Finland's Universal Basic Income experiment failed to put more people back to work

Finland’s Social Insurance Institution just released results from a two-year experiment with Universal Basic Income. The plan was simple. Instead of only giving unemployment benefits to people who are out of work, Finland would randomly select 2,000 people who would receive a monthly payment whether or not they worked. This guaranteed income was supposed to encourage people receiving it to take more jobs or even start new businesses. But that’s not what happened. From the official press release:

‘On the basis of an analysis of register data on an annual level, we can say that during the first year of the experiment the recipients of a basic income were no better or worse than the control group at finding employment in the open labour market’, says Ohto Kanninen, Research Coordinator at the Labour Institute for Economic Research.

The recipients of a basic income had on average 0.5 days more in employment than the control group. The average number of days in employment during the year was 49.64 days for the recipients of a basic income and 49.25 for the control group.

The proportion that had had earnings or income from self-employment was approximately one percentage point higher for the recipients of a basic income than for the control group (43.70% and 42.85%). Then again, the amount of earnings and income from self-employment was on average 21 euros lower for the recipients of a basic income than for the control group (€4,230 and €4,251).

There are two caveats here that need to be mentioned. The first is that while this two-year experiment is now over, the assessment of the data is taking place with a one-year delay. In other words, this conclusion is based on just the first half of the data that was collected. The final comprehensive results including year two of this experiment won’t be released until early 2020. So, if you’re a fan of UBI, you might hold out hope that year two will be better. The second caveat is that while the experiment didn’t produce any significant changes in employment or earnings, it did make people receiving the payments feel a bit better:

According to the survey, the recipients of a basic income perceived their wellbeing as being better than did the control group. 55% of the recipients of a basic income and 46% of the control group perceived their state of health as good or very good. 17% of the recipients of a basic income and 25% of the control group experienced quite a high degree or a very high degree of stress.

‘The recipients of a basic income had less stress symptoms as well as less difficulties to concentrate and less health problems than the control group. They were also more confident in their future and in their ability to influence societal issues’, says Minna Ylikännö, Lead Researcher at Kela.

I find this exasperating. I’ve written about Universal Basic Income experiments before and it annoys me that researchers feel this is a significant area of study. Was there really any serious chance that free money would make people feel worse? Why can’t we just stipulate up front that free money makes people happy? But no, it’s always treated as if this were an important and unexpected result of these experiments.

But the bottom line here is that this did not produce the results that its supporters hoped it would. That seems like a significant and timely result given that Alexandria Ocasio-Cortez just proposed some sort of UBI as part of her Green New Deal and most of the Democratic candidates for president have already signed on to it. We may already be at the point where UBI is a goal of the Democratic Party.

There’s a good video summary of the results here but it’s not embeddable so you’ll have to click over to see it. BBC also did a story which tracked a couple of recipients over the two years of the experiment. Their individual experiences seem to track pretty well with the reported results, i.e. it didn’t really help them work more but it made them feel good:

Finally, I found this compilation clip interesting. This is four different people—Elon Musk, Ben Shapiro, Sam Harris, and Jordan Peterson talking about UBI. Musk seems to think it’s inevitable. Shapiro takes more of a wait-and-see approach. Both Musk and Peterson suggest the real problem with the idea is that work provides people with something like meaning which can’t be replaced with a government check: