What Is Universal Basic Income?

SUMMARY

Proponents hail simplicity and equity; skeptics worry about fiscal cost and incentives

 
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What Is Universal Basic Income? Proponents hail simplicity and equity; skeptics worry about fiscal cost and incentives

Maura Francese and Delphine Prady

Many governments pay pensions to elderly people, or unemployment benefits to those who lose their jobs, or child benefits to families. Cash transfers to households are common in most countries. What is a universal basic income, and how is it different from these programs?

Universal basic income is an income support mechanism typically intended to reach all (or a very large portion of the population) with no (or minimal) conditions.

Discussions around universal basic income can be heated, both in a scholarly context and in public discourse, and there is no established common understanding. Very different income-support programs are often labeled "universal basic income," even when they have little in common or do not aim at the same goal.

Many ongoing and prospective experiments with universal basic income around the world refer to very different interventions. Examples include cash transfers to a selected group of unemployed people for a short time in Finland, to adults for 12 years in Kenya, and to randomly chosen households in California. This diversity reflects the absence of a unified definition and assessment methodology in both the literature and policy discourse.

Programs typically grouped under the universal basic income umbrella have a mix of key features (see chart). Does it replace or complement other social protection programs? Is the recipient an individual or a household? How is the pool of beneficiaries defined? What is the timing of the payment? Are there conditions attached?

Depending on how these key features are chosen and combined, scholars have proposed various forms of universal basic income (see chart).

Thomas Paine’s (1797) "ground-rent" resembles a categorical capital grant (for example, a one-time endowment to a specific group of people) aimed at fighting the transmission of poverty from one generation to the next. Milton Friedman (1968) saw the "negative income tax" as a way to replace the entire American welfare state to overcome administrative inefficiencies. Philippe Van Parijs (1992) advocates a regular, universal, unconditional, and generous cash transfer. Anthony Atkinson’s (1996) "participation income" complements existing social programs and the minimum wage and is conditioned on a form of "social" participation—

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