There’s quite a bit of evidence suggesting that Universal Basic Income (UBI) can help reduce poverty. Studies and pilot programs in various countries have shown that giving people a regular sum of money, no strings attached, can lift them out of poverty or prevent them from falling into it in the first place.
It’s like a safety net that ensures everyone has enough to cover their basic needs, like food, shelter, and healthcare. Plus, UBI can also boost economic activity by giving people more spending power.
Let’s look at some of the evidence how UBI can be beneficial in tackling poverty.
Evidence from pilot programs
Finland
Numerous pilot programs and studies have been conducted worldwide to assess the feasibility and impact of UBI. For example, in Finland, the government launched a two-year UBI trial in 2017, providing 2,000 randomly selected unemployed individuals with a monthly stipend.
Preliminary results indicated improvements in overall well-being and perceived economic security among participants, although employment remained relatively unchanged.
Kenya
Similarly, in Kenya, the nonprofit organization GiveDirectly implemented a large-scale UBI experiment, making cash transfers to thousands of individuals living in poverty. Results showed significant reductions in poverty levels, as well as positive effects on health, education, and entrepreneurship.
United States
Stockton Economic Empowerment Demonstration (SEED) is a UBI pilot program launched in Stockton, California, in February 2019. Over 100 residents living below the city’s median income received $500 per month for 24 months, with no strings attached.
Initial findings from the SEED program showed that participants experienced significant improvements in financial stability, reduced anxiety and stress, and increased spending on basic needs such as food and utilities.
Additionally, there were no significant changes in employment status among participants, challenging the notion that UBI disincentivizes work.
The Alaska Permanent Fund Dividend is often cited as an example of a UBI-like program. Since 1982, all residents of Alaska have received an annual cash dividend from the state’s oil revenues, with the amount varying each year.
Research on the PFD has shown that it has contributed to poverty reduction and economic stability in Alaska. Additionally, studies have found that the PFD has had positive effects on children’s education outcomes, including higher high school graduation rates and increased college enrollment.
Canada
In 2017, the Canadian province of Ontario initiated a large-scale Basic Income Pilot project aimed at assessing the impacts of UBI on poverty, employment, health, and well-being.
Although the program was prematurely cancelled in 2018 by the incoming provincial government, preliminary findings indicated positive outcomes for participants.
Those receiving basic icome reported improvements in mental health, housing stability, and access to education and training opportunities.
Namibia
Namibian Basic Income Grant (BIG) Pilot Project was implemented in Namibia from 2008 to 2009, giving a basic income to residents in selected rural villages.
Findings from the Namibian BIG Pilot Project indicated improvements in food security, child nutrition, school attendance, and overall well-being among recipients. The program had positive spillover effects on local economies, including increased spending on goods and services.
These findings suggest that UBI has the potential to address poverty and improve the lives of marginalized populations.
Impact on Economic Security
One of the primary goals of UBI is to enhance economic security by providing people with a reliable source of income to meet their basic needs.
Unlike traditional welfare programs, which often come with strict eligibility requirements and bureaucratic hurdles, UBI offers unconditional support that is not contingent on employment status or income level.
This ensures that individuals have a financial safety net during periods of unemployment, illness, or economic hardship. By reducing the risk of poverty and financial instability, UBI can empower individuals to pursue education, training, and entrepreneurial ventures without fear of financial ruin.
Plus, UBI has the potential to streamline social welfare systems and reduce administrative costs, thereby maximizing the efficiency of resource allocation.
Reducing financial vulnerability
UBI provides individuals with a reliable source of income that is not tied to employment or means-testing. This reduces their vulnerability to economic shocks, such as job loss, illness, or unexpected expenses.
With a guaranteed basic income, individuals and families can better weather financial crises without facing the risk of homelessness, hunger, or insurmountable debt.
Promoting stability and planning
Knowing that they have a steady stream of income coming in regularly, individuals can plan for the future with greater confidence.
UBI empowers people to make long-term decisions about education, career choices, housing, and retirement, without the constant stress of financial insecurity hanging over their heads. This stability can lead to improved mental health outcomes and overall well-being.
Encouraging entrepreneurship and innovation
UBI provides a safety net that allows individuals to take risks and pursue entrepreneurial ventures without fear of failure. Freed from the constraints of poverty and the need to work multiple jobs to make ends meet, people are more likely to invest in their ideas, start businesses, and contribute to innovation and economic growth.
This can lead to the creation of new jobs, industries, and opportunities for economic advancement.
Supporting caregiving and unpaid work
UBI recognizes the value of unpaid caregiving work, such as raising children, caring for elderly relatives, or volunteering in the community.
By giving a basic income to all individuals, regardless of their employment status, UBI enables caregivers to devote more time and attention to their loved ones without sacrificing their own financial security.
Streamlining social welfare systems
Traditional welfare programs often come with complex eligibility criteria, bureaucratic barriers, and stigma associated with receiving government assistance.
UBI simplifies the social safety net by delivering a universal benefit that is easy to understand and access. This reduces administrative costs, eliminates welfare traps, and ensures that no one falls through the cracks. B
y streamlining social welfare systems, UBI maximizes the efficiency of resource allocation and ensures that everyone receives the support they need to thrive.
Empowering marginalized communities
UBI has the potential to empower marginalized communities, including women, people of color, immigrants, and individuals with disabilities.
UBI reduces systemic barriers to economic security and social inclusion. This can help address historical injustices, break cycles of poverty, and create a more equitable society for all.
Addressing inequality
UBI aims to bridge the gap between the rich and the poor, thereby promoting greater equality of opportunity.
Unlike means-tested welfare programs, which often perpetuate stigma and discrimination, UBI is inclusive and universal, ensuring that everyone receives support regardless of their socioeconomic status.
This not only reduces the administrative burden associated with welfare administration but also fosters social solidarity and cohesion.
Above all, by lifting individuals out of poverty and enabling greater access to education, healthcare, and economic opportunities, UBI has the potential to create a more equitable and prosperous society for all.
The case for UBI
Universal Basic Income (UBI) has gained traction as a potential solution to various social and economic challenges. At its core, UBI advocates for providing all individuals with a regular, unconditional cash payment, regardless of their employment status or income level.
Proponents argue that UBI offers several compelling benefits, including poverty reduction, economic security, and social equity. By ensuring that every person has access to a basic income floor, UBI aims to alleviate financial stress, promote individual autonomy, and create a more equitable society.
Moreover, UBI has the potential to stimulate economic activity by increasing consumer spending, fostering entrepreneurship, and encouraging innovation.
