The central pillar of my campaign for president of the United States in 2020 is the Freedom Dividend, a form of universal basic income (UBI) that gives every American adult over the age of 18 $1,000 per month. I believe in the transformative power of the Freedom Dividend so much that I’m personally financing two — one in New Hampshire, and one in Iowa.
These two trials are too small to draw strong conclusions, though, so I’ve been following the various UBI trials around the world, and I wanted to share my thoughts on the recent data released by the Finnish government on their trial. While the current results are preliminary, covering only the first year, the results are worth examining.
First, a quick summary of the trial itself. A total of 7,000 individuals from those receiving unemployment benefits were selected to participate: 2,000 in the test group (receiving basic income) and 5,000 in the control group (not receiving basic income). The chosen income level for the experiment was 560 euros per month. This amount closely matches monthly unemployment allowances and the labor market subsidy. Also, the participants were allowed to continue to receive their unemployment benefits, whether they were selected to receive the basic income or not.
Despite limitations on the study, the results on the wellbeing for those receiving the basic income are very promising:
• Physical and mental health improved by 17 per cent
• Depression decreased by 37 per cent
• Stress decreased by 17 per cent
• Life satisfaction improved by 8 per cent
• Trust in other people improved by 6 per cent
• Trust in politicians improved by 5 per cent
• Confidence in the future improved by 21 per cent
• Confidence in the ability to influence society improved by 22 per cent
• Financial security improved by 26 per cent
These are the measurements that matter most, as they show that investing in people immediately and drastically improves their lives. A society where everyone is healthier, more satisfied, and more trusting is one where we’re better able to come together to tackle large problems like climate change and the rise of authoritarianism. It’s one where people are more likely to approach their differences with tolerance rather than hatred.
The results on employment were decidedly mixed, but this area is where the study’s limitations are more likely to have an impact. The results show that participants receiving the basic income were “no better or worse at finding employment than those in the control group during the first year of the experiment.” As stated before, however, the recipients of the basic income still had a disincentive to find work because they continued to receive government unemployment benefits. Additionally, the basic income was below the poverty line in Finland, unlike my proposal for the Freedom Dividend, which is set to be right at the US poverty line.
Finally, the lack of an improvement in employment is no surprise given the history of other trials, and the limited nature of the sample. Other studies have had similar outcomes on employment. The Canadian Mincome experiment showed that only two groups worked less: new parents, and students. I’d argue those two groups should be working less than they currently are. The results of almost all basic income experiments show no negative impact on the overall employment rate.
But the limited nature of these studies obscures what will happen when everyone in a town has extra income, not just those who are currently struggling economically. As the Roosevelt Institute’s study showed, that’s when the true power of the Freedom Dividend will be unlocked.
That much additional money circulating through the economy, to people who are both currently subsisting and thriving, will create more opportunities for people to create businesses, find employment, and grow opportunities in their communities. Under the constraints of the Finnish experiment, it’s no surprise that these growth effects weren’t seen.
Instead, think about a world where everyone is receiving the benefits of a basic income. Individuals are healthier and more trusting. Families are more secure, and children are better taken care of. Communities are more intertwined and able to build themselves up in a way that makes sense for them. Businesses are forming and hiring. And society, with a new mindset of abundance instead of scarcity, can come together to solve the biggest problems that are facing us.
Andrew Yang is a 2020 Democrat presidential candidate
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