Where Basic Income is Already Happening
If you provide money to the extreme poor, they will be at a minimum… less poor. — by Michael Faye and Ian Bassin
Over eight years ago, we started working on GiveDirectly to provide capital grants to the world’s poorest. It seemed simple, right? If you provide money to the extreme poor, they will be at a minimum… less poor. And they certainly know more about their needs than we do sitting in an office half a world away (just think how hard it is to buy gifts for family at Christmas). At the time, we were called “naive,” and The New York Times asked if what we were doing was “nuts.” After all, everyone remembers the old adage “give a man a fish, feed him for a day; teach a man to fish, feed him for a lifetime.”
Well, today much of that discussion has changed. Roughly 130 low- and middle-income countries have an unconditional cash transfer program. World Bank studies of these programs have consistently found that recipients don’t drink away their transfers and, if anything, their spending on vices like tobacco and alcohol go down. An independent evaluation of an initial GiveDirectly program found that recipients’ incomes increased by about $270 per $1,000 grant after the transfer had ended. The evidence behind cash has prompted the Secretary General of the United Nations to argue that it should be the “default” form of humanitarian assistance.
This growing evidence base on cash has coincided with dissatisfaction with the current social safety net across the globe, and a rising fear of the potential impacts of automation and artificial intelligence. Not surprisingly, an old idea of a specific form of cash transfers — giving money to everyone to meet basic needs in perpetuity, colloquially known as a universal basic income — has become the subject of policy discussions across the world in countries as far ranging as India and Namibia, and has captured the public imagination as well (as can be seen in this Google trends chart).
We’re excited to see cash transfers take center stage, and to have governments moving beyond the question of whether to do cash to “how to do cash?” In keeping with our organizational goals and philosophy, we’re eager to help answer key questions about basic income through rigorous assessment. So this Fall, we launched a large-scale pilot of a basic income. An entire village is already receiving transfers, and dozens more start receiving in early 2017. Ultimately, we’re aiming to transfer capital to 30,000 people in rural Kenya; and like the original GiveDirectly project, we’ll be evaluating the impact of these transfers through a randomized controlled trial, evaluated by leading development economists Abhijit Banerjee and Tavneet Suri and former Chair of President Obama’s Council of Economic Advisers, Alan Krueger.
We intend to answer what happens when you give people money for a long time. How does that compare to providing people just temporary support, or a one-time injection of capital? While we don’t expect this will answer all questions for all geographies, we do expect it to answer basic questions like whether there are deleterious consequences of guaranteeing people enough cash to live on over the long term, no strings attached. Will people stop working or drink it away (all the short-term cash transfer evidence says no)? Will they take greater risks, start business, spend time furthering education or care taking? Will people consume more or invest more?
Just as early studies on cash transfers in Brazil and Mexico spurred momentum behind short-term cash transfers, we hope that what we do in Kenya provides a jumping off point for moving policy debates on basic income to the next level.
As President Obama recently noted, we may need to reevaluate our social compacts and make sure they’re fit for the times. We think that will require not just rigorous research, but public engagement and discussion. That’s why we’ve opened our project to public participation — unlike most innovative policy research, our pilot is crowd-funded. You can come to GiveDirectly.org and provide a basic income for one person currently living in poverty for $1/day and then follow how families and communities use the funds. Together, we’ve raised more than $23 million already — we’ve got $7 million to go and hope you’ll join now. At worst, we’ll provide transformative help to some of the poorest families on the planet; at best, we could light the way towards the economic policies of the future.
