The Headline

“Universal income study finds money for nothing won’t make us work less” - Joshua Howgego/ New Scientist  February 8, 2019

Background: The Basic Income Study

On December 31, 2018, the Finnish government concluded a two-year experiment in which 2000 unemployed people were given a guaranteed, no-strings-attached payment each month. The study also included a control group of 173,000 people receiving conditional unemployment benefits. The basic income payment was 560 euros ($635) per month, which corresponded to the monthly net amount of the basic conditional benefits received by the control group. The key difference between the basic income and control groups was that the latter’s benefits could be reduced if they received additional income from a job, while the former’s basic income payments stayed the same regardless of additional income or employment status.

Preliminary Results

Preliminary results were published earlier this month. These results are based on government data from 2017 and telephone interviews during the last few months of 2018. Specifically, researchers reviewed income and employment data collected by government agencies and interviewed 586 persons from the basic income group and 1047 persons from the control group. It’s important to note that researchers actually contacted many more individuals than were ultimately interviewed: 1869 from the basic income group and 5161 from the control group.. The preliminary report doesn’t discuss why over two-thirds of those contacted did not complete interviews. Nor does it address potential differences between individuals who did complete interviews and those who did not. For instance, might basic income participants who completed telephone interviews have felt more positive about the program and their lives than participants who declined to be interviewed or simply did not return calls? Had these respondents been motivated to give a rosier picture of their state of mind*?

Now about that headline: “Universal income study finds money for nothing won’t make us work less”. This refers to the government data that the basic income and control groups both worked around the same number of days in 2017. That would be 49 days. Somehow I don’t find a willingness to work an average of one day a week over the course of a year all that reassuring. Besides, Universal Basic income (UBI) advocates often argue that UBI recipients would actually work more than if they received unemployment benefits. The basic argument runs as follows:

“A UBI would, by definition, actually remove one of the major existing incentives for not working: unemployment benefits … Insofar as it would be paid unconditionally, there would be no extra subsidizing incentive to opt for unemployment over work.” - The Wisdom of a Universal Basic Income by Johnny Hugill and Matija Franklin/Behavioral Scientist October 19, 2017

Why didn’t the basic income participants work more in 2017? After all, the basic income benefit was unconditional and was only $635 a month. The researchers don’t address this question in their preliminary report, but they do report on the personal income of the basic income and control groups. It turns out that even though both groups received roughly the same level of benefit, the basic income group had a higher level of personal income, per the government data. That means the basic income participants received more income from other sources than the control group. In addition, 60% of the basic income respondents reported they were “living comfortably” or “doing okay” financially, compared to 51% of the control group. Perhaps that’s why the basic income group didn’t work more.

In the telephone survey, basic income respondents reported greater life satisfaction and less stress** than the control group. Then again, according to both objective and subjective measures, the basic income group was financially better off than the control group. Did the researchers control for differences in financial status when looking at differences in emotional well-being? No they did not.

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* Two words: Demand Characteristics, a tendency of research subjects to anticipate what researchers want and adjust their behavior (including self-reports) as a result. Demand characteristics are weaker when researchers are blind to the experimental condition of subjects. In the case of the Finnish study, that would mean the telephone interviewers would have been unaware whether they were speaking to someone in the basic income or control group. Unfortunately, the preliminary report does not address whether the interviewers were blind to the condition of their interviewees, nor whether other efforts were made to control for demand characteristics (such as questionnaires asking participants to guess the study’s hypotheses, such as “Basic income recipients will report greater life satisfaction than the control group”).

** UBI advocates argue that conditional benefits are inherently stressful due to having to engage, or report engagement, in various activities, like looking for work. However, per the preliminary report, most of the basic income group received other types of government benefits and so had to deal with bureaucratic requirements anyway. Perhaps these other benefits are the reason the basic income group had more income than the controls.

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Reference:

Olli Kangas, Signe Jauhiainen, Miska Simanainen, Minna Ylikännö (eds.) The basic income experiment 2017–2018 in Finland Preliminary Results Reports and Memorandums of the Ministry of Social Affairs and Health 2019:9; Ministry of Social Affairs and Health, Helsinki 2019 http://urn.fi/URN:ISBN:978-952-00-4035-2