Universal basic income

Evidence Rating  
Expert Opinion
Evidence rating: Expert Opinion

Strategies with this rating are recommended by credible, impartial experts but have limited research documenting effects; further research, often with stronger designs, is needed to confirm effects.

Health Factors  
Decision Makers

Universal basic income (UBI) programs provide all or most individuals in a community with regular cash transfers, regardless of employment status, age, or other conditions. Amounts vary but proposals emphasize that they should be enough for individuals to meet their basic needs and to live with dignity1, 2 without earned income3. Dignity generally refers to economic security4 and freedom from stigma and exploitation in meeting basic needs2. Most UBI proposals include children and young adults but provide a smaller amount and the cash transfer is given to their parents or guardians4. A true UBI program would be paid from public funds and administered by a national government but could be implemented at a state or local level2.

UBI-like programs are targeted rather than universal, administered on a smaller scale, and often limited by budget, political, or other constraints3, 5. Programs meeting some of the criteria for UBI, such as unconditional cash transfer programs, exist in nations with varying income levels6. Programs may be called basic income if transfers are only made to some individuals in a community, such as those with lower incomes7. UBI-like programs often aim to improve health and well-being by reducing poverty, especially among those with the lowest incomes7. Experts are studying UBI-like programs to understand how a true universal basic income program might function and how it could replace or complement the current safety net3.

Expected Beneficial Outcomes (Rated)

  • Increased financial stability

Other Potential Beneficial Outcomes

  • Reduced stress

  • Improved physical health

  • Improved mental health

Evidence of Effectiveness

Universal basic income (UBI) is a suggested strategy to improve individuals’ financial stability and health outcomes1, 8, 9. Available evidence suggests that programs with similarities to UBI, such as cash transfer programs or supplemental assistance programs, can have positive, multi-generational effects3, 10, 11. These programs do not appear to significantly reduce labor supply1, 8. However, additional evidence is needed to confirm effects, especially of a large-scale UBI program8.

In theory, universal basic income programs provide a direct cash transfer to individuals unconditionally, universally, and regularly2, 4. Some experts interpret basic as covering basic needs without earned income; others argue it refers to a base amount intended to be combined with income from paid work4. Many UBI supporters propose $1000 per month as a cash transfer amount that is high enough to cover basic needs. Other supporters suggest starting with $500 or less per month and increasing over time, since even small amounts could be significant for those living in extreme poverty4. UBI is different from a tax credit or in-kind benefit, such as for food or housing, and distinct from programs which provide benefits at the household level or which provide a single lump sum, for example in early adulthood4. The scale and length of UBI programs also influence outcomes. Whether individuals anticipate a program will be short- or long-term may affect their behavior, especially for employment decisions6, 8.

A systematic review of historical and contemporary programs with similarities to UBI finds multiple health benefits, including improved mental health and infant birth weight, and modest effects on employment, with the largest effects for women with young children8. Another review of UBI-like programs in multiple countries finds no evidence that overall labor supply is significantly reduced: Reductions among some groups, such as women with young children, are offset by increases among other groups1. Generally, safety net programs that increase families’ resources improve children’s outcomes over their lifetimes3, 12. Available evidence shows children in families with lower incomes who receive a cash transfer have greater educational attainment, healthier weight, and higher incomes in adulthood10, 13.

Negative income tax (NIT) experiments in the US and Canada from 1968-1982 are often compared to UBI. These NIT experiments were government authorized and funded, though the programs were not universal and provided benefits at the household rather than individual level. NIT experiments provided cash transfers to families with lower incomes in an amount intended to cover basic needs6, 8. These transfers lasted a few years and included families in rural areas. Individuals paid higher taxes on the cash transfer if they earned more through paid employment. Health benefits associated with NIT experiments include improved nutrition quality; fewer hospitalizations, especially for mental health, accidents, and injuries; and increased autonomy and self-respect. Education outcomes also improved, including school attendance, grades, and test scores, especially among younger children and those from households with the lowest incomes6, 8. Available evidence shows minimal or no effects on employment outcomes6, 8. In some instances, participants worked fewer hours in paid employment, with the largest decrease in hours among married women and single parents; however, the decrease in paid employment appears to benefit families and support improvements in education outcomes for children8.

Dividend programs can also be compared to UBI. For example, the Eastern Band of Cherokee Indians’ casino dividend program in North Carolina provides guaranteed income or smaller cash transfer amounts intended to supplement, but not replace, earned wages. One study suggests the program improved children and adolescents’ school attendance, educational attainment, and reduced participation in minor criminal activity. Program participation is also associated with improved mental health14. Related studies suggest Tribal members’ increased income from casinos is associated with reduced smoking, obesity, and anxiety15. The dividend program did not have a significant effect on labor supply6, 14. The Alaska Permanent Fund is another dividend program that provides an annual cash transfer to all residents, including non-citizens who are permanent residents or refugees. The fund is maintained through the state’s oil revenue, so the transfer amount can vary, but the transfers are universal, permanent, and nearly unconditional. Studies suggest the dividend increases consumption, stimulates labor demand in some sectors, and increases the number of individuals working part-time—some individuals may leave full-time work, while others may transition from unemployment. Overall employment rates in Alaska remain comparable to other states6.

Early research on a small-scale, two-year basic income pilot program in Finland suggests that individuals who receive basic income report fewer health problems, reduced stress, and have similar employment outcomes, compared with those who do not receive basic income5. A two-year guaranteed income pilot in Stockton, California, which provided individuals with a $500/month unconditional cash transfer, appears to improve financial stability and participants reported improved physical and mental health16. However, participants in a Canadian basic income pilot, which ended early due to a shift in political support, reported increased financial precarity and negative feelings toward the government after the program was canceled7.

Advocates for UBI suggest it could reduce poverty and increase economic stability; improve population health, especially through reduced stress and stress-related behaviors; increase involvement in activities like caregiving, education, and entrepreneurship; protect workers who may be displaced by automation; and be simpler to administer than existing safety net programs8, 9. Some experts suggest UBI benefits could reduce the negative economic and social impact of the COVID-19 pandemic17. Research focused on the long-term, psychological, and political effects of a universal component is needed3. Available evidence on targeted cash transfer programs suggests that eligible individuals fail to enroll due to lack of awareness, administrative barriers, or stigma and that such programs can have unintended effects for non-beneficiaries; experts suggest that universal programs would alleviate these challenges1.

Criticism of UBI includes concerns that individuals will leave paid employment8 though available evidence suggests that negative labor effects are overstated and the health benefits of UBI seem to be understudied and undervalued18. Fewer individuals in paid employment may actually be a desirable outcome of UBI, but employment concerns may be a barrier to political will3.

UBI alone may not be adequate assistance for some groups, including individuals with the lowest incomes, individuals who are differently abled, and older adults8. Experts recommend maintaining or expanding supports for these groups alongside UBI, to reduce poverty and provide economic security4. Experts also suggest implementing UBI with initiatives to address the cumulative disadvantages of structural racism. For example, UBI and reparations have been proposed together as a multi-component initiative to reduce the racial wealth divide4.

Proposals understood to be universal are often near-universal; for example, some proposals exclude children but assume UBI would exist alongside an unconditional child benefit program2. Some proposals and programs limit eligibility for individuals who are or were recently incarcerated2. For example, Alaskan residents who were incarcerated in the previous year for felony convictions are not eligible to receive the annual cash transfer from the Alaska Permanent Fund6.

UBI program financing may influence effects, whether funds are generated through increased taxes, decreased spending, a wealth dividend program, or something else. Further research is needed to clarify what types of financing are most feasible and desirable6, 8. Proposals for universal basic income often recommend funding programs through a combination of taxes, such as progressive income, wealth, or carbon taxes; although other mechanisms have been used, such as state wealth from natural resources or industry4.

A generous UBI program would reduce the need for some existing programs3 and streamline administration of benefits4, which would account for some of the cost of the program. Some research suggests that implementation of UBI in the US could cost as much as $3 trillion per year, or 75% of total federal expenditures as of 2017, to provide US residents 18 and older with a transfer of $12,000 per year. Some UBI proposals aim to control cost by lowering the dollar amount below what would cover basic needs or by limiting eligibility, i.e. eliminating the universal component3. However, the economic value of UBI’s benefits has not been studied, including reduced health service use, increased educational attainment, and reduced criminal justice system involvement8. More research is also needed to estimate the value of the multi-generational benefits of safety net programs12.

Equity Analysis

Inconclusive impact on disparities

It is unclear what impact universal basic income (UBI) could have on disparities in wealth and income. Universal basic income is not implemented in the US but would provide cash transfers to individuals unconditionally, universally, and regularly2, 4. Cash transfer programs have the potential to decrease disparities through improvements in income, educational attainment, and health among families with low incomes10, 13. However, more research is needed to determine the long-term, psychological, and political effects of a large-scale UBI program3, 8.

The way a UBI program is financed may influence its effects on disparities, whether through taxes which include progressive income, wealth, or carbon taxes4. A generous UBI funded through a progressive income tax has the potential to decrease disparities, and could increase the overall support received by those with the lowest incomes3. How UBI is implemented will also influence its effect on disparities; for example, to decrease disparities, UBI may be paired with other safety net programs to support the economic security and reduce poverty among individuals with the lowest incomes, individuals who are differently abled, older adults4, 8, and children2. Combining UBI with other initiatives, such as reparations, could impact the racial wealth divide4. A UBI program could include individuals who may be excluded from similar programs, such as those who are not US citizens6 or those who have been incarcerated2. Experts suggest that the universal component could increase enrollment among individuals with lower incomes, who are often the focus of cash transfer programs1.

Historical Context

Proposals of UBI-like programs, including lump sum payments and dividends, first appeared in the US and Europe during the 18th and 19th centuries based on the idea that all individuals should receive a share of the wealth generated by a society4. Some economists recommended setting a guaranteed income floor in the 1930s, and Milton Friedman’s book on the topic in the 1960s renewed public interest, leading to the Negative Income Tax (NIT) experiments based on his proposal27. In the 1960s, the federal government faced urban unrest, the persistence of poverty despite programs to alleviate it, and the economic toll of the Vietnam War27. The Civil Rights movement generated new interest in basic income, with supporters including Martin Luther King, Jr., and multiple cities attempted guaranteed income experiments27. In the 1990s Phillip Van Parijs, a philosopher and economist from Belgium, published an influential paper on UBI that argued for UBI as an extension of justice, in contrast with means-tested programs that require individuals to prove they deserve assistance from communal resources4. More recent supporters of UBI cite technology’s potential to reduce available jobs, a need to reduce and simplify income support programs, and a need to include those left out of current programs3.

Equity Considerations

  • What steps can be taken at the community level to ensure that UBI, or a guaranteed or basic income program, are implemented in a way that decreases disparities?
  • Is there political will in your community for UBI, or a local guaranteed or basic income program? Who would benefit from such a program?

Implementation Examples

There is continued interest in UBI and cash transfer programs worldwide, in countries with varying income levels19, 20. UBI programs have been considered at regional or national levels, and by countries in a union, such as the European Union2. In the US, the state of Alaska continues its dividend program, with around 660,000 individuals receiving the dividend annually6.

Guaranteed income and basic income programs exist which meet some of the criteria for UBI. These are often implemented at the city or county level and funded through nonprofits, community foundations, and community trusts. The Stockton Economic Empowerment Demonstration (SEED) in California was led by the city’s mayor and provided 125 residents with incomes below the area median with an additional $500/month for two years21.

The City of Los Angeles began a guaranteed income pilot program in 2021, which provides selected households with a monthly $1,000 unconditional cash transfer for a year. The program is targeted to households with low incomes who have been adversely impacted by COVID-1922. Participants are offered counseling to understand the potential impact of participating on any existing benefits23. Other cities with similar programs include the People’s Prosperity Guaranteed Income Pilot Program in St. Paul, MN,24 and Hudson UP, in Hudson, NY, which is scheduled to last five years25. Alachua County, FL offers Just Income GNV, a guaranteed income program for individuals who have been incarcerated26.

Implementation Resources

MGI - Mayors for a Guaranteed Income (MGI). About MGI.

Stanford-BIL - Stanford Basic Income Lab.

World Bank Group-Gentilini 2020 - Gentilini U, Grosh M, Rigolini J, Yemtsov R, eds. 2020. Exploring universal basic income: A guide to navigating concepts, evidence, and practices. Washington, DC: World Bank; 2020.

BIEN-About - Basic Income Earth Network (BIEN). About Basic Income.

Footnotes

* Journal subscription may be required for access.

1 de Paz-Banez 2020 - de Paz-Báñez MA, Asensio-Coto MJ, Sánchez-López C, Aceytuno MT. Is there empirical evidence on how the implementation of a universal basic income (UBI) affects labour supply? A systematic review. Sustainability. 2020;12(22):9459.

2 Van Parijs 2004* - Van Parijs P. Basic income: A simple and powerful idea for the twenty-first century. Politics and Society. 2004;32(1):7-39.

3 Hoynes 2019* - Hoynes H, Rothstein J. Universal basic income in the United States and advanced countries. Annual Review of Economics. 2019;11:929-958.

4 Bidadanure 2019* - Bidadanure JU. The political theory of universal basic income. Annual Review of Political Science. 2019;22:481-501.

5 Kangas 2019 - Kangas O, Jauhiainen S, Simanainen M, Ylikännö M, eds. The basic income experiment 2017-2018 in Finland: Preliminary results. Helsinki: Ministry of Social Affairs and Health; 2019.

6 Marinescu 2018 - Marinescu I. No strings attached: The behavioral effects of US unconditional cash transfer programs. National Bureau of Economic Research (NBER). 2018: Working Paper 24337.

7 McDowell 2021* - McDowell T, Ferdosi M. The impacts of the Ontario basic income pilot: A comparative analysis of the findings from the Hamilton region. Basic Income Studies. 2021;16(2):209-256.

8 Gibson 2020 - Gibson M, Hearty W, Craig P. The public health effects of interventions similar to basic income: A scoping review. The Lancet Public Health. 2020;5(3):e165-e176.

9 WHO-Haagh 2019 - Haagh L, Rohregger B. Universal basic income policies and their potential for addressing health inequities: Transformative approaches to a healthy, prosperous life for all. Copenhagen: World Health Organization (WHO), Regional Office for Europe; 2019.

10 Aizer 2016* - Aizer A, Eli S, Ferrie J, Lleras-Muney A. The long-run impact of cash transfers to poor families. American Economic Review. 2016;106(4):935-971.

11 Hoynes 2016* - Hoynes H, Schanzenbach DW, Almond D. Long-run impacts of childhood access to the safety net. American Economic Review. 2016;106(4):903-934.

12 Brookings-Hoynes 2018 - Hoynes HW, Schanzenbach DW. Safety net investments in children. Washington, DC: Brookings Institution; 2018.

13 Campbell-Baird 2013 - Baird S, Ferreira FHG, Özler B, Woolcock M. Relative effectiveness of conditional and unconditional cash transfers for schooling outcomes in developing countries: A systematic review. Campbell Systematic Reviews. 2013;9(1).

14 Akee 2010* - Akee RK, Copeland WE, Keeler G, Angold A, Costello EJ. Parents’ incomes and children’s outcomes: A quasi-experiment using transfer payments from casino profits. American Economic Journal: Applied Economics. 2010;2(1):86-115.

15 Wolfe 2012 - Wolfe B, Jakubowski J, Haveman R, Courey M. The income and health effects of tribal casino gaming on American Indians. Demography. 2012;49(2):499-524.

16 SEED-West 2021 - West S, Castro Baker A, Samra S, Coltrera E. Preliminary analysis: SEED’s first year. Stockton, CA: Stockton Economic Empowerment Demonstration (SEED); 2021.

17 Johnson 2020a - Johnson MT, Johnson EA, Webber L, Nettle D. Mitigating social and economic sources of trauma: The need for universal basic income during the coronavirus pandemic. Psychological Trauma: Theory, Research, Practice, and Policy. 2020;12(S1):S191-S192.

18 Johnson 2021* - Johnson MT, Johnson EA, Nettle D, Pickett KE. Designing trials of universal basic income for health impact: Identifying interdisciplinary questions to address. Journal of Public Health. 2021:fdaa255.

19 BIEN-About - Basic Income Earth Network (BIEN). About Basic Income.

20 World Bank Group-Gentilini 2020 - Gentilini U, Grosh M, Rigolini J, Yemtsov R, eds. 2020. Exploring universal basic income: A guide to navigating concepts, evidence, and practices. Washington, DC: World Bank; 2020.

21 SEED-About - Stockton Economic Empowerment Demonstration (SEED). About.

22 LA CIFD-LEAP - City of Los Angeles Community Investment for Families Department (CIFD). Basic Income Guaranteed: Los Angeles Economic Assistance Pilot (BIG:LEAP). What is BIG:LEAP?

23 LA CIFD-LEAP FAQ - City of Los Angeles Community Investment for Families Department (CIFD). Frequently asked questions and answers.

24 St Paul-Prosperity - City of St Paul, Minnesota. Office of Financial Empowerment. People’s Prosperity Guaranteed Income Pilot.

25 Hudson UP - Hudson UP Universal Basic Income (UBI) Pilot.

26 JI GNV - Just Income GNV. Guaranteed income for our justice-impacted neighbors.

27 Zamora Vargas 2021 - Zamora Vargas, D. Basic Income in the United States, 1940–1972: How the ‘fiscal revolution’ Reshaped Social Policy. In: Sloman, P., Zamora Vargas, D., Ramos Pinto, P. (eds) Universal Basic Income in Historical Perspective. Palgrave Macmillan, Cham. 2021.

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