Three New Findings Show Us How a Universal Basic Income Might Work

In short? Really well.

Collage of a person holding a wad of cash.
Photo illustration by Slate. Photo by Vitaly Taranov/Upsplash and Thinkstock.

Universal basic income, or UBI—the concept of the government giving its citizens enough money to live on without placing conditions on how they spend it—has gained steam with thinkers ranging from Charles Murray on the right to tech titans Elon Musk and Mark Zuckerberg, the Movement for Black Lives, and former Service Employees International Union President Andy Stern. But how would it actually work? Most people think of UBI as pretty utopian, but in reality, smaller, UBI-like forms of “cash transfers,” “cash assistance,” or “child allowance” programs already exist in many places. Though some social scientists have run projections for what a larger UBI could do (on a negative income tax or basic income), we have little evidence of how much money is enough to make a difference and the specific conditions to implement and make it work. But here are three things we do know from recent studies of policies that give cash directly to individuals in Canada, the United States, and Colombia.

1. Even a Small Amount of Cash Can Help Families Meet Basic Needs

Since 2001, low-income, pregnant residents of Manitoba, Canada—the very same province where the Canadian government tested the first and only basic income guarantee between 1974 and 1979—have received a Healthy Baby Prenatal Benefit of U.S.$64 per month to help with the unexpected costs of having a baby (a 10 percent increase in their monthly income). And the first unconditional cash-transfer evaluation in an affluent country is seeing significant effects across the province, especially in rural settings where food and transportation costs are high. While $64 per month isn’t enough to lift people out of poverty, interviews with program participants suggest it has alleviated financial strain and is enough to “get ready for baby”—to pay for the little things that are just out of reach when living in poverty, like a crib, baby clothes, and the food recommended to them by their prenatal providers.

From 2007 through 2010, Mayor Bloomberg implemented the Family Rewards Program in New York City to study the experiences and outcomes of qualifying low-income families who received cash—an average of $8,674 over three years—for their participation in health services, child’s education, and parental employment. The program found clear positive effects on hunger, housing-related hardships, and financial well-being. Families felt they were doing better financially, and they didn’t have to ask friends and family for cash loans. And even though people didn’t earn more money after the program ended, they still felt more financially stable moving forward.

With a rapidly aging population, and without a social security system in place, Colombia is looking to cash transfers to make elders more financially secure. (Social Security is the largest anti-poverty program in the U.S.) Forty percent of elderly Colombians live in poverty, and the over-60 population is expected to jump from 9 to 24 percent of the population over the next 50 years. Starting in 2003, Colombia began issuing small UBI-like “pensions” of U.S.$16–34 monthly. (Unlike Social Security, participants didn’t contribute that into any fund.) The funds reduced poverty and also self-perceived poverty (“Are you satisfied with income and able to make ends meet?”) for the participants.

2. Even a Small Amount of Cash Can Have a Large Effect on Accessing Health Services and Reducing Health Disparities, Especially if Administered to Pregnant Women, Parents With Children, and the Elderly

Beyond “getting ready for baby,” Healthy Baby Prenatal Benefit money was crucial to helping Manitoban moms access health care. According to Nathan Nickel, co-author of a study on the program, leading a healthy life requires more support than just universal health care. For example, even though Canadians receive universal health care at no cost, they still have to physically get to the doctor, which can be challenging in more remote and colder areas with limited public transportation. For some moms, U.S.$64 was enough to pay for a taxi to prenatal care appointments in a subzero winter. But even if you level the playing field economically, Nickel suggested there’s still a lot more at play in supporting people’s health: “The social and structural environment in which we live impacts our health.” Nickel emphasized the need to study the lingering effects of racism and colonialism on Canadians when money is not an issue.

Nonetheless, the U.S.$64 baby benefit was sufficient to begin chipping away at unequal birth outcomes such as low-birth-weight babies, preterm births, and breastfeeding initiation. Nickel found gaps between low-income and high-income women were significantly smaller when low-income women received the baby benefit. They’ve also begun to study those children who received the benefit to understand its long-term effects, which tentatively suggest improved social-cognitive ability (if children are able to see patterns in shapes and numbers presented to them) in children who received the benefit. This is especially important since Manitoba is home to First Nations populations (Native American Canadians) who are still living with the intergenerational economic and health effects of North American racism and colonization.

Its neighbor to the south, New York City, saw a large and significant increase in health services, specifically dental services, the largest unmet health need in the U.S., particularly among children. Since dental care isn’t included in health insurance, it’s one of the first things that families can’t pay for without a steady and high income. A 2016 Health Affairs article found—unsurprisingly—that cost is the primary barrier to accessing dental care: “Dental care presents the highest level of financial barriers, compared to other types of health care services,” which may soon balloon further since many dental materials are imported from abroad. And the consequences can be dire: Lack of dental care is linked to difficulties with eating as well as diabetes and heart disease, the leading cause of death in the United States.

Finally, the small cash-transfer “pension” in Colombia improved self-reported health and reduced hospitalizations among men, even though Colombia—like Canada—has a universal health care system.

3. Small Amounts of Money Increase Perceptions of Health and Hope, and That Makes a Big Difference

While the Manitoba study hasn’t yet analyzed the effects of the baby benefit on moms (an area of future research), when conducting qualitative interviews, researcher Nathan Nickel found that participating moms felt a sense of appreciation and empowerment in being trusted by the program to do what’s best for their family.

In New York City, the Family Rewards program also improved self-reported mental health and hope. “Even if it isn’t a perfect measure, depression and mental health are neglected, crucial outcomes. The program enabled people to have better planning, sense of control, and better mental health, even though social policies rarely have a positive effect on how people feel in terms of self-reported health,” reported NYC study co-author Emilie Courtin.

Similarly in Colombia, the small monthly transfer of U.S.$16–34 significantly improved measures of self-reported health and hope among men, an interesting finding for a potential U.S. program, given hopelessness and increased death rates among men in the U.S. attributable to suicide, “diseases of despair” related to addiction, and other health conditions driving increased mortality in the U.S. It’s also important given the negative effects of scarcity. In other words, not having enough changes the way one’s brain works, be they a busy person making decisions about time, someone dieting making decisions about food, or a low-income person making decisions about money. Scarcity affects everyone, so apart from the challenges of meeting basic human needs, it’s important to try to address situations that limit humans’ abilities to have agency in their own lives.

Even when the Canada, U.S., and Colombia examples offered participants objectively small amounts of money, study results indicate it was still a relatively large, predictable part of participants’ disposable income. In the cases of the U.S. and Colombia examples, people received a regular income they could plan around for the first time, which affected their lives in significant ways.

We also know little about the differing effects of conditional programs (for example, families may receive money if their children attend school) with unconditional programs (for example, families with children receive money). Conditional programs are criticized from the left for stigmatizing certain populations by suggesting that low-income people wouldn’t otherwise participate in “responsible behavior” if not for a financial incentive, whereas many people suspect that unconditional programs encourage unemployment and indolent behavior.

Colombia-study co-author Philipp Hessel said many of those fears are just speculation: “We don’t have good evidence of whether conditional or unconditional programs work better because they aren’t tested as such.” According to Hessel, social programs for the young are often conditional and ones for the elderly unconditional. Why? Do the elderly deserve to make their own decisions more than parents? The evidence suggests nonconditional programs—like the Manitoba baby benefit—also work for nonelderly citizens. But, said Hessel, “Conditionalities are introduced to justify the distribution of benefits to the voters rather than the likely impact on recipients.”

As the evidence from new programs trickles in, it’s clear the biggest barriers to UBI may not be results, but politics. Not even Finland, a Nordic country that made news last year for piloting universal basic income, will continue with the project, despite its promising results. The reason? Widespread fear, despite a total lack of evidence to support it, that if people receive cash transfers, they will stop working. They’ve discontinued their UBI experiment and have instead begun to implement work requirements. For all the excitement around UBI, and positive findings far and wide, this is something that advocates and researchers outside Manitoba can’t get us past.