Finland’s experiment in giving people no-strings-attached money was too oddly constructed to take much from it, but one thing is clear: Having more money is good for people’s well-being
Asglobal economies become more unequal, and as the incomes of working people have stagnated to the point of barely affording them a decent livelihood, a small groundswell of support has developed for one revolutionary solution for evening out wealth and opportunity: a universal basic income (UBI), which is a flat payment delivered to all members of a community, regardless of means or employment status.
The idea certainly sounds good on paper. But does it work? Around the world, multiple trials are trying to answer that question, but none have fully embraced the universal part of the UBI: Y Combinator’s planned pilot in Oakland, California, set to launch this year, will target only low-income people. A program in Stockon, California, will only give it to select families. The Magnolia Mothers’ Trust in Jackson, Mississippi, serves low-income black mothers. Ontario’s basic income, which was canceled last year by the newly elected conservative government but notable for its large scale, only served people at the lower end of the economic spectrum. Another trial in Finland just finished, and while it was designed in a way that makes it even less comparable than the others to a true UBI, it still has some interesting lessons.
Finland’s two-year trial, which ran in 2017 and 2018, made plenty of headlines as a test of basic income, but deviated the most of any of the trials from implementing anything close to a true basic income, according to Ioana Marinescu, professor of economics and labor-market specialist at the University of Pennsylvania. The main difference: The monthly €560 (or $630) payment was only available to unemployed people, because its main goal was seeing if a basic income prompted more people to enter the workforce. A preliminary report on the first year of the trial found that it did not.
This, however, is not a cause for hand-wringing over the potential of UBI. Pushing people to work is not, after all, one of the aims of a true UBI. As Matt Bruenig, founder of the progressive think tank People’s Policy Project told Fast Company last year, the Finnish trial acted more like an incentive-based policy designed to push people into the labor market.
But the reason it failed in doing that was because the structure of the basic income program was too conservative to actually incentivize people to work: If you are unemployed in Finland, you get a stipend to cover expenses in place of income. “But if you take a job, you lose those benefits,” Marinescu says. But the basic income payments, which were administered to 2,000 unemployed Finns (and measured against a control group of 173,222 unemployed people), were not conditional: If someone got a job, they’d continue to receive them.
According to the Finnish government’s report, people who received the basic income payments still used around 83 percent of the standard unemployment benefits they received before. The basic income payment was not enough to totally replace those unemployment benefits, and if people receiving the monthly stipends took a job, they’d lose access to the assistance programs they still depended upon.
As the basic income advocate Scott Santens notes in his analysis, this mostly comes down to kids. The unemployment benefits increases that families with children usually receive were not accounted for in the basic income, and as such, people with kids still had to apply for unemployment assistance to cover that gap. “Why would we expect a significant bump in employment . . . if people are still largely punished for employment through loss of benefits?” he writes.
So can we draw any meaningful conclusions about what a true, well-structured UBI would actually do from Finland’s trial?
Yes: In terms of intangibles like stress levels, trust in government, and overall well-being, even Finland’s poorly designed basic income worked wonders. Compared to the control group, monthly payment recipients reported a 37 percent reduction in depression levels, a 22 percent improvement in confidence for their futures, and an 11 percent bump in faith in politicians. These results, Marinescu says, track alongside findings from other studies examining the effects of cash bonuses on people. People living on Native American reservations who receive stipends from casino profits, for instance, report lower levels of stress and depression. “There’s a broadly consistent effect of feeling financially safe,” Marinescu says.
It’s not accurate to say that Finland’s trial was a success. Its goal was conservatively motivated and misaligned with what UBI sets out to accomplish. But a true UBI ultimately aims to make life better for the people who receive it. Finland’s program began to accomplish that, and it’s not hard to imagine what kinds of benefits a more robust and considered basic income program could deliver.