Finland's basic income trial: Free money made people happy but 'would be unsustainable'

Finland's basic income trial: Free money made people happy but 'would be unsustainable'

Finland ran a two year basic income pilot program from 2017 to 2018. 2,000 people were chosen at random to receive roughly $600 a month for two years. The stated goal of the program was to see if having the extra income, which was given regardless of how much money someone earned from working, would encourage those who received it to take on additional low paying work, knowing they wouldn’t be penalized for doing so. Today, a study looking at the result of the two year effort concluded that while giving people free money did make them happier it didn’t encourage much additional work.

Researchers said people who received the money ‘described their well-being more positively’ than those who did not.

‘They also had a more positive perception of their cognitive abilities, i.e. memory, learning and ability to concentrate,’ researchers said…

But Kari Hämäläinen of Finland’s VATT Institute of Economic Research said the basic income had only a ‘small’ effect on employment levels.

The results suggest that for many people, ‘the problems related to finding employment are not related to bureaucracy or to financial incentives,’ he said.

Bloomberg reports there was only a slight different between those who received benefits and the control group who did not when it came to getting a job:

In the first year, 18% of study participants found work, roughly in line with the control group. In the second year, 27% of those getting a basic income worked, just 2 percentage points more than the control group. The results in 2018 are somewhat skewed by a model introduced by the government penalizing jobless people who didn’t actively seeking work.

But the real problem is the cost of making this basic income plan into a universal basic income plan. The chief researcher concluded extending this to the whole country would be “unsustainable.”

“This was a big carrot, and we can see it didn’t fully work,” Kari Hamalainen, chief researcher at the VATT Institute for Economic Research, said on a webcast. Implementing a universal basic income for all citizens “would be expensive. If we had a universal basic income, we’d have to incorporate taxation” and based on these results “it would be unsustainable.”

The government released data for the first year of this trial in early 2019. I wrote about it at the time and even then it was clear that it wasn’t working as hoped. In fact, the difference between the basic income recipients and the control group last year worked out to 4 hours. Not four hours a week but four hours over the entire year.

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.

Naturally, Vox tried to spin the initial results as if the failure of the project’s main goal was incidental. They haven’t published anything new about the conclusion of the trial yet. Maybe they’ll have something up tomorrow.

The coronavirus pandemic has brought a new surge of interest in the idea of basic income. Andrew Yang, who made UBI the centerpiece of his run for the White House, has pushed for a temporary UBI for the duration of the crisis:

Yang is getting some support from Pete Buttigieg even today:

So far, Yang hasn’t tweeted anything about the failure of the UBI pilot in Finland.

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Ed Morrissey 4:41 PM on September 29, 2023