Some people in the Dutch city of Utrecht might soon get a windfall of extra cash, as part of a daring new experiment with the idea of “basic income.”
Basic income is an unconditional and regular payment meant to provide enough money to cover a person’s basic living cost. In January of 2016, the fourth largest city in the Netherlands and its partner, the University of Utrecht, will create several different regimes for its welfare recipients and test them.
A group of people already receiving welfare will get monthly checks ranging from around €900 ($1,000) for an adult to €1,300 ($1,450) for a couple or family per month. Out of the estimated 300 people participating, a group of at least 50 people will receive the unconditional basic income and won’t be subject to any regulation, so even if they get a job or find another source of income, they will still get their disbursement, explained Nienke Horst, a project manager for the Utrecht city government. There will be three other groups with different levels of rules, and a control group that will follow the current welfare law, with its requirements around job-seeking and qualifying income.
The experiment seeks to challenge the notion that people who receive public money need to be patrolled and punished, said Horst. The traditional criticism of basic income is that it does not incentivize people to work, and thereby damages the economy.
“People say they are not going to try as hard to find a job,” she told Quartz. “We will find out.” Her view, however, is optimistic: “We think that more people will be a little bit happier and find a job anyway,” she said.
Other countries, including India and Malawi, have tested basic income in the past, but the most famous experiment was one carried out in the Canadian town of Dauphin, in Manitoba. Between 1974 and 1979, The Mincome programme gave a stipend to the entire population, varying depending on how much money each person earned.
Evelyn L. Forget, an economist at the University of Manitoba, studied this experiment and wrote a report called “The town with no poverty,” published in 2011. Her conclusion? Basic income reduced Dauphin’s poverty and alleviated several other problems.
Although working hours dropped, as skeptics had predicted, it happened mainly among young men, who instead continued their education, and mothers who used the financial freedom to focus on childrearing.
“People thought that it was negative, but men were less likely to drop school, which has an influence in lifetime earnings,” she told Quartz, “and women took longer maternity leaves.”
People who participated in Mincome were less likely to go to hospitals and the town’s health facilities saw a drop in mental-health-related complaints, reducing costs, Forget said.
One substantial difference between Dauphin’s Mincome and the Utrecht experiment, however, is the Canadian program was universal and Utrecht’s will be restricted to those already on welfare.
“What you lose by limiting the program to current welfare recipients is the possibility of making life better for the working poor—people earning low wages in part-time or contractual jobs who sometimes fall between the cracks of the existing system,” said Forget. “When you have a program with more freedom, people have the power to take responsibility for their own decisions and, I think, the outcomes will be beneficial.”
The effect of running a program like Mincome long-term remains unclear—it was ended without any proper evaluation of its results after the Conservative government took over the provincial government in 1977, and the federal government in 1979.
Perhaps Utrecht will offer more insight.
This article was originally published on qz.com.
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Basic income is an unconditional and regular payment meant to provide enough money to cover a person’s basic living cost. In January of 2016, the fourth largest city in the Netherlands and its partner, the University of Utrecht, will create several different regimes for its welfare recipients and test them.
A group of people already receiving welfare will get monthly checks ranging from around €900 ($1,000) for an adult to €1,300 ($1,450) for a couple or family per month. Out of the estimated 300 people participating, a group of at least 50 people will receive the unconditional basic income and won’t be subject to any regulation, so even if they get a job or find another source of income, they will still get their disbursement, explained Nienke Horst, a project manager for the Utrecht city government. There will be three other groups with different levels of rules, and a control group that will follow the current welfare law, with its requirements around job-seeking and qualifying income.
The experiment seeks to challenge the notion that people who receive public money need to be patrolled and punished, said Horst. The traditional criticism of basic income is that it does not incentivize people to work, and thereby damages the economy.
“People say they are not going to try as hard to find a job,” she told Quartz. “We will find out.” Her view, however, is optimistic: “We think that more people will be a little bit happier and find a job anyway,” she said.
Other countries, including India and Malawi, have tested basic income in the past, but the most famous experiment was one carried out in the Canadian town of Dauphin, in Manitoba. Between 1974 and 1979, The Mincome programme gave a stipend to the entire population, varying depending on how much money each person earned.
Evelyn L. Forget, an economist at the University of Manitoba, studied this experiment and wrote a report called “The town with no poverty,” published in 2011. Her conclusion? Basic income reduced Dauphin’s poverty and alleviated several other problems.
Although working hours dropped, as skeptics had predicted, it happened mainly among young men, who instead continued their education, and mothers who used the financial freedom to focus on childrearing.
“People thought that it was negative, but men were less likely to drop school, which has an influence in lifetime earnings,” she told Quartz, “and women took longer maternity leaves.”
People who participated in Mincome were less likely to go to hospitals and the town’s health facilities saw a drop in mental-health-related complaints, reducing costs, Forget said.
One substantial difference between Dauphin’s Mincome and the Utrecht experiment, however, is the Canadian program was universal and Utrecht’s will be restricted to those already on welfare.
“What you lose by limiting the program to current welfare recipients is the possibility of making life better for the working poor—people earning low wages in part-time or contractual jobs who sometimes fall between the cracks of the existing system,” said Forget. “When you have a program with more freedom, people have the power to take responsibility for their own decisions and, I think, the outcomes will be beneficial.”
The effect of running a program like Mincome long-term remains unclear—it was ended without any proper evaluation of its results after the Conservative government took over the provincial government in 1977, and the federal government in 1979.
Perhaps Utrecht will offer more insight.
This article was originally published on qz.com.
