Basic Income: A Way Out of Poverty in a Time of Pandemic or Utopia

(23 September 2020) Sir Thomas More introduced the concept of basic income* in Utopia back in 1516. It's a simple concept: Eliminate poverty by guaranteeing a basic level of income. The New Jersey Income Maintenance Experiment (1968-1972) was the first basic income experiment and has since been followed by more than 40 experiments across 14 countries, including 16 ongoing, and another 5 experiments planned for 2020 or later. From an experimental perspective with small groups of participants (as opposed to whole economies), the data demonstrates that basic income helps to eradicate poverty and without many of the anticipated negative effects. 

• The labor pool remained strong even with basic income guarantees, however, female participants did increase time spent on childcare while others pursued additional education.
• Beyond basic necessities, recipients spent additional income on consumer capital goods and assets, rather than on alcohol and tobacco as some feared would occur.
• In addition, basic income improved nutrition, health, and the reported general psychological state of recipients. 
• Children benefited, in particular, with incidents of child labor and crime decreasing and primary and secondary education participation rates increasing.

So, while the idea of basic income may have appeared on the public stage more than 500 years ago, we had to wait until the 20th century for broad political and public discussion to trigger experimentation globally. The findings from these experiments could not be more relevant than in this time of COVID as governments worldwide evaluate new policy approaches for economic stimulus and general resilience to avoid future economic slowdowns from shocks like the COVID-19 pandemic.

*Definition: Basic Income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement. BIEN