Early insights from the first field test of universal basic income

Since October 2016, each of 95 adults in a rural village in Western Kenya has received 2,280 shillings, about $22, every month from Silicon Valley-based nonprofit GiveDirectly. They’ll get that money for the next 12 years, regardless of what else happens in their lives.

The pilot project is among the first field tests of universal basic income — the idea of providing everyone with a base amount of cash, regardless of work status. It may also hold some early answers about how recipients choose to use the money, how it impacts their decision to work, and general family well-being.

GiveDirectly has now released the results of the first phone survey since the pilot began, asking people how the income has impacted their lives. A respondent named Erick (only first names are disclosed) used his entire first transfer to purchase a fishing net and a floater. Milka purchased food but kept most of the transfer as savings. Fredrick put most of the transfer toward school fees, while also spending money on clean water, food and soap.

Such replies preview what researchers hope to glean by expanding the project involving around 26,000 beneficiaries in a randomized control trial. The study will compare four groups of villages — 40 receiving a long-term basic income, 80 receiving a short-term basic income, 80 receiving lump sum payments, and 100 in a control group.

The team aims to measure the upsides and downsides, benefits and limits, of a universal basic income so that both proponents and opponents can see the evidence. They will share results of the study as they come in, so observers can see if it seems like a fair test, Paul Niehaus, GiveDirectly co-founder, told Devex.

A new model

In many ways, GiveDirectly has already changed the way that much of development is done through its model of unconditional cash transfers. It’s first true study on universal basic income pushes the logic of direct giving even further.

“We were really struck by the way the conversation on universal basic income comes from two totally disparate ends of spectrum,” Niehaus told Devex. “On one end, you have people from wealthy countries worrying about what is going to happen to people and their jobs because of automation. On the other end, you have people who are thinking about alleviating poverty and whether this very direct approach might be the right one.”

GiveDirectly can speak to both ends of that conversation, Niehaus said. The nonprofit draws much of its funding and support from Silicon Valley but works in Kenya, Uganda and Rwanda.

“That’s hard,” Niehaus said. “It requires understanding where people are coming from and what their concerns and questions are and incorporating their perspectives into the measurement plan.”  

Michael Faye, fellow co-founder of GiveDirectly, told Devex he sees the basic income trial as a natural extension of the organization’s work on short-term unconditional cash transfers.

Yet the model is in fact the opposite of GiveDirectly’s transfers, Niehaus said. Those cash transfers provide funds up front, while the new UBI study will make monthly payments over the next 12 years.

“We have tons of evidence on the impact of cash transfers, but little to no evidence informing this conversation on universal basic income,” Niehaus told Devex.

Leapfrogging to the gig economy

GiveDirectly may be uniquely positioned to bring evidence to the debate over UBI, but developing countries themselves bring their own expertise.

“In many ways, these developing countries already have gig economies, because when you look at how many poor people earn their living, it’s usually a portfolio of ways,” Niehaus said. “Because these countries are already living in a world where job-based approaches to social policy don’t make a lot of sense, they’re further along in their thinking.”

India’s government, for example, devoted an entire chapter of its most recent economic survey to what a universal basic income would look like. Meanwhile, nearly every African country has at least one unconditional cash transfer program, Niehaus said.

But one of the barriers for universal basic income to make the leap from pilot to policy has to do with public demand.

“Voters have historically been very skeptical of things that look like handouts,” Niehaus said.

He thinks evidence can help. GiveDirectly is aiming to answer questions regarding the impact that basic income has on family dynamics, how the money gets spent, and whether recipients stop working.

Initial results

GiveDirectly’s first follow-up survey from the village asks recipients some of the same big picture questions that the organization’s research hopes to answer, including how much was spent versus saved, how it impacted family relationships, whether people were more or less inclined to work, and how the welfare of children has been impacted.

Among the most contentious arguments over UBI is whether it will result in a class of non-working citizens. Most initial replies showed the opposite: greater investment in small businesses, personal training and education to secure better jobs.

Recipient Joyce, for example, said she would continue with her charcoal burning business, and casual jobs in nearby farms, so she can have money between transfers. Fredrick said the payments motivated him to finish his driving course and find employment. Millicent said she wanted to start a business selling second-hand clothes.

GiveDirectly is not the only group testing universal basic income. Y Combinator, the San Francisco-based startup accelerator, is testing UBI in nearby Oakland, California, providing 100 people between $1,000 and $2,000 a month. Finland, meanwhile, is sending 2,000 unemployed people monthly basic incomes in place of their social benefits.

But none of these experiments have studied what happens when an entire community gets money over an extended time period — nor are they likely to do so given the cost, which is part of why GiveDirectly decided Kenya would be the place for a proof of concept. “The same study in the U.S. would cost probably 100 times more,” Niehaus said.

Community-level tests are vital, Niehaus said, because the most fundamental aspect of universal basic income is that it is in fact universal. Whether this study reflects how a UBI policy at scale would work depends in part on whether these payments continue over the full 12 years. And that depends on whether GiveDirectly raises the $30 million it needs for the study.  

“We know a lot now about the effects of cash in the pocket,” Niehaus told Devex. “What we don’t know is what are the effects of that guarantee on long-term stability?”

Beyond fundraising, other challenges include fulfilling this long-term commitment, which involves organizational planning, financial planning and managing risk, Niehaus said.

“We don’t want to launch this thing unless we’re highly confident we can follow through on this commitment to people,” he said.