Research shows that cash transfer programs are more efficient overall, as they sidestep the administrative costs of distributing in-kind goods. The theory is that people know their own needs and can allocate money more effectively than the government. Moreover, the hope is that because UBI is a universal initiative, it will avoid some of the stigma associated with need-based programs, which have historically been criticized as handouts to the “undeserving” poor.
Pawar recently introduced a pilot for a UBI program in Chicago. Under his program, $500 a month would be delivered to 1,000 Chicago families — no strings attached. Additionally, the proposal would modify the Earned Income Tax Credit program for the same 1,000 families, so they’d receive payments on a monthly basis instead at the end of the year — a process known as “smoothing” that enables families to integrate the tax credit into their monthly budgets.
The proposal also leaves room for the creation of a Chicago-specific EITC program.