A new universal basic income (UBI) experiment funded by tech billionaire Sam Altman has found people who receive free money generally tend to work less.
In a study titled “The Employment Effects of Guaranteed Income: Experimental Evidence From Two U.S. States,” researchers gave 1,000 low-income individuals $1,000 per month unconditionally for three years.
Participants mostly spent the extra money on basic things like food, transportation or rent, and enjoyed a slight reduction in stress.
But the study found that participants on average worked about 15 minutes less per day, something that the researchers say policymakers should consider when mulling potential UBI programs.
Our analysis demonstrates that even a fully unconditional cash transfer results in moderate labor supply reductions for recipients. Virtually all existing large-scale cash transfer programs in the U.S. are means-tested, which provides additional disincentives to work.
Rather than being driven by such program features, participants in our study reduced their labor supply because they placed a high value, at the margin, on additional leisure.
While decreased labor market participation is generally characterized negatively, policymakers should take into account the fact that recipients have demonstrated–by their own choices–that time away from work is something they prize highly.
Similar studies have yielded different results.
The Denver Basic Income Project (DBIP), which gives people $1,000 a month to combat homelessness, found that many participants actually increased their full-time employment.
Over the last several years, dozens of UBI pilot programs have popped up all over the country, including in Michigan, Los Angeles, Chicago, Austin, and many more.
Generated Image: Midjourney