Is Universal Basic Income Effective? Not Really

Last year, I wrote about the OpenResearch Unconditional Income Study (ORUS), an experiment in which lower-income Americans were given $1,000 a month for three years—a short-term test run of proposals for a universal basic income (UBI). The results were pretty much what common sense would predict: relative to a control group (paid $50 a month for their continued participation), the subsidized group worked somewhat less, devoted a bit more time to leisure activities, and spent more money on health care without seeing significantly improved health outcomes. 

A new analysis of the same experiment evaluates the money’s effect on parents and kids, and a growing body of similar experiments helps to round out the picture. Once again, the upshot is that, while free money can be helpful for those receiving it, even relatively large payments don’t seem as transformative as UBI boosters have hoped. Some side effects may even be harmful. 

Start with the new study, published as a working paper through the National Bureau of Economic Research. 

The least surprising good news is that when parents got more money, they spent more, including on some undeniably important things. Child-related spending rose about 13 percent. Parents also spent $43 per month more on food and $22 per month more on medical care. They were also more likely to move, though not necessarily to higher-quality homes and neighborhoods. 

Recipients also seemed to become slightly better parents, at least according to a battery of survey questions developed to measure parenting quality. (The questions ask, for instance, how much supervision children receive.) Relative to the control group, the $1,000 group scored about 0.05 standard deviations better. This effect would, for example, take the median parent, at the 50th percentile of parenting quality, and nudge him up to the 52nd percentile. 

Disappointingly, the extra attention and spending did little to improve outcomes. School performance didn’t improve for K–12 students. College enrollment and completion weren’t measurably affected, either, though few children in the study were of college-going age. Oddly, despite the (tiny) improvement in parenting quality, parents were more likely to report developmental and stress-related problems in their kids. The authors speculate that this might have been the result of parents being more attentive and thus more likely to notice such things. The subsidy also didn’t seem to make recipients have more kids or want to have more. 

This study appears at a time when universal basic income proposals are receiving growing interest from across the political spectrum. Some conservatives and libertarians would like to give everyone a flat payment to replace the entire welfare state. Some liberals would like to give everyone money on top of the welfare state. Some futurists worry that a UBI might be necessary in a world where AI and other technologies take all the jobs. 

Stanford’s Basic Income Lab tallies more than 160 UBI projects in the U.S. alone, though many are fairly small in terms of sample size. As studies of these projects continue to trickle out, they will fill in the picture. 

But existing research, especially the larger randomized trials, seems mostly in line with ORUS: free money is nice—you shouldn’t turn it down—but it doesn’t have the large and clear positive effects one would want out of an expensive public policy. 

A few examples. In Compton, recipients of a $500 monthly payment enjoyed lower debt, but those working part-time at the beginning of the study stopped working in significant numbers. A $400 monthly payment in Chelsea, Massachusetts, increased food spending and did not measurably reduce work, but it failed to produce results for the research team’s “primary downstream outcomes”—namely self-reported health and child school attendance. The Baby’s First Year pilot, which gave $333 a month to new low-income mothers in four cities, reduced mothers’ work at the height of the pandemic, though not beyond that period. More importantly, after four years, it produced “no statistically significant impacts” on kids’ outcomes, including language, social-emotional problems, and pre-literacy. Meanwhile, studies with sunnier results often suffer from methodological problems or skewed presentation of insignificant findings, as the No-Spin Evidence Review has been diligently documenting. 

UBI boosters deserve some credit for thinking big—and for testing their idea scientifically, at great cost. Unfortunately, the results appear too lackluster to justify widespread adoption, at least until AI really does take everyone’s jobs. 

  

Phot by krisanapong detraphiphat via Getty Images