In an encouraging flip of the narrative, an experiment demonstrated that basic income recipients in a California city showed intelligence and ambition, not lethargy.
The randomized, controlled trial in the city of Stockton is being viewed by sociologists as a good jumping-off point for further research into the effects of a no-strings-attached cash injection to alleviate the difficulties of living in the lower-income class.
The project was called SEED (Stockton Economic Empowerment Demonstration), and it took place from February 2018 to February 2020.
Distributing $500 every month for two years to 125 people living around or below the city’s median household income resulted in the participants’ acquisition of full-time jobs climbing up to 200% above a control group of participants who did not receive income. The jump was still less than what is seen on traditional unemployment benefits, though those receiving the $500 were not necessarily unemployed.
Unlike unemployment benefits though, participants were not told their reception of the money would hinge on their searching for a job. Instead they received their money on a debit card and were told to spend it on whatever they liked.
The vast majority of the spending was on things one might imagine it would go towards, such as food, utilities, rent, auto-maintenance, and so on.
Another significant finding was that it allowed participants a little more time in the day to enjoy life, spend time with their families, or study to potentially improve their skillsets.
“The $500 spilled into their extended networks in material and immaterial
ways that alleviated financial strain across fragile networks and generated more time for relationships,” the authors wrote.
One man had spent an entire year being eligible to receive a real estate license, but he never actually had time to begin the process. The $500 allowed him to take time off work to get his certificate and switch careers, resulting in a “360-degree” turn around in his fortunes.
Lastly, despite the fact that every participant spent 100% of their monthly $500 boosts, 25% of the participants by trial’s end had managed to cover the $400 cost of an unexpected expense, suggesting that rather than going on spending sprees or committing the money immediately to rent, at least some were able to extend the life of the $500 and other sources of income much further, perhaps by saving more than normal—the most fundamentally important aspect of financial strength and growth.
It’s an encouraging sign that a randomized placebo-controlled trial was able to find so many benefits.
A basic income may be a more flexible and effective alternative than other existing welfare programs that limit the scope of the handout to particular requirements and circumstances, because it allows the individual to maintain their own agency and manage their own affairs—who as the economists of centuries past recognized—are the only ones who can do so.