There has been lots of discussion recently about the idea of a basic income for all citizens. Largely, this discussion has been in response to alarmist headlines due to the rise of artificial intelligence and machine learning, and projections about the impact these new technologies will have on employment. Putting aside those projections, which I have commented on previously (most recently, Strategic CSR – Jobs and Strategic CSR – Robots), there remains the issue of whether a basic income is worth exploring as effective public policy, especially given the potential cost. All the evidence I have seen suggests we could not afford to do it in a way that achieves the social welfare benefits that this policy is intended to deliver. The article in the url below adds some solid empirics to that debate by describing the results of a two-year study in Finland. As might be expected with such a complex policy idea, the results are mixed:
"Finland — the world's happiest country last year, according to the United Nations — is exploring alternatives to its social security model. About 2,000 Finns, chosen randomly from among the unemployed, became the first Europeans to be paid a regular monthly income by the state that was not reduced if they found work."
And the results are now in:
"Finland's minister of health and social affairs … said the impact on employment of the monthly pay check of 560 euros ($635) 'seems to have been minor on the grounds of the first trial year.' But participants in the trial were happier and healthier than the control group."
And, in this context, "happier" means across-the-board in a much better place:
"The chief researcher … said that compared with the control group, 'The basic income recipients of the test group reported better well-being in every way.'"
It seems that the main benefit, according to participants reported in the article, is the security that the commitment of the basic income provided. Although the total amounts of money they received were not very much higher than they were otherwise getting under Finland's generous welfare payments, not having to deal with the government bureaucracy and knowing the money was committed for two years, helped in many ways:
"Sini Marttinen, 36, a former I.T. consultant, had been unemployed for nearly a year before 'winning the lottery,' as she described the trial. Her basic income gave her enough confidence to open a restaurant with two friends. 'I think the effect was a lot psychological," she said. 'You kind of got this idea you have two years, you have the security of €560 per month,' she said, adding: 'It gave me the security to start my own business.' Her income rose by only €50 a month compared with the jobless benefit she had been receiving, 'but in an instant you lose the bureaucracy, the reporting,' Ms. Marttinen said."
Other participants reported being given the freedom to be more creative in their day-to-day lives (e.g., via hobbies). Unfortunately, the main purpose of the policy was to combat unemployment, and a basic income is a very expensive (and not particularly effective) way of achieving that:
"The higher taxes that the Organization for Economic Cooperation and Development says would be needed to pay for basic income schemes might also be off-putting for voters. In a review of the Finnish scheme last year, the organization warned that implementing it nationally and cost-neutrally for the state would imply significant income redistribution, especially toward couples from single people, and increase poverty."
The key, of course, is what is the correlation between the more abstract relationship between happiness and social welfare, versus the more concrete relationship between employment and social welfare. In other words, if someone is happy but unemployed, are they a more 'productive' member of society than someone who is employed (even if they are less happy as a result)? This discussion is particularly appropriate in a U.S. context, where the constitution guarantees a right to the pursuit of happiness. But, is happiness all it is cracked up to be, especially if it is reduced to an individual pursuit that comes at the cost of social cohesion?
Take care
David
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Finland's Basic Income Trial Boosts Happiness, but Not Employment
Finland's Basic Income Trial Boosts Happiness, but Not Employment
By Saabira Chaudhuri
January 25, 2019
The Wall Street Journal
Late Edition – Final
B1
