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Photo: Fiona Graham, CC BY-SA 2.0, via Wikimedia Commons
Most people keep working. Stress falls, children in families lifted out of poverty do better, and in poor villages the money spreads to neighbours. The largest recent US study also found people worked slightly less, and its wellbeing gains faded.
The usual objection to unconditional cash, often called basic income, is that people will stop working. It is a fair question, and it no longer needs to be argued in the abstract. Governments, charities and researchers have paid real money to real people, often with a randomly chosen comparison group, and measured what happened.
Every year Alaska pays every resident a dividend from the Alaska Permanent Fund, a public investment fund built from oil revenue. It is universal, permanent and has run for more than 40 years.
Economists Damon Jones and Ioana Marinescu compared Alaska with similar states. The dividend had no effect on employment overall. Part-time work rose by 1.8 percentage points, about 17%. Their explanation: people with extra money spend it locally, which creates jobs that offset anyone who works less.
Finland's government picked 2,000 unemployed people at random and paid them €560 a month, tax-free, for two years, whether or not they found work. A similar group stayed on ordinary unemployment benefits.
The money did not make people idle. It also did not transform their job prospects.
The Stockton Economic Empowerment Demonstration gave 125 randomly selected residents $500 a month for two years. In February 2019, 28% of recipients held full-time jobs. A year later, 40% did. In the comparison group the share rose from 32% to 37%. Recipients also showed less depression and anxiety.
The sample is small. Researchers said some people used the money to cover the gap while they trained, took an internship or applied for better jobs.
The charity GiveDirectly makes large one-off cash transfers to poor households in rural Kenya. Randomised studies found households spent the money on food, assets and businesses, and reported better psychological wellbeing. A later study of the whole local economy found each dollar transferred generated about $2.40 in local economic activity, with little rise in prices. Neighbours who got nothing gained too, because recipients spent the money with them.
In the 1990s a casino opened on Eastern Cherokee land in North Carolina, and every tribal member began receiving a share of the profits. Researchers happened to be following children in the area for a mental health study already. They could compare children whose families were lifted out of poverty with children who stayed poor and children who were never poor.
Among children whose families escaped poverty, psychiatric symptoms fell by about a third, from 4.28 to 2.90 on the study's scale. They reached the level of children who had never been poor. Children in families that stayed poor showed no such fall.
The largest recent US trial paid 1,000 low-income people $1,000 a month for three years, in two states, against a comparison group paid $50 a month. Its results are less flattering.
Where each trial ran shapes what it found. Finland paid people who were out of work, in a country where losing a job doesn't mean losing your home or your doctor, and for them the cash made taking work safer. The US trial paid low-income Americans, in a country where health cover usually comes through an employer and little catches you if you fall. There, many people work every hour they can get because stopping is dangerous. Given a cushion, some took an hour or two back. Time off, for someone who has never been able to afford it, isn't the same as laziness.
An honest summary has to hold both. Cash does not make most people stop working. It can make some work a little less. How much depends on the amount, who receives it, and what else is going on in their lives.
| Question | What the evidence says |
|---|---|
| Do people stop working? | No. Effects range from slightly more work (Finland, Stockton) to none (Alaska) to slightly less (US $1,000 study). |
| Is it wasted? | In Kenya, spending went to food, assets and businesses, and lifted neighbours. |
| Does it help children? | The Cherokee study found clear falls in children's psychiatric symptoms when families left poverty. |
| Does wellbeing improve? | Yes in Finland and Stockton; in the US $1,000 study the gain faded. |
No country yet pays a permanent, universal income large enough to live on. Alaska's dividend is universal and permanent but small; the others were temporary or limited to one group. What the evidence rules out is the claim that cash with no strings makes most people give up work.
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