The Nonlinear Library EA - Early findings from the world's largest UBI study by GiveDirectly
Dec 7, 2023
11:29
Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Early findings from the world's largest UBI study, published by GiveDirectly on December 7, 2023 on The Effective Altruism Forum.
Summary of findings 2 years in:
A monthly universal basic income (UBI) empowered recipients and did not create idleness. They invested, became more entrepreneurial, and earned more. The common concern of "laziness" never materialized, as recipients did not work less nor drink more.
Both a large lump sum and a long-term UBI proved highly effective. The lump sum enabled big investments and the guarantee of 12 years of UBI encouraged savings and risk-taking.
A short-term UBI was the least impactful of the designs but still effective. On nearly all important economic measures, a 2-year-only UBI performed less well than giving cash as a large lump sum or guaranteeing a long-term UBI, despite each group having received roughly the same total amount of money at this point. However, it still had a positive impact on most measures.
Governments should consider changing how they deliver cash aid. Short-term monthly payments, which this study found to be the least impactful design, are the most common way people in both low- and high-income countries receive cash assistance, and it's how most UBI pilots are currently designed.
To learn about the most effective ways of delivering cash aid, GiveDirectly worked with a team of researchers to compare three ways of giving out funds.[1] About 200 Kenyan villages were assigned to one of three groups and started receiving payment in 2018.
Now we have results 2 years in. These newly-released findings look at just the first two years (2018-2020), when all three groups had received roughly the same amount of money.
Long-term UBI: a 12-year basic income of $22.50/month ($540 total after 2 years) with a commitment for 10 more years still to follow
Short-term UBI: a 2-year basic income of $22.50/month, ($540 total after 2 years) with no more to follow
Large lump-sum: one-off $500 payment given 2 years ago, with no more to follow[2]
These amounts are significant for people living below the extreme poverty line, which in Kenya means surviving on less than $33 a month or $400 a year.[3]
Researchers compared outcomes of these villages to a control group of similar villages that did not receive cash. The results are summarized below. You can read a table of the results here and the full paper here
A monthly UBI made people in poverty more productive, not less
Critics of universal basic income often fear monthly cash payments disincentivize work; however, this study in rural Kenya, like many studies of cash transfers before it, found evidence to the contrary for all groups.
Highlights from the research paper:
UBI improved agency and income: "Overall there is no evidence of UBI promoting 'laziness,' but evidence of substantial effects on occupational choice… impacts on total household income are also positive and significant."
Cash transfers increased savings: "The effect on both household and enterprise savings are positive and mostly significant… The amount the households have in rotating savings and credit associations (ROSCAs) also goes up significantly…"
Cash did not change hours worked, but recipients shifted to self-employment: "Treated households are not working less… there is significant reduction in hours of wage work, all of which comes from work in agriculture, and a slightly larger increase in hours of non-agricultural self-employed work, so there is no net effect on total household labor supply."
Cash did not increase drinking: "Respondents [receiving cash] reported seeing fewer of their neighbors drinking daily, and were less likely to perceive drinking as a problem."
Giving $500 as a lump sum improved economic outcomes more than giving it out over 24 months
If we have limited funds to help a person living i...
Summary of findings 2 years in:
A monthly universal basic income (UBI) empowered recipients and did not create idleness. They invested, became more entrepreneurial, and earned more. The common concern of "laziness" never materialized, as recipients did not work less nor drink more.
Both a large lump sum and a long-term UBI proved highly effective. The lump sum enabled big investments and the guarantee of 12 years of UBI encouraged savings and risk-taking.
A short-term UBI was the least impactful of the designs but still effective. On nearly all important economic measures, a 2-year-only UBI performed less well than giving cash as a large lump sum or guaranteeing a long-term UBI, despite each group having received roughly the same total amount of money at this point. However, it still had a positive impact on most measures.
Governments should consider changing how they deliver cash aid. Short-term monthly payments, which this study found to be the least impactful design, are the most common way people in both low- and high-income countries receive cash assistance, and it's how most UBI pilots are currently designed.
To learn about the most effective ways of delivering cash aid, GiveDirectly worked with a team of researchers to compare three ways of giving out funds.[1] About 200 Kenyan villages were assigned to one of three groups and started receiving payment in 2018.
Now we have results 2 years in. These newly-released findings look at just the first two years (2018-2020), when all three groups had received roughly the same amount of money.
Long-term UBI: a 12-year basic income of $22.50/month ($540 total after 2 years) with a commitment for 10 more years still to follow
Short-term UBI: a 2-year basic income of $22.50/month, ($540 total after 2 years) with no more to follow
Large lump-sum: one-off $500 payment given 2 years ago, with no more to follow[2]
These amounts are significant for people living below the extreme poverty line, which in Kenya means surviving on less than $33 a month or $400 a year.[3]
Researchers compared outcomes of these villages to a control group of similar villages that did not receive cash. The results are summarized below. You can read a table of the results here and the full paper here
A monthly UBI made people in poverty more productive, not less
Critics of universal basic income often fear monthly cash payments disincentivize work; however, this study in rural Kenya, like many studies of cash transfers before it, found evidence to the contrary for all groups.
Highlights from the research paper:
UBI improved agency and income: "Overall there is no evidence of UBI promoting 'laziness,' but evidence of substantial effects on occupational choice… impacts on total household income are also positive and significant."
Cash transfers increased savings: "The effect on both household and enterprise savings are positive and mostly significant… The amount the households have in rotating savings and credit associations (ROSCAs) also goes up significantly…"
Cash did not change hours worked, but recipients shifted to self-employment: "Treated households are not working less… there is significant reduction in hours of wage work, all of which comes from work in agriculture, and a slightly larger increase in hours of non-agricultural self-employed work, so there is no net effect on total household labor supply."
Cash did not increase drinking: "Respondents [receiving cash] reported seeing fewer of their neighbors drinking daily, and were less likely to perceive drinking as a problem."
Giving $500 as a lump sum improved economic outcomes more than giving it out over 24 months
If we have limited funds to help a person living i...