A paper presented to the National Bureau of Economic Research has outlined its short-term results from a long-term UBI trial in Kenya, and they are impressive!
Communities receiving UBI experienced substantial economic expansion—more enterprises, higher revenues, costs, and net revenues—and structural shifts, with the expansion concentrated in the non-agricultural sector.
Labor supply did not change overall, but shifted out of wage employment and towards self-employment.
Once again, UBI is proving to boost economies, increase innovation and promote industry. It does not reduce labour market participation, encourage laziness nor increase spending on drugs and alcohol.
An important goal of this experiment is to overcome a big problem with UBI trials: they are temporary. This paper shows that there is a psychological difference in providing a UBI for a limited period (2 years) versus providing a UBI indefinitely (in the experiments it is still limited to 12 years, but psychologically, at least in the early years, it is is perceived as almost permanent) which gives people the opportunity to use the UBI to make long-term decisions, investments and real life changes.
Furthermore, the experiment focussed on making the UBI universal (the ‘U’ in UBI) by giving it to all (not just a select few) adults (not households) in the village. This removed significant psychological constraints on each individual’s ability to make decisions and choose what to do with their income.
It’s also worth pointing out that one of the key findings in this experiment is that providing a UBI significantly improved the participants’ mental health with depression scores falling in all scenarios. A UBI is not just about providing basic economic needs, it’s about ensuring that all our basic needs are met; both physical and psychological.
What would you do if you received a long-term UBI?
Daniela Ortner