In recent decades, and especially following the 2008 crisis, we have been hearing more and more you that speak of the need of a Universal Basic Income (UBI) for everyone, just by virtue of its existence, and which would supposedly greatly improve the quality of life of all people. Aside from the economic viability of this UBI, which seems practically impossible and would lead to endless contradictions, remains to be proven that an unconditional income serve to improve really the life of the personas that they were going to receive that income, and that it also did not represent a disincentive to work. These two issues have been the subject of a recent work by economists Eva QuicklyElizabeth Rhodes, Alexander From the barDavid Broockman and Sarah Miller, where they show the effects that a guaranteed and unconditional income of $1,000 per month has about a group of 1,000 participants over a period of three years in the United States.
This work, which we can read here (to see its effects on employment) and here (to see its health effects), It took place between November 2020 and October 2023. The income transfers were divided in two ways, on the one hand, a treatment group of 1,000 American citizens who received $1,000 a month for these three yearsand a control group of 2,000 American citizens who received $50 a month for the same period of time. These citizens were selected from ten counties in Texas (including Dallas) and nine counties in Illinois (including Chicago).
The audience to whom this experiment was directed were people between 21 and 40 years oldwith an average family income in the year prior to the experiment (2019) of $29,900so the transfers for the treatment group represented approximately an increase of 40%At the start of the study, almost 60% of the participants were employed, with 17% of them working a second job. In addition to the transfers, participants also received $10 for each survey they filled out. This study has a key advantage, which is the ability to combine the experimental variation of a large unconditional cash transfer with exceptionally rich data, and this is what we are going to show now. We can classify the effects of this income in two ways: at the employment level and at the health level.
Effects at employment level:
- The transfer caused a decline in total revenue of the individuals in the treatment group of about $1,500 a year relative to the control group, excluding transfers.
- The participants of the treatment group reduced their weekly working hours by 1.3 to 1.4 hours, just like their partners did.
- It was observed a Increase in time spent on leisureas well as increases (albeit smaller) in the use of transport and finance.
- For each dollar received, total household income (excluding transfers) decreased by at least 21 cents in the treatment group.
- As for the quality of jobsno improvement is observed.
- Over the three years that the transfers lasted, the average length of the unemployment spell in the control group was 7.7 months, while the treatment group had the effect of increasing this duration by 1.1 months. That is, the group that received the 1,000 dollars a month was unemployed longer than the group that received the $50.
- It was observed that participants in the treatment group had more interest in the business activities and were willing to take more financial risks.
Health effects:
- No increase in time spent was observed childcare, physical exercise, job searching or self-improvement.
- In terms of health, the cash transfer resulted in significant improvements, but short-term in stress and eating habits, and increased use of hospital and emergency services, and an increase in medical spending of approximately $20 per month in the treatment group compared with the control group. However, no effect was observed on several measures of physical health, as well as no improvement in mental health, sleepor physical activity.
In summary, we have seen that at the level of employment and income this transfer did not even improve employment, since the participants preferred to make use of leisure time, reducing their weekly working hours. It is striking that the total income of the treatment group was $1,500 lower than that of the control group, since the former was the one that received $1,000 per month. This This is explained by the fact that the treatment group preferred to use unemployment benefits rather than look for a better job or start a business.. At the health level, we have been able to see how improvements occurred in indicators such as stress or nutrition, although they were not long-lasting. Mental health, sleep or physical health did not change significantly for the better.
Therefore, if we stick to this ambitious and consistent experiment, we see that the unconditional rent of $1,000 per month for three years Not only has it not improved the health of those who have received it, but it has also caused a disincentive to employment, since its recipients preferred to have less annual income in order to work less or not work. This work provides further evidence to rule out the implementation of a UBI for everyoneeven if in the minds of its promoters it may seem like a wonderful idea.
