of UBI, analysis of trade-offs, linkages with broader agendas, and paths to scale-up.

  • These need to be fixed to allow for informed decisions and depolarization of policy debates.
     


 

The idea of a Universal Basic Income (UBI) – a flat, unconditional stipend periodically given to every legal resident in a country to stay above the poverty line – is not new. It has long stayed, however, on the policy fringe. COVID-19 has changed that.

 

Multiple countries employed UBI - or less ambitious variations in the form of temporary basic income (TBI) or minimum subsistence income (MSI) - as a crisis measure to cushion the immediate social and economic damage of the COVID-19 pandemic.

 

Even before that, automation and the replacement of jobs due to it were pushing many towards seriously considering UBI as a way to distribute more fairly the risks and benefits of technological shifts.

 

With interest surging, the real question is what we actually know about UBI. In such an emerging and polarized policy debate, the link between what we know and how that informs policies has real implications.

 

What we have

 

First, the good news.

 

Trials show how UBI performs in both stable and volatile settings. It was piloted before and during the pandemic. Many schemes will run through the crisis and end in post-COVID set-ups. Combined, these trials serve in two respects. First, to guide the debates on UBI as a longer-term policy. Secondly, to inform the deployment of UBI as an emergency response in humanitarian, development, and various crisis contexts. COVID-19 is one of many mega-crises to come. Think of the looming social and economic turmoil associated with climate change. Understanding how cash and UBI may (or may not) alleviate such shocks is critical in preparing response options.

 

UBI is not a developed country issue, despite what is sometimes assumed. It has been implemented both in the Global North (e.g., Canada, Finland, Germany, the United Kingdom, the United States) and in the Global South (e.g., Kenya, India, Mongolia, Namibia).[1] Experts say that developing countries are not at a disadvantage in carrying the fiscal load of UBI or in running the schemes. Yet it is to be pointed out that very few of the reallife cases were truly unconditional, universal, longer-term, and sustainably funded. Notwithstanding this, the contextual lessons – in terms of developed and developing countries – are critical and available.

 

Financing is front-and-centre in any talk on sustained UBI. And it should stay there. Data is emerging on various financing modalities, their feasibility, and their sustainability. These include more traditional sources (e.g., oil- and natural resourcederived funding, reallocation of existing international aid or domestic revenue), innovative ways (e.g., carbon price-anddividend, private sources, data-driven funding, dividends from marketing socially owned data), and mixed options. Key lessons are also available on distributive performance of UBI and ways of calibrating the progressive or regressive character of schemes through the design of their financing mechanisms. These are to be listened to if the intention is to go beyond individual trials towards longer-term or to-scale UBI. They become even more pressing when public buy-in and political acceptability are factored in. Think, for instance, how profoundly the politics around the policy would change depending on how distributive a given UBI scheme is and whether it is financed by re-directing existing funds (e.g., from pensions) or by tapping into new revenue streams, leaving the current entitlements untouched.

 

Evaluations of UBI trials are available and they contain a wealth of data. But the contextual differences and the particular set-up of the trials are often under-analysed in the debates on UBI’s effectiveness and impacts. The results also tend to be skewed, with certain impacts of UBI being assigned a heavier weight in disregard of the context. Take the Finnish trial that provided 2,000 people with €560 monthly pay. The trial is often quoted as having little impact on employment. About 18 per cent and 27 per cent of participants got a job over 2 years, showing little difference with the control group. Yet this trial specifically covered the young and the long-term unemployed – a group facing high and well-known barriers in (re) entering the labour market. The results, although valuable, ought to be extrapolated to the general population cautiously. The same applies to measured impacts on well-being and equity. The main point is that all trial results require coherent and transparent analysis to guide decisions based on systematic rather than selective interpretations of UBI’s impacts. These results should also be understood for what they are – limited pilot results – when analysed and/or when put on par with to-scale UBI schemes.

 

What we’re missing

 

Critical things are absent.

 

Alternative and adjacent policy ideas need serious exploration. Think of Universal Basic Services or universal social protection as alternative approaches, and carbon price-and-dividend as adjacent, to UBI. Cases are being made for all but, moving forward, they need to be assessed against the same targets and desired impacts – something that risks getting lost in disciplinary (if we talk knowledge production) and sectoral (if we talk policy) divides.

 

Key gaps exist in the understanding of UBI as part of a system rather than a stand-alone game-changing solution. First, largely unknown is the interplay of UBI with the rest of the policy space. Its interactions with minimum wage, pensions, severance pay, and the broader social protection systems are particularly pressing. Second, the interplays of UBI with societal agendas (e.g., its gendered effects, links to care work, impacts on inequalities or political participation) and international frameworks (e.g., if and how UBI feeds into the Sustainable Development Goals or climate commitments) are under-analysed. All require stronger, contextual knowledge to inform comparative analysis and debates on trade-offs.

 

Paths to scale-up remain unclear. Much of what we know comes from limited pilot schemes, leaving open questions about the paths to, from technical to political, and the effects of, full UBI.

 

Data on UBI exists but it has loopholes and its quality is inconsistent. The flow of data between developing and developed countries, as well as its use, face obstacles. Valuable insights are lost in the silos of different policy experiments and jurisdictional limits.

 

And lastly, as so often, much work remains to be done to connect the worlds of knowledge and policy on UBI if the intent is to move ahead smartly. The former holds data, the latter holds the power of acting upon it.

 

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References:

 

Kela, 2020.  Results of Finland’s basic income experiment

 

Schupp, J., Bohman, S., 2020. German Basic Income Pilot Project. DIW Germany.

 

Jones D., Marinescu I., 2018. The Labor Market Impacts of Universal Cash Transfers-Alaska. NBER and University of Chicago.

 

Faye M., Kreuger A., Banerjee A., Niehaus P., Suri T., 2020. Effects of a Universal Basic Income during the pandemic-Kenya. MIT.

 

Khosla, S., 2018. India’s Universal Basic Income. Carnegie Foundation.

 

Fritz, V., Levy, B., Ort, R., 2014. Dealing with a Resource Shock: Political Economy Analysis and Its Impacts in Mongolia, in: Problem-Driven Political Economy Analysis. The World Bank, pp. 33–85.

 

CPI, 2016. Basic Income Grant (BIG) in Namibia. Centre for Public Impact.

 

Banerjee A., Niehaus P., Suri T., 2019. Universal basic income in the developing world. MIT.

 

 

Notes:


[1] For Spain, the programme is a Minimum Subsistence Income (MSI).

[2] For Mongolia, Chapter 2 starting on pp.31 dicusses the nation’s UBI scheme.

 

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John Crowley is UNESCO's chief of research, policy and foresight. He is the author of 5 books and a further 100 academic articles and book chapters, mainly on political theory and comparative politics.

 

Iulia Sevciuc is UNESCO’s lead on inclusive policies and the data-driven transformations. Prior to her appointment to UNESCO, Iulia worked with the United Nations Development Programme (UNDP) in Indonesia and Moldova.

 

 The authors are responsible for the facts contained in the article and the opinions expressed therein, which are not necessarily those of UNESCO and do not commit the Organization.

 

 

 

 

 

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