What we know and what we don’t know about universal basic income

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: John Crowley, Chief of Research, Policy and Foresight, UNESCO & Iulia Sevciuc, Lead, Inclusive Policies and Data-Driven Policy Change, UNESCO

• The debate on UBI is often polarized and rooted in selective data.
• To allow for informed policy, an open conversation needs to be had on what we actually know and what we are missing.
• Trials show how UBI performs in both stable and volatile settings.

The COVID-19 pandemic came with a surge of interest in universal basic income (UBI). The crisis moved UBI from the policy fringe, where it has long been, closer to the mainstream.

Multiple countries employed UBI – or less ambitious variations in the form of temporary basic income (TBI) or minimum subsistence income (MSI) as a crisis measure to cushion the immediate social and economic effects of the pandemic. Before COVID-19, automation and the replacement of jobs made many think of UBI as the way to distribute more fairly the risks and benefits of the technological shifts.

Wales is rolling out a UBI trial in a 2-year scheme that will include 5000 people. It joins a growing group of countries engaging with UBI, from Canada to Finland, Germany to India, Kenya and the United States, as either a standing policy tool or an emergency response.

The debate on UBI is, however, often polarized and rooted in selective data. Blind spots exist on all sides. To allow for informed policy, an open conversation needs to be had on what we actually know and what we are missing on UBI.

What we know

First, the good news.

Trials show how UBI performs in both stable and volatile settings. It has been piloted before and during the pandemic. Many schemes will run through the crisis and end in post-COVID set-ups. Put together, trials serve in two respects.

First, to guide the debates on UBI as a longer-term policy. Secondly, to inform the deployment of UBI as an emergency response in humanitarian, development, and various crisis contexts. COVID-19 is one of many mega-crises to come. Think of the looming social and economic turmoil associated with climate change. Understanding how cash and UBI may (or may not) alleviate these shocks is critical in preparing response options.

UBI is not a “rich country” issue, despite what is often assumed. It has been implemented both in the Global North (e.g., Canada, Finland, Germany, Spain, the US) and in the Global South (e.g., Kenya, India, Mongolia, Namibia). Experts say that developing countries are not at a disadvantage in carrying the fiscal load of UBI or in running the schemes.

Financing is front-and-centre in any talk on sustained UBI. And it should stay there. Data is emerging on the feasibility and sustainability of various financing modalities. These include more traditional sources (e.g., oil and natural resource-derived funding, reallocation of existing funds), innovative ways (e.g., carbon price-and-dividend, data-driven funding, dividends from marketing socially-owned data), and mixed options.

Key lessons are also available on distributive performance of UBI and ways of calibrating the progressive/regressive character of schemes through their financing mechanisms. These are to be listened to if the intention is to go beyond individual trials towards longer-term or to-scale UBI. They also matter greatly when it comes to public buy-in and political acceptability of UBI.

Evaluations of UBI are available and they contain a wealth of data. But the contextual differences and the particular setup of the trials are often under-analysed in the debates on the effectiveness and the impacts of UBI. The results also tend to be skewed, with certain impacts of UBI being assigned a heavier weight in disregard of the context. Take the Finnish trial that provided 2,000 people with a €560 monthly pay.

Much work remains to be done to connect the worlds of knowledge and policy on UBI if the intent is to move ahead smartly —John Crowley and Iulia Sevciuc

The trial is often quoted as having little impact on employment. About 18% and 27% of participants got a job over 2 years, showing little difference with the control group. Yet this trial specifically covered the young and the long-term unemployed – a group facing high and well-known barriers in (re)entering the labour market.

The results, although valuable, should be cautiously extrapolated to the general population. The same applies to impacts on well-being and equity. The main point is that all trial results require coherent analysis to guide decisions based on systematic rather than selective interpretations of UBI impacts.

What we’re missing

Critical things are lacking.

Alternative and adjacent policy ideas need serious exploration. We need to think of Universal Basic Services as an alternative approach and carbon price-and-dividend as adjacent to UBI. Cases have been made for all but, moving forward, they need to be assessed against the same targets and desired impacts.

Key gaps exist in the understanding of UBI as part of a system rather than a standalone game-changing solution.

First, largely uncovered are the links of UBI with minimum wages, pensions, and severance pay. Second, the interplays of UBI with societal agendas (e.g., its gendered outcomes, impacts on inequalities or political participation) and international frameworks (e.g., if and how UBI feeds into the Sustainable Development Goals (SDGs) or the climate commitments) are under-analysed. All require stronger knowledge to inform comparative analysis and debates on trade-offs. https://open.spotify.com/embed/episode/1iK7QfPoj9UqG0v3Jw9H2o

Data on UBI exists but it has loopholes and blind spots. The flow of data – between the developing and developed countries – and its use face obstacles. Valuable insights are lost in the silos of different policy experiments and jurisdictional limits.

And lastly, as often, much work remains to be done to connect the worlds of knowledge and policy on UBI if the intent is to move ahead smartly. The former holds data, the latter holds the power of acting upon it.

This piece is based on the work of the UNESCO Management of Social Transformations (MOST) Programme and the UNESCO Inclusive Policy Lab. Experts of the Lab have contributed extensively with data and analysis to this work.

The authors are members of the World Economic Forum Expert Network.