2016 turned out to be a banner year for the idea of giving people enough money so they’re no longer poor–otherwise known as a universal basic income (UBI). Around the world, more cities and countries are exploring UBI, including a big new effort in Finland, which launched recently. Millions of dollars of research are going into it in the U.S. The debate has shifted from ‘wow, what a crazy notion’ to ‘let’s see if the crazy thing can work.'”
Aside from Finland, the tech incubator Y Combinator is also piloting basic income in Oakland, California. And Give Directly (GD), a nonprofit that already makes unconditional cash transfers to people in Kenya and Uganda, is launching a 26,000-person basic income experiment in rural Kenya.
“We realized it was a pretty natural fit for us to try to contribute to this debate that’s been happening on a philosophical level lately, but without enough testing and evaluating how this specific type of cash transfer works,” says Joe Huston, regional director at GD. “Testing different types of cash transfers is what we’ve been doing for the last several years.”
Versions of UBI has been championed by everyone from Martin Luther King to libertarian economist Milton Friedman. And there have been trials before, notably in Manitoba, Canada, and more recently in India. But the three new trials could contribute a whole new level of data and documentary evidence. GD’s experiment will span hundreds of villages, allowing researchers to compare whole-population effects across several different income structures.
GD is working in Siaya County, in western Kenya, and Bomet County in the central-west. Up to 45 villages will be offered UBI for 12 years, in monthly payments. Another 80 villages each will be offered either two years of UBI or a lump sum instead of monthly payments. The three experiment groups will then be compared to another 100 villages who–pity for them–will get no money at all (the control). Villagers will get about 75 cents a day, enough to cover food and other fundamentals.
The research is designed by two heavy-hitters in economic social science: Alan Krueger, a former chairman of the White House’s Council of Economic Advisers, and Abhijit Banerjee, a professor at MIT. Banerjee recently published a positive review of “cash transfer programs” like GD’s, debunking “the myth” that cash handouts discourage work. Across seven studies, free money had no such effect, he says.
GD has raised $23 million for the project so far, out of a hoped-for $30 million. The New York nonprofit says donors who haven’t been interested in giving directly to the poor before are interested in being involved in a basic income experiment. “It widens the base,” says Huston.
$30 million is a fraction of what it might have cost if the experiment had been done in the U.S. (perhaps about $1 billion). Huston admits there are differences between rural Kenya and, say, middle Chicago, but argues that “a lot of the questions about basic income are universal.”
“How do people react when they have more security in their lives? How does it change their incentives for the types of work and the amounts of work they do? If we provide this long term security, do we see people take bigger life risks like going to Nairobi to look for better work or investing in a crop with a longer maturation period? I think those things are generalizable, and not dependent on specific social structures,” Huston says.
It’s going to be fascinating to watch these trials play out in 2017. GD plans to release its first results in two years. By then, we’ll have some idea if UBI shows appreciable effects in people’s lives and in wider society. UBI could make sense in an era of extreme automation. But, as Huston says, it has to make an appreciable difference to be worth what could be a large investment.