Why I’m dedicating my year to Universal Basic Income
This year, I left my job to pursue study of Universal Basic Income. I don’t have any external financial support for this project, and so I’m working off savings. It’s the only time in my career that I’ve been without a paycheck, an office, and a boss. I realize that it’s a huge luxury to be able to give this commitment to the idea, and I know that most others simply can’t do it (without a basic income!). I encourage you to stay aware, ask questions, and to help spread the message; every voice counts.
For me, this is a big change, and it’s more than a little scary at times, but over the last several years it has become increasingly clear to me that we need significant changes to our social support system, and that we aren’t yet quite sure what those should look like. Now is the time to put forth big ideas, air them in a public debate, and collectively find the best way forward for ourselves, the future of work, and our economy.
For those new to the idea, Universal Basic Income is a social safety net concept where the government guarantees a minimum standard of living for all citizens via direct cash payments. It’s not means-tested, so all citizens receive the same amount regardless of income level, and it’s not tied to work status (differentiating it from higher minimum wages). There’s significant debate about the level it should be set at and how to pay for it, but a UBI conceptually would be enough to cover basic necessities such as housing and food (though there’s value in sub-basic incomes as well — the same concept, but with payments not high enough to be sufficient to cover all basic necessities).
There are a lot of different ways to build a social safety net, and I don’t yet know if UBI is the best way to do it for our world today; that’s what I’m hoping to find out. But, it’s very appealing on first glance. I was attracted to the idea for a few key reasons:
1. It’s moral, ensuring a minimum standard of living for all citizens, but entrusting individuals with managing their personal spending decisions.
2. It’s non-distortive, meaning it fits within the market structure, and specifically avoids the income cut-offs in some current programs that can reduce the marginal incentive to work.
3. It’s easy to administer, with all citizens receiving it regardless of income level or working status.
In addition to guaranteeing a minimum standard of living, there are a lot of other potential positives for the economy. A stronger safety net will also provide people with the security to found new businesses and explore new opportunities, and could encourage migration to cities with low costs of living but where job markets have struggled. Wage levels are also likely to rise when no worker has to face abject poverty and accept a ‘desperation wage’.
There are also potential downsides, and my research focus is just as much on the negative effects as the positive ones, with the biggest potential issues being costs (and the impact of the higher taxes likely necessary to finance this), and the potential downward shifts in labor force participation, which in a worst case could constrict the economy’s ability to grow.
The goal is to keep an open mind to all the ideas and test them, using everything from direct pilot programs to thought experiments and economic modeling. Data from historical unconditional direct payment systems will be invaluable, but with a limited history of such programs, researchers will also have to rely on imperfect data substitutes to answer some of our questions, too. The overall goal of the project is to develop a clear-cut set of policy recommendations, along with specific forecasts for what the impacts will be in different parts of the economy.
For those of you that read a lot about UBI, you’ll notice I’ve made it uncommonly far in this article without mentioning the robot revolution (self-driving cars, automated checkouts, etc.) and other reasons that we need this. There are a lot of people writing great articles about why UBI is needed and how it can prepare us for the changing future of work. I’m certain to add a few articles to that crowded marketplace of ideas, but mostly just to echo and amplify the good work that’s already being done there. Instead, my job is to rigorously test the ideas from the perspective of an economist and data scientist, doing the nuts and bolts analysis required to put forth an economically sound proposal that gives the best chance of success to maximize social good and prepare for an uncertain future.
UBI has made major progress in the last several years, with a national referendum in Switzerland last year receiving significant support, and real-world pilots planned or currently under progress in areas including the Netherlands, Finland, Kenya, and Oakland, CA. But, we’re still early in the movement, and we need people working on all sides. We need visionary writers and artists to show us what the future might hold, we need analysts and policy wonks to figure out how it could work within our economic and political systems, and we need organizers and influencers to spread the messages. We even need the skeptics (and this still includes me, too!), helping us all to think about UBI and its effects from a variety of perspectives.
I encourage you all to engage, challenge, and spread the message by talking to your friends, sharing these articles, and airing your thoughts. Reach out to me on twitter @stefanhilts if you want to ask questions, raise ideas, collaborate, or just to hassle me for some position. It’s going to take a movement to make progress on this, and it’s going to take you to make a movement.
I’ll be digging deeper into the details on all my future articles, so follow me and keep an eye out!
-Stefan Hilts
