Proponents of universal income argue that it’s the most proficient way to help the poor.
Image via cc (Credit: Sathia Bathu)
Studies have shown, in contrast to what conventional wisdom might suggest, that the poor don’t stop looking for work when they’re handed money, nor do they spend said money on booze. So what do they do with the no-strings-attached funds? That’s exactly what a new long- experiment, spearheaded by the organization GiveDirectly, is intending to find out.
“We’ve spent much of the past decade delivering cash transfers to the extremely poor through GiveDirectly, but have never structured the transfers exactly this way: universal, long-term, and sufficient to meet basic needs,” write Michael Faye and Paul Niehaus, the organization’s co-founders, on Slate. “And that’s the point — nobody has and we think now is the time to try.”
The charity is planning to provide at least 6,000 Kenyans — who often are living on less than the U.S. equivalent of a dollar per day — with a basic income for 10 to 15 years. Throughout the course of the experiment, top academic researchers will be measuring the impacts of the system, including whether less fortunate individuals’ guaranteed financial security in the future motivates them to, for instance, take more risks, enroll in school or seek out better jobs.
A plan like this would put Americans about $1 billion in the hole, but in Kenya, it’s estimated to cost closer to $30 million, 90 percent of which will be routed directly to very poor households (the other 10 percent will cover administrative costs). Similar projects are being proposed by the Canadian and Finnish governments.
Skeptics are opposed to the notion of simply handing money to the poor because there’s a possibility they could waste it, but some are just critical that a plan like this is even financially plausible. Proponents of universal income argue that it’s the most proficient way to help the poor, since it neither discourages work nor requires it, and reduces the bureaucratic costs of operating complex social programs.
“At worst that money will shift the life trajectories of thousands of low-income households,” write GiveDirectly’s co-founders. “At best, it will change how the world thinks about ending poverty.”