The idea that giving money to poor households as a way to lift them out of poverty is an unconventional one. Proponents of the 'Universal Basic Income' (UBI) argue that given the deep inequalities that exist in this world, paying everyone a certain amount of money gives those with too little enough to get by. Detractors, however, argue that giving people money for nothing effectively removes the 'motivation to work'.
UBI has become a hot topic, with some arguing that it is a form of solutionism that doesn't address the root causes of poverty, which often include unequal resource distribution and poor planning.
While evidence suggests that unconditional cash transfers are better than conventional welfare at improving the lives of people living in poverty, there is little research and empirical evidence on how and when UBI could best be used. As a result, there is limited data available on such programmes. The existing evidence comes from several small-scale pilots, but no study to date has been conducted with sufficient size, rigour, timescale, or universality to truly test the impact of a full-fledged UBI program.
Collecting such data would need a regular, long-term cash transfer involving meaningful amounts of money over a large area, and with sufficient controls in place.
There have been a number of high-profile investments into various UBI initiatives, the latest of which a nonprofit grant in the amount of US$493,000 from eBay co-founder Pierre Omidyar's Omidyar Network to GiveDirectly, one of the leading organizations in the field of unconditional cash transfers.
GiveDirectly is running a 12-year UBI pilot in Kenya, the most ambitious experiment of its kind, involving more than 26,000 people in 200 villages in Kenya.
6,000 of these participants will receive payments of $0.75 per day, about 80 Kenya shillings, or roughly half the typical adult income in rural Kenya, for 12 years.
This experiment is built on the belief that empowering people frees them to better themselves, their families, and their communities. In these programs, low-income individuals who receive cash benefits have shown improvements in nutrition, household income, the status of women, school attendance, and a range of other positive indicators.
Kenya provides an interesting testing ground for this experiment, especially given the high penetration of mobile money services, meaning that the experiment is more inclusive and transparent than if only the banking system was used.
GiveDirectly has partnered with economists at Princeton and MIT to run this UBI experiment, and the data collected will help answer critical questions on the impact of long-term, “no-strings-attached” universal basic income, such as:
- How will UBI shape incentives for risk-taking, entrepreneurship, investment, and consumption?
- Would beneficiaries stop working? Would they take this opportunity to get trained for better work?
- Would they use the money to gamble or buy alcohol and drugs? (existing evidence strongly suggests the answer is “no”)
- Does lump sums versus regular payments impact recipients’ decision-making and social outcomes?
- What are the implications for education, health, and other public needs?
- What do these learnings mean for future policy and aid programs?
The GiveDirectly project is taking donations, having reached US$23.7 million of its US$30 million goal. Omidyar Network's involvement will include learning insights from this experiment and helping to disseminate them in order to shed some light on the discussions around the topic of universal basic income.
They will also look for opportunities to fund other studies which look into answering some of the questions raised around job displacement by technological change.
GiveDirectly has initiated cash transfers in one village in Kenya already. As the project continues, it will yield insights that will provide evidence-based arguments to shed light on the discussions around the future of work and poverty alleviation policies.