Universal basic income (UBI) provides all citizens a set amount of money monthly to cover basic needs like food and shelter. A document discusses UBI, including its features of being periodic, a cash payment, paid individually and universally without conditions. It notes UBI's pros like reducing poverty but cons like potential high costs. The document summarizes a UBI experiment in Stockton, CA that found recipients spent on necessities and were more likely to work full-time. It reflects on experiments in other places and debates on UBI's current relevance, including discussions of its "revival" amid the COVID-19 pandemic.

1. REMEDIES TO ECONOMIC
INEQUALITY – UNIVERSAL
BASIC INCOME (UBI)
INEQUALITY (SPRING 2023)
M A Y 2 S T , 2 0 2 3

2. WHAT IS
UNIVERSAL
BASIC
INCOME?

3. UNIVERSAL BASIC INCOME
MAIN IDEAS
• Pay every individual a set amount of money
monthly to cover basic needs such as food,
shelter and education
• No strings attached (“unconditional”)
• Embraces the idea of everyone having right to
a basic minimum income
• Universal Basic Income is not a new idea. The
concept has been around for over 500 years,
with supporters including Martin Luther King
Jr., Richard Nixon and Bill Gates.

4. UNIVERSAL BASIC INCOME
FIVE BASIC FEATURES
1. Periodic: It is paid at regular intervals, not as one-off grant (usually, monthly)
2. Cash payment: It is paid in an appropriate medium of exchange, allowing those who
receive it to decide what they spend it on (not in kind nor vouchers)
3. Individual: It is paid on an individual basis (sometimes, some conditions based on
household characteristics)
4. Universal: It is paid to all, without any test (alternative: “means-tested” solutions)
5. Unconditional: It is paid without a requirement to work or demonstrate willingness to work

5. UNIVERSAL BASIC INCOME
WHY DO WE NEED IT?
US is so wealthy, but still has:
•The highest Infant mortality/child
poverty rate in the developed world
•Shorter/sicker lives
•The highest incarceration rate
•Lowest rates of career mobility
and opportunity of 10 richest
countries in the world
•So many citizens living in poverty
US is one of the
richest countries on
Earth.
US has more
billionaires than
anywhere on Earth.

6. UNIVERSAL
BASIC
INCOME
PROS VS. CONS
Pros
•Helps eliminate deep
poverty & poverty among
children
•Opportunities for
entrepreneurship
•Lets people go back to
school
•Encourages more art
•Spend more time with
families
•Volunteering in
communities
•More productive,
healthier, happier people
•Give people basic
security and more control
over their lives
•Improvement in financial
literacy and inclusion
Potential Downsides
•Costs a lot
•“Conspicuous spending”
à spending on wasteful
activities
•Might lead some people
to stop working (elderly,
young, parents of little
kids)
•Might create inflation
•Push back against US
deep seeded belief that
"nobody should
get something for
nothing"
•Gender norms may
regulate the sharing of
UBI in households
•Challenges/threatens the
idea of meritocracy

7. COMMON OBJECTIONS

8. REFLECTION
• In the US, advocates of Universal Basic Income want the government to send people
monthly payments of $500-$1000 per month, with no strings attached.
• Critics of Universal Basic Income programs worry that if people receive monthly income
from the government, they may not want to keep working (distorted incentives).
• What do you think?

9. HOW CAN WE AFFORD UBI?
• Existing bureaucratic welfare program spending
• Consumption taxes (VAT)
• Financial transaction taxes
• Tax expenditures (subsidies, deductions)
• Carbon taxes
• Patent fees
• Income and property taxes
• Savings from reduced governmental costs (e.g., health, crime)

10. STOCKTON ECONOMIC
EMPOWERMENT DEMONSTRATION
(SEED)
• This program was founded in February 2019 by
then-Mayor of Stockton California Michael Tubbs
and funded by donors.
• SEED gave 125 people living in neighborhoods at or
below the city's median household income an
unconditional monthly stipend of $500 per month.
• Critics worried the program would eliminate the
incentive to work, as well as endanger certain
existing safety net programs.

11. SEED OUTCOMES
• Individuals spent most of the money on basic
needs, including food, merchandise, utilities
and auto costs, with less than 1% going
toward alcohol and/or tobacco.
• People were able to stretch resources to
cover needs like caring for older or sick
family members, school or sports supplies
and transportation to and from doctor's
appointments that they might otherwise
have skipped.

12. • The monthly income increased
recipients' full-time employment by 12
percentage points.
• These payments proved to help people
work by giving them the stability they
need to find and take a new job.
• Researchers argue that this money
created capacity for goal setting, risk
taking, and personal investment.
SEED OUTCOMES

13. • Former Mayor Tubbs explains, "So many of the
illnesses we see in our community are a result of
toxic stress and elevated cortisol levels and
anxiety, directly attributed to income volatility
and not having enough to cover your basic
necessities. That’s true in the public-health crisis
we’re in now.”
• The cash payments doubled people’s ability to
pay unexpected bills, pay down their debts, help
their families and friends – thus providing
financial stability to the broader community.
SEED OUTCOMES

14. STOCKTON
UNIVERSAL
BASIC
INCOME

15. REFLECTION
• The outcomes from the SEED program found that the people who received
the money were actually more likely to get and keep jobs.
• Why do you think that is?
• May impacts of UBI differ across different contexts? e.g., stronger in
poorest communities/countries?

16. WHAT HAPPENED IN SWITZERLAND
• In 2016 Switzerland voted on a referendum to provide basic income to all Swiss citizens, becoming the
first country to contemplate the implementation of UBI
• https://www.bbc.com/news/world-europe-36454060
• Results: 77% opposed the plan; 23% backed it
• Supporters had suggested a monthly income of 2,500 Swiss Francs ($2,555) for adults and 625 SF for each
child
• The amounts reflected the high cost of living in Switzerland à unclear how the plan would have affected
those on higher salaries
• Supporters: “Since work is increasingly automated, fewer jobs are available for workers”
• Critics: “Disconnecting the link between work done and money earned would be bad for society"

17. BASIC FACTS FROM EXPERIMENTAL
EVIDENCE
• https://www.economist.com/finance-and-economics/2021/03/02/might-the-pandemic-pave-
the-way-for-a-universal-basic-income

18. THE CANADIAN EXPERIMENT
• Mincome: “Manitoba Basic Annual Income Experiment” à Canadian social experiment conducted in
Manitoba in the 1970s
• Randomized Controlled Trial (RCT) in the city of Winnipeg (main site) and in rural Manitoba (dispersed
site), with a pilot site in the town of Dauphin (saturation site)
• Randomly allocated lower-income households to one of seven treatment groups and a control group
• Families in the treatment groups received an income guarantee or minimum cash benefit according to
family size that was reduced by a specific amount (35, 50 or 75 cents) for every dollar they earned by
working
• No substantive analyses of outcomes at the time
• Subsequent analyses demonstrated both positive (less poverty) and negative impacts (reduced LFPR)

19. THE CANADIAN EXPERIMENT
https://www.bbc.com/worklife/article/20200624-canadas-forgotten-universal-basic-income-experiment

20. CURRENT RELEV
ANCE

21. COVID-19 AND UBI “REVIV
AL”
• Spanish case à nationwide (your reading) à one of the world’s biggest experiments

22. COVID-19 AND UBI “REVIV
AL”

23. THE KENYAN CASE