Researchers studying the two largest universal basic income (UBI) pilot programs in the U.S. discovered something unremarkably predictable: when you give people money in exchange for nothing, it incentivizes them to do more nothing.
Proponents of UBI argue that providing a monthly stipend to a large segment of the population would afford people the freedom to pursue higher quality employment, increase employment mobility, and engage in entrepreneurial activities. The researchers were interested in measuring these outcomes, especially with respect to other potential individual choices, such as caregiving, education, leisure and self-care.
The researchers discovered that low-income individuals (average household income: $29,900) who received $1,000 month for three years experienced a net income decline of about $1,500, excluding the $12,000 annual transfers. For every dollar an individual received, his earned income fell by 12 cents. Interestingly, other adult members in the household of someone receiving the money also altered their employment behaviors as well, resulting in a total household earned income decrease of 21 cents for every “free dollar” received.
Recipients in the study reduced the number of hours they worked by 1.3 to 1.4 hours per week – the exact amount of increased time spent in leisure activities. Researchers found zero effect on the quality of employment. Recipients didn’t get jobs with better working conditions, hours or pay. Nor was there a statistically significant increase in caregiving or personal development activities.
The $1,000 per month represented an increased monthly cash flow of approximately 40% for the average recipient – all of which was spent. Despite receiving $36,000 over the course of the study, recipients did not accumulate savings or reduce debt.
Not only did the $1,000 a month cause people to shift from work to leisure, but the effect also increased over time. The longer a person received the money, the fewer hours he worked.
The bottom-line conclusion of the study is that while UBI may provide temporary financial relief, it does not (necessarily) lead to long-term improvements in employment quality or economic well-being. Instead, its most significant effect is a decrease in the overall supply of labor, offset primarily by an increase in leisure activities. Perhaps it is desirable to give certain people the freedom to work less and play more, but UBI supporters should not kid themselves into believing it improves recipients’ financial stability.
These researchers are not a bunch of childless cat lady hating, Project 2025, knuckle dragging, Neanderthals. The study’s authors include professors from University of California, Berkley and the University of Toronto – not the Heritage Foundation.
David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.