UBI is a policy concept that prioritizes universality over targeting and means-testing, unconditionality over conditions like work requirements, and cash over in-kind benefits like food stamps. Policy features like the UBI’s amount, how it’s funded, interaction with other government programs, whether the amount varies by age, and accessibility to immigrants are open questions that we believe warrant research and debate.
UBI can be studied like any other policy
New experiments will add to the robust cash transfer literature
UBI experiments started in earnest in the 1970s, when the U.S. and Canada tested a form of UBI known as a negative income tax (a UBI that phases out with income), and others since have grown the academic literature. Upcoming experiments will test the effect of UBI on outcomes like earnings, health, and inflation, refining estimates from prior research.
Few public policies undergo randomized controlled trials in advance. That doesn't mean their effects aren't predicted rigorously
Economists estimate the responsiveness of individuals and the overall economy to policy changes for taxes and transfers. While experiments can improve estimates of these parameters, and gradual policy change may be safer than radical change, UBI doesn’t differ fundamentally from other well-researched policy proposals.
Broader labor market evidence is consistent with UBI studies
If you were faced with a new 1% income tax, would you work more or less? Economists decompose this sort of question into the income effect and the substitution effect. The income effect causes people to increase work hours when they have less (after-tax) money, since they have to work more to pay their bills. The substitution effect causes people to reduce work hours when they face higher marginal tax rates, since they keep less of their earnings and would. When someone is faced with a new tax, or gets a raise, these effects move in opposite directions, pushing some to work more and some to work less.
The substitution effect is somewhat large, suggesting benefits that create high taxes on the poor keep people from working. The income effect is relatively smaller, and most studies find that people respond to new income by reducing work hours. For example, Jones and Marinescu (2018) found that the Alaska Permanent Fund Dividend “had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent).” UBI experiments can be considered a special case of the broader evidence base around income and substitution effects.
UBI policy design matters
UBI could replace benefit programs and nothing else, or be part of large-scale tax reform. Most approaches will make some households better off, and some worse off. The UBI Center aims to facilitate open discussion about the consequences of different UBI plans to create productive dialogue on the overall policy concept