UBI: The Devils in the Details

1. The Whole Enchilada

The devil is always in the details, as the old saying goes. Most have probably forgotten now what that proverb means, but in essence, it’s a kind of caveat emptor: If it seems too good to be true, it probably is. Don’t swallow the whole enchilada until you know all the ingredients. In my previous article, “To UBI or Not to UBI?” I discussed the Canadian proposal for a Universal Basic Income and the various reactions to UBIs from both socialist and capitalist sources. I also noted that a nearly three-year study on UBIs by the University of British Columbia, Simon Fraser University and the University of Calgary concluded that, “a basic income for all is not the best way to address poverty and other social problems.” Instead, the British Columbia Expert Panel on Basic Income said, “governments should boost existing social support programs for vulnerable groups…”[1]

The tri-university study[2] released an executive summary prefaced by a quote from Nisga’a Chief Joseph Gosnell, explaining his nation’s traditional understanding of what we call “social welfare”:

“We Nisga’a have always organized our lives and society around a concept called Saytk’ilh Wo’osim, which means “Our Common Bowl.” Under this principle, it is understood that since everyone relies on the same resources and community, all must contribute. It’s about sharing energy, wisdom, spirit, joy, and sadness and it touches all aspects of life. It means no one gets left behind. Nisga’a government uses this principle to guide the delivery of healthcare, education, and social services.” [3]

A complementary principle is stated by classical economist Adam Smith, who said that, “Where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy.” [4]

Ah—there’s a little devil in the details: the motivation for governments seeking to implement such a plan. Is it to foster the mutual care and regard for one another so admirably enshrined in the ethics espoused by the Nisga’a and Adam Smith? Or is something else at work here? Two years ago, I could have been convinced of the benign intentions of such a program. Who’d have thought two years could be such an eternity? Already at an all-time low in public polls prior to the Covid-19 lockdowns (alongside corporations and Big Pharma), governments since then have played out their last shreds of credibility and trustworthiness. Their willingness to trample democratic constitutions into the dirt in pursuit of the delusional the Covid-zero fantasy, the willingness of even opposition parties in Parliament to side with the offenders in hopes of grabbing power—none of this bodes well on the question of motive. Particularly when it’s common knowledge that Prime Minister Trudeau and Finance Minister Chrystia Freeland are devotées of the political ideology promoted by the World Economic Forum, and it’s this agenda, not the mutual concord of society, that is at the heart of their UBI proposal. More and more it takes on the patina of social control rather than social welfare.

To honour the journalistic principle of balance, however, I felt it was only fair to report on what some of the other UBI studies from around the world have concluded. So far the two largest such experiments were conducted in Finland and the province of Ontario. The Finnish pilot program ran from 2017 to 2018, selecting 2,000 unemployed people at random and gave them unconditional monthly payments of €560 (Euros). According to reporter Edd Gent, “Their outcomes were then compared against 173,000 people on Finland’s standard unemployment benefits,” but the results were decidedly mixed, with “ammunition for both proponents and detractors of the idea.” [5] Part of the problem is that Finnish society is already ranked as one of the most progressive in the world, with a robust social welfare system. Although those receiving the unconditional payments reported “significantly improved financial and mental wellbeing,” with a “slight improvement in employment,” 2,000 people is a very small study sample. Given the costs of implementing a UBI, this causes many to question whether a modest gain in employment is worth the added burden of taxation required. As Gent astutely summarizes: “Despite being the largest trial to date, it’s hard to extrapolate the results up to the scale of a nationwide program, and it’s also impossible to predict what impact similar interventions would have in countries with very different cultures and governmental systems.” [6]  

Writing about the Ontario pilot program that ended in 2019, Professor of Economics Mark Stabile prefaced the article by stating: “The world needs well-designed studies to move beyond the philosophical aspects of how wealth should be distributed.” [7] And indeed, most pilot program studies to date have concentrated on similarly small sample sizes. Echoing the authors of the UBC/SFU/UC study, Stabile refers to the utopian philosophy that undergirds some proponents of UBI social programs, noting that even those among the super-rich such as Elon Musk, Mark Zuckerberg and Bill Gates have suggested it may be the way of the future as AI and robots take over more and more jobs. Never once do they question the wisdom of such hyper-mechanization making more and more humans obsolete, or the psycho-social impacts of creating a race of people without any purpose in life. While no one should be forced to earn their crust of bread by back-breaking labour, conversely, humans need a sense of accomplishment achieved by their own labours in order to remain well-adjusted.

Although the research isn’t conclusive, [8] there is a worrying trend in labour studies that links increased suicide rates to periods of increased unemployment. A New Zealand study concluded, “Being unemployed was associated with a twofold to threefold increased relative risk of death by suicide, compared with being employed.” [9] Studies further show the risk is more severe for males than females; male suicide rates are four times that of women at any time. [10] “The age-adjusted suicide rate increases when the economy is in recession and more people are unemployed, and it falls when the economy is booming and more people have jobs,” explains a summary published by the US Department of Veterans Affairs. [11]  

Professor Stabile reports that the Ontario pilot project had been carefully planned as a scientifically randomized study that aimed to recruit 4,000 participants, who would be paid “a minimum income level through monthly payments, without conditions and regardless of their employment status. The only ‘catch’ was that participants had to agree to withdraw their access to other social assistance programmes.” [12] However, by October 2017 the province had only recruited 400 participants, with an enrolment deadline of April 2018. Then suddenly in July that year the program was ended, jeopardizing the integrity of the data. Although public opinion polls revealed a majority of Ontario respondents in favour of the program, “nearly half found that the proposed minimum yearly income of CA $16,989 for singles (US$ 13,000) and CA $24,027 (US $18,000) for couples was too little.” Stabile points out that even at the lower rate of $1,200 (CA) per month, the cost of paying all Canadians a UBI would total about $400 billion per year, “more than the entire federal budget (around CA $340 billion).” Although I don’t know whether Professor Stabile is a Friedmanite or a Keynesian, I must trust that his personal philosophy has not been allowed to overcome his professional integrity.

2. Stanford’s Gold Standard

Stanford University, whose Professor John Ioannidis and his colleagues quickly established themselves as the gold standard of scientific integrity during the Covid crisis, has done a meta-study of all the available data on UBIs. Stanford’s report cites many benefits of UBI programs, particularly on the scale of personal wellbeing. “There is consistent evidence across contexts for improvements to health status and to the myriad behavioural and social factors that are linked to leading causes of premature ill- health, disability, and death,” [13] although some social stigma remained for those receiving benefits. Still on the positive side, “Overall, evidence consistently demonstrates that unconditional cash in low- and middle- income countries leads to a measurable decrease in poverty, although one review raises some uncertainty based on the quality of the evidence.” And consistent with Professor Stabile’s conclusions regarding the Ontario pilot project, given the cost of living, even these basic income levels are insufficient to raise people out of poverty: “For persons living with disabilities, transfers are generally insufficient to move out of poverty or beyond sustenance living…” [14] Evidence was also mixed regarding improvements to healthcare access.

Stanford’s conclusion? “There is an obvious research evidence gap in the evaluation of an experimental, sustained UBI, which is considered the ‘gold standard’ for evidence… More research is needed on outcomes such as stigma and social cohesion to clarify the imperative to provide transfers universally. Our review surfaced that impacts of UBI-type programs are not uniform across all groups… There has been limited research on the impact of UBI-type programs at the community level. Research to date has focused on more proximate impacts for individuals and households.”

Stanford’s conclusion echoes our astute journalist Mr. Gent: “Simply put, effects that are observed under some social and economic conditions may not transfer elsewhere. In other words, UBI implementation must account for the environments where people live, work, and play, as these contextual factors can enable or constrain the decisions people make in ways that either amplify or diminish intervention effects.” [15] To which must be added the unique cultural and ethical mores at work in each society. Not all cultures view a handout as a hand up. 

The Stanford report notes that there are still UBI experiments being studied around the world. The most current pilot program was launched by MIT’s Sloan School in 2018 and will be by far the longest at 12 years. “MIT Sloan associate professor Tavneet Suri will be part of a team collaborating with the nonprofit GiveDirectly to study the effects of implementing a universal basic income in Kenya… Overall, GiveDirectly expects to transfer $25 million to more than 21,000 people (not including the control group), 5,000 of whom will receive cash transfers for 12 years. The money comes with no strings attached.” [16]

Meanwhile there have been several other pilot projects carried out. A two-year program for Stockton, California began in February 2019 including all residents over age 18 who had income levels at or below the city’s median annual income of $46,033. (The city’s 2010 census recorded a population of 291,707. [17]) The project resulted in an increase in participants finding full-time jobs, and “individuals who received the money were, in general, healthier, with fewer incidences of depression and anxiety.” [18] The New Leaf Project in Vancouver, Canada, “distributed $7,500 cash payments to 50 homeless individuals (who weren’t struggling with addiction or mental health issues) between 2018 and 2019. Another control group of unhoused individuals was not given any cash. Members of the group who received the $7,500 were quicker to find stable housing accommodations and the majority were food secure within a month.” [19]

Positive results, to be sure. But as the Stanford meta-analysis suggests, these results may or may not be transferable across entire populations, so more research is needed at much greater scale. And if anything, the Stockton and Vancouver projects seem to have targeted the most at-risk population, supporting the British Columbia Expert Panel’s conclusion. That study made 65 recommendations to the BC government, flushing out the “devils in the details”: income supplements and program revisions that specifically target the most disadvantaged in society. “Our evidence suggests that a mixed, tailored system is the best approach for positive change,” said Dr. David Green, professor at the Vancouver School of Economics at UBC, and the panel’s chair. “British Columbians would stand to benefit the most with different approaches in different circumstances.” [20]

To view the British Columbia Expert Panel on Basic Income list of recommendations visit: https://news.ubc.ca/2021/01/28/basic-income-guarantee/

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[1] “Liberal delegates endorse a universal basic income, reject capital gain tax hike,” CBC News, April 10, 2021: https://www.cbc.ca/news/politics/liberal-universal-basic-income-1.5982862

[2] “B.C. has better tools than universal basic income to create a more just society, report finds,” University of British Columbia, UBC News, January 28, 2021: https://news.ubc.ca/2021/01/28/basic-income-guarantee/

[3] Quoted in executive summary, “Covering All the Basics: Reforms for a More Just Society,” Final Report of the British Columbia Expert Panel on Basic Income (PDF): https://bcbasicincomepanel.ca/wp-content/uploads/2021/01/Executive_Summary_BC_Basic_Income_Panel.pdf

[4] Quoted in executive summary, “Covering All the Basics: Reforms for a More Just Society,” Final Report of the British Columbia Expert Panel on Basic Income.

[5] Edd Gent, “Here Are the Results of the Biggest Universal Basic Income Trial Yet,” Singularity Hub, May 18, 2020: https://singularityhub.com/2020/05/18/here-are-the-results-of-the-biggest-universal-basic-income-trial-yet/

[6] Edd Gent, “Here Are the Results of the Biggest Universal Basic Income Trial Yet,” Singularity Hub, May 18, 2020.

[7] “Universal Basic Income: Lessons From a Failed Experiment,” Mark Stabile, INSEAD Professor of Economics, November 5, 2019: https://knowledge.insead.edu/economics-finance/universal-basic-income-lessons-from-a-failed-experiment-12731

[8] “Effect on suicide rate of having reduced unemployment is uncertain,” Ilkka Henrik Mäkinen, British Medical Journal, April 3, 1999, US National Library of Medicine, National Institutes of Health online database: https://www.ncbi.nlm.nih.gov/sites/ppmc/articles/PMC1115352/

[9] “Unemployment and suicide. Evidence for a causal association?” TA Blakely, SCD Collings, J Atkinson, British Medical Journal, Journal of Epidemiology & Community Health, Volume 57, Issue 8: https://jech.bmj.com/content/57/8/594

[10] “The Economics of Suicide: An Empirical Study of America’s Rising Suicide Rate,” Senior Capstone Project for Andrea J. Bergeron: https://digitalcommons.bryant.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1019&context=honors_economics   

[11] “The Effect of Unemployment on Suicide Risk,” US Department of Veterans Affairs info sheet: https://www.mentalhealth.va.gov/suicide_prevention/docs/Literature_Review_FSTP_Unemployment_FINAL_508_8-19-2019.pdf

[12] “Universal Basic Income: Lessons From a Failed Experiment,” Mark Stabile, INSEAD Professor of Economics, November 5, 2019.

[13] Rebecca Hasdell, “What We Know About Universal Basic Income: A Cross-synthesis of Reviews,” Stanford University Basic Income Lab: https://basicincome.stanford.edu/uploads/Umbrella%20Review%20BI_final.pdf

[14] Rebecca Hasdell, “What We Know About Universal Basic Income: A Cross-synthesis of Reviews,” Stanford University Basic Income Lab.

[15] Rebecca Hasdell, “What We Know About Universal Basic Income: A Cross-synthesis of Reviews,” Stanford University Basic Income Lab.

[16] Rebecca Linke, “12-year study looks at effects of universal basic income,” MIT Management, Sloan School, January 30, 2018:https://mitsloan.mit.edu/ideas-made-to-matter/12-year-study-looks-effects-universal-basic-income

[17] https://en.wikipedia.org/wiki/Stockton,_California#2010_US_Census

[18] “Universal Basic Income: What do the studies say?” March 12, 2021: https://features.inside.com/universal-basic-income-studies-does-it-work/

[19] “Universal Basic Income: What do the studies say?” March 12, 2021: https://features.inside.com/universal-basic-income-studies-does-it-work/

[20] “B.C. has better tools than universal basic income to create a more just society, report finds,” University of British Columbia, UBC News, January 28, 2021: https://news.ubc.ca/2021/01/28/basic-income-guarantee/