Universal Basic Income: Some Negative Findings from the Finnish Experiment

A few days ago, the preliminary report on The Basic Income Experiment 2017–2018 in Finland was published. The report is freely available online and, given its brevity, well worth a download and read.

Allow me to quote from the summary section of the report:

On the basis of the register data analysis, there is no statistically significant difference between the groups as regards employment. However, the survey results showed significant differences between the groups for different aspects of well-being.

This neatly summarizes the substance and tone of the report’s findings. The substance is effectively that UBI has no positive impact on employment, and the tone is one of authors trying to salvage the experiment from utter dismissal. Since the stated aim of the experiment was to test whether UBI could make “the social security system of Finland more inclusive and further increase the labour supply,” the findings on employment are prima facie devastating.

As the report progresses, and it becomes clear that the central purpose of the experiment—i.e. of getting people into the workforce—is not enhanced by UBI, a shift occurs towards the theme of well-being. As the report outlines, some well-being indicators, such as confidence in public institutions, did indeed increase. However, it is not strange that people receiving UBI register an increase in confidence in the state. This is hardly a good reason to promote UBI—it certainly does not compensate for its lack of positive effects on employment.

The study then points to other factors of well-being, such as a decline in perceptions of poor health and stress and an increase in perceptions of concentration. I highlight the word perceptions since, despite the report’s use of the phrase “the test group experienced significantly fewer problems related to [… the] ability to concentrate,” the actual reporting tested how participants answered questions on this and other points. This is significant, as the study and statistical analysis of such things as stress levels and concentration abilities is not straightforwardly derivable from questionnaires and surveys. This point is particularly acute with respect to ascertaining abilities “to concentrate.” When the findings discuss issues such as the relationship between UBI and “satisfaction with life,” the report loses significant credibility. I fail to see how such a notion can be conceptualized or measured or how the relationship between UBI and satisfaction with life can be correlated or gauged, and how this can therefore be a factor in the study.

One area that the study identified as an aim in piloting UBI was reduction in bureaucracy. UBI is touted as a solution to the bureaucratic nightmare of welfare. By providing an unconditional amount of money to each citizen—and thereby eliminating specific welfare claims, such as housing, health and disability claims—UBI, it is claimed, would end the need for the extensive exchange of information between citizen and government, means testing and delays to welfare claims made in retrospect. Again, the study employed a questionnaire/survey/interview methodology to establish that the perception is indeed that UBI decreases bureaucracy. This is hardly a surprising result. The problem comes when UBI is considered in terms of factors that go beyond the individual. For example, what about people with families? What about people with large families? The report raises these points, but it offers little in the way of speculative analysis.

If UBI is the panacea that it is touted to be, these concerns surely need to be addressed. There are plenty of cases in which a person will require significantly more, by way of welfare, than UBI will provide. This is true not only of some large families, but also in cases such as those of parents of children with disabilities and adults with disabilities themselves (we have a moral obligation to provide them with far more than UBI). Proponents of UBI may argue that UBI in no way prevents additional welfare being paid to those who require more than UBI will cover. However, in that case, the problems of bureaucracy and inefficiency will be re-introduced—but with the additional inefficiency of vast numbers of people, who are in no need of welfare whatsoever, receiving UBI. This is a central problem: millions who do not need UBI will receive it, and millions who require more will be in a deficit—the latter still effectively caught up in the bureaucracy UBI is, in part, trying to resolve. This is the addition of layers of inefficiency.

Towards the end of the report, the authors state:

In previous research, the amount of support for basic income in Finland has been gauged through a general question on whether the person is in favor of a basic income or not. Percentages as high as 70 per cent in support of a basic income have been obtained. When the respondents are informed of the necessary changes to the income taxation in order to finance basic income, the level of support dwindles considerably [emphasis mine].

This goes to the core of the debate: proponents of UBI need to think very carefully—and be open about—how radical an overhaul of the structure of society UBI would require. One central concern is where the money will come from. Some have suggested taxing automated means of production; others have suggested simply taxing higher income earners more. Both solutions lack the systematic thinking which is needed to give UBI a chance of succeeding.

Such utopian thinking needs to end. Society is not a laboratory in which to experiment with undeveloped social programs. The welfare state is a significant achievement, which reflects a maturity of civilization and functions as a means of dispensation with respect to our moral duties towards those in need. However, we must also bear in mind the moral maxim that value should be rewarded in proportion to labor. We would be far better advised to put our efforts towards to creating new, well-paid employment, while remaining conscious of our social obligations to those in need. Let’s spend this time and money on education and re-skilling, rather than in the pursuit of what is fast becoming fantastical thinking.