What happens when you give people free money with no strings attached? The question is of enormous importance to America’s safety-net policy, given widespread proposals for a “universal basic income” or a “child allowance”—which would give unconditional cash payments to all adults or parents, respectively. A massive scientific experiment has now provided the most compelling answers to date.
Those answers pretty much align with common sense: when people get free money, they work a bit less and play a bit more. And while they spend more on health care, they don’t see enduring health improvements as a result. This study won’t end the movement for no-strings cash, of course, but it certainly validates some common criticisms of these policies.
The experiment included 3,000 lower-income Americans aged 21 to 40, drawn from 19 counties in the Dallas and Chicago areas, with an average household income of just under $30,000. Two-thirds of these folks were randomly assigned to the control group and paid $50 a month for their continued participation. The other 1,000 got $1,000 every month for three years. That works out to $1 million a month, and $36 million over the whole time period, funded by private donations.
Researchers collected detailed data on what happened to the participants. They published some key findings Monday in a pair of working papers through the National Bureau for Economic Research.
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