Sam Altman, the CEO of OpenAI, launched a groundbreaking study to explore the effects of providing a guaranteed basic income to low-income individuals. The results are in, and they offer some fascinating insights.
What Was the Study About?
Starting in 2019, Altman’s study gave 1,000 low-income participants $1,000 a month for three years, with no strings attached.
Per Business Insider, the goal was to see how this extra money would impact their lives. The study involved 3,000 people from Texas and Illinois, all earning below $28,000 a year. While one-third received the $1,000 monthly payments, the rest, the control group, received just $50 a month.
How Did People Spend the Money?
The study revealed that most of the additional income was spent on essential needs such as food, rent, and transportation. This indicates that the recipients prioritized basic survival and stability over other expenditures. Interestingly, recipients also extended financial support to others in need, showing a communal approach to financial well-being.
Financial Stress and Employment
Initially, recipients experienced a significant reduction in financial stress, which allowed them to make more deliberate and informed decisions about their lives.
They remained engaged in the workforce, even though they worked slightly less on average.
This suggests that the extra income provided them with the flexibility to seek better job opportunities and invest in their future without the immediate pressure of financial survival.
Savings and Financial Support
Recipients increased their overall spending by an average of $310 a month, with a substantial portion directed toward savings.
The study found that their total savings in bank accounts grew by nearly 25%. Additionally, they spent about 26% more on other people compared to the control group, reflecting a greater capacity to support their community.
Personal Stories
Participants shared how the extra money made a difference in their lives. Here are a few of their experiences:
Sarah’s Story
Sarah, a mother of four from rural Illinois, teaches in a homeschool network. Despite her husband’s decent job, their financial situation was tight. The $1,000 monthly payments helped her pay for braces for two of her children and a graduation trip for her daughter.
Sarah reflected on her experience, saying, “Even though my husband had a pretty decent job, we didn’t have a lot of money for extras. The payments from the program were a huge relief.”
However, she also admitted to becoming less careful with her finances, noting, “Looking back, I regret that I didn’t save more of it.”
Cara’s Story
Cara, who suffers from a debilitating nerve disorder that causes widespread pain and loss of mobility, faced severe financial struggles. Despite receiving some short-term disability payments, a break-in at her apartment left her financially devastated.
She started selling her personal belongings to make ends meet. When she learned she would receive $1,000 a month, she was overwhelmed with emotion. “I probably started crying when I got the phone call,” she recalled.
The money helped her pay off nearly all her debts, allowing her to focus on her health and recovery. “It’s almost like a miracle,” she said. “Knowing that I was able to manage that mountain of medical debt, it felt like my brain would have been in a completely different place.”
Celene’s Story
Celene, another participant, faced financial ruin after losing money in a business venture. She and her family had to move in with a friend, living in substandard conditions. When she was selected to receive the $1,000 monthly payments, she was in disbelief.
“I couldn’t believe it when I got the call,” she said. The extra income allowed her to buy new clothes, shoes, and other necessities for herself and her children.
By the second month, she had secured a job and started saving money. “The payments helped me not feel like a failure as a parent,” she shared. “It gave me the confidence to make decisions in my family’s best interests.”
Broader Implications
Altman’s study underscores that while basic income can provide immediate financial relief and greater decision-making freedom, it is not a panacea for all socio-economic problems.
Chronic health conditions, high housing costs, and other systemic issues require more comprehensive solutions. But we know that already. UBI can’t exist in a bubble.
The study also highlights the importance of integrating basic income programs with other social services and infrastructure investments to address these broader challenges effectively.
The Bigger Picture: Basic Income in the Age of AI
Altman was inspired by the potential of basic income to ensure equality of opportunity, especially in an era where artificial intelligence could render many jobs obsolete.
The study’s findings contribute to the ongoing debate about basic income’s role in mitigating the economic disruptions caused by technological advancements.
Despite the promising findings, basic income experiments, including Altman’s, face political hurdles. Many smaller programs have encountered resistance, particularly from conservative groups.
However, the data from these experiments consistently show that cash payments can help alleviate homelessness, unemployment, and food insecurity, emphasizing the need for continued exploration and support for such initiatives.
Conclusion
Sam Altman’s basic income study provides a comprehensive look at the potential benefits and limitations of guaranteed cash payments.
While the program significantly reduced immediate financial stress and offered greater freedom in life choices, it also highlighted the necessity for broader, more integrated solutions to address deeper societal issues.
As the conversation around basic income continues, Altman’s study serves as a critical piece of evidence supporting the idea that financial security can play a crucial role in improving lives, but it is just one part of a much larger puzzle.
