In 2020, amid widespread layoffs and economic turmoil brought on by the COVID pandemic, 1,000 low-income people in Texas and Illinois won something of a lottery. They were selected to receive $1,000 per month—with no strings attached—for three years as part of a study on guaranteed income by OpenResearch, a nonprofit research organization funded in part by OpenAI and its founder, Sam Altman.
Silicon Valley philanthropists are just one piece of a growing movement for using basic income to improve people’s lives. In recent years the Stanford Basic Income Lab and the Center for Guaranteed Income Research have been tracking 30-plus pilot programs that have tested basic income in towns and cities across the U.S.
“There’s a long history of interest in basic income in the United States,” says Sara Kimberlin, executive director of the Stanford Center on Poverty and Inequality. Founding father Thomas Paine advocated for it in The Rights of Man. Martin Luther King, Jr., called it the solution to poverty. Even economist and free-market capitalist Milton Friedman suggested basic income in the form of a “negative income tax.”
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When people receive unconditional cash, they tend to use the money in ways that increase their financial security and housing stability, Kimberlin says, pointing to a “large body of research.” Those observations line up with the most recent results from OpenResearch, which showed that participants increased spending to meet their basic needs and to help family and friends. A separate study published online in July in the Journal of the American Medical Association also found that cash benefits reduced emergency room visits.
"Cash is flexible. It gives people a lot of dignity and autonomy in deciding how they are going to use it."
—Sara Kimberlin
Taken as a whole, the evidence suggests that when people’s most basic needs are met, they start to build a firmer financial foundation for themselves and their family. Scientific American spoke with Kimberlin to learn more about these basic-income pilot programs and how this unconditional, guaranteed aid improves people’s lives.
An edited transcript of the interview follows.
What is the promise of basic income?
A key problem that basic income or guaranteed income is designed to address is the significant share of people and families who don’t have enough resources to be able to meet their essential needs. And we have a lot of research that shows the challenges that arise from struggling to meet your basic needs. For example, if you don’t have access to stable, safe housing, health care or food, that interferes with your ability to be a productive worker or to take care of your family. And if you’re a child, that interferes with your ability to concentrate in school.
On the flip side, there’s a lot of research showing the positive things that happen when a policy ensures people’s needs can be met. It shows that when food stamps are introduced in a particular area, the outcomes for the families improve. Other research shows that children whose families received the Earned Income Tax Credit when they were young had more positive long-term educational outcomes, which translated to stronger financial security later in life.
Why provide cash, as opposed to food stamps or rent assistance?
Cash is flexible. People can use it to meet whatever their most pressing need may be. It’s an efficient way of addressing people’s needs, and it also gives people a lot of dignity and autonomy in deciding how they’re going to use it. It helps to avoid situations where someone may already have resources designated to pay for food but needs, for example, emergency child care. If they don’t get it, then they can’t get to their job, which could cause a lot of disruption down the line by making them miss a paycheck, then miss the rent. You can look at unconditional cash as a potentially very promising way of approaching social support because it streamlines the administrative costs and makes it easier for people to access the support they are eligible for.
What stood out for you about the new findings from OpenResearch?
It’s a very large study, and it’s well designed and well funded. It studied a fairly broad, more representative population, rather than being targeted to a specific group such as parents of young children, which meant there was a lot of variation in the outcomes.
It wasn’t surprising that the study found the most common uses of the funds were to cover basic needs such as housing, food and transportation. This is something we see consistently across guaranteed-income pilots that are tracked on the Guaranteed Income Pilots Dashboard on the Stanford Basic Income Lab website.
Something that stood out for me was the significant increase in people spending money to help their friends and family. That struck me because it means there are some effects of this program that are not fully captured in the results. If a participant is saying, “Oh, my cousin called me because her husband lost his job, and they can’t make their rent this month, and I gave her some money so her family wouldn’t get evicted”—outcomes like that wouldn’t be fully captured in the participant data. There’s a ripple of positive effects that are going out beyond the direct recipient.
People who received the cash worked an average of one hour less per week and were 2 percent less likely to be employed than people in a control group that received $50. What does that tell you?
People wonder: Does receiving unrestricted cash mean people are going to just stop working? How would that affect the labor market? There have been different findings across different studies. Some have shown somewhat increased employment. You can imagine how that’s possible. If receiving a basic income allows you to repair your car so that it’s reliable or pay for child care, that might make it more possible for you to get a job. There have also been studies that have shown no significant impact on employment.
And then there have been studies that show some reductions in employment or in number of hours worked compared with a control group. That’s what was found in these OpenResearch results.
One important piece of context here is that this study, along with many of the studies in this recent crop of guaranteed-income pilots, took place in the unusual economic setting of the pandemic. Unemployment was very high across the entire U.S. in both the treatment and the control group at the beginning of this study. Over the course of the three years lots of people in both groups went out and got jobs as more jobs became available again—overall, employment and hours worked increased in both groups, but they increased less in the group receiving $1,000.
Many of the drivers that might cause somebody to work less when they receive a basic income could be seen as positive outcomes in other ways. For example, single parents or parents of young children might work fewer hours to spend more time directly caring for their children.
Is just giving people money really a viable solution to poverty?
Basic income, particularly at this scale that has been studied, is not a cure-all or magical solution to poverty. Access to health care, schooling, child care and affordable housing are still needed. I think it makes sense to think about basic income as a promising intervention that complements other parts of the social safety net. Unrestricted cash has a lot of power to be able to fill in places where the safety net is inadequate.
What are some open questions about the impacts of basic income that you hope more research will answer?
It’s really important to study how these programs work for different groups of people. There are different pilots focused on specific populations, such as people aging out of foster care, people experiencing domestic violence or people reentering society after incarceration. Understanding how it works for different groups is helpful for designing programs and policies.
And a critical question is: What are the long-term effects of these programs, in particular on people’s health? A three-year study can’t address health problems that have developed over people’s lifetime. But if you had a long-term program in place, would you see different effects on people’s health, such as on chronic health conditions? And studying the potential effects of these programs on children’s long-term trajectories is very important. Some of those outcomes are not measurable yet, but they may be quite consequential for the people who receive the money and may ripple out to their families and communities.