• Starting this week, 120 Germans will receive a form of universal basic income every month for three years.
• The volunteers will get monthly payments of €1,200, or about $1,400, as part of a study testing a universal basic income.
• The study will compare the experiences of the 120 volunteers with 1,380 people who do not receive the payments.
• Supporters say it would reduce inequality and improve well-being, while opponents argue it would be too expensive and discourage work.

August 2020. Germany is about to become the latest country to trial a universal basic income, starting a three-year study of how it affects the economy and recipients’ well-being.

As part of the study, 120 people will receive €1,200, or about $1,430, each month for three years — an amount just above Germany’s poverty line — and researchers will compare their experiences with another group of 1,380 people who will not receive the payments.

The study, conducted by the German Institute for Economic Research, has been funded by 140,000 private donations.

All participants will be asked to complete questionnaires about their lives, work, and emotional state to see whether a basic income has had a significant impact.

Universal basic income is the idea that a government should pay a lump sum of money to each of its citizens, usually once a month, regardless of their income or employment status, effectively replacing means-tested benefits.

Its proponents argue that it would reduce inequality and improve well-being by providing people more financial security. Its opponents say it would be too expensive and discourage people from going to work. The idea has gained traction in recent years amid financial crises and growing inequality in some Western countries.

Jürgen Schupp, who is leading the study, told the German newspaper Der Spiegel that it would improve the debate about universal basic income by producing new scientific evidence.

“The debate about the basic income has so far been like a philosophical salon in good moments and a war of faith in bad times,” he told the newspaper.

“It is — on both sides — shaped by clichés: Opponents claim that with a basic income people would stop working in order to dull on the couch with fast food and streaming services. Proponents argue that people will continue to do fulfilling work, become more creative and charitable, and save democracy.

“Incidentally, these stereotypes also flow into economic simulations as assumptions about the supposed costs and benefits of a basic income.

“We can improve this if we replace these stereotypes with empirically proven knowledge and can therefore lead a more appropriate debate.”

A pro-basic-income lobbying group called Mein Grundeinkommen is funding the experiment. The group has used donations from its supporters to fund monthly €1,000 payments for 668 people since 2014.

Finland experimented with a form of basic income for nearly two years: From January 2017 to December 2018, 2,000 unemployed Finns received €560 a month. But the researchers behind that trial concluded that while it led to people out of work feeling happier, it did not lead to increased employment, the BBC reported.

• Universal basic income is the answer to the inequalities exposed by COVID-19
• Coronavirus has shown us why we urgently need to make a basic income a reality
• Finland’s basic-income trial found people were happier, but weren’t more likely to get jobs

Germany is launching a new experiment in basic income

Amid the Covid-19 pandemic, the government will give some citizens free money.By Sigal Samuel  Aug 25, 2020, 10:50am EDT

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Starting this month, life is about to get easier for 120 Germans. They will receive 1,200 euros ($1,430) every month for three years as part of a new experiment in basic income.

The general idea behind basic income — that the government should give every citizen a regular infusion of free money with no strings attached — has moved from the fringes into the mainstream over the past few years, with several countries running trials to test its effects.

The coronavirus pandemic has only made basic income more popular. With the crisis generating so much financial loss and uncertainty, advocates around the world are arguing that citizens desperately need some sort of guaranteed income. In the US, a coalition of mayors is pushing for this, while in Spain, monthly payments have been going to the nation’s poorest families since June.

In Germany, the amount being given to the 120 participants in the new study is just above the country’s poverty line. It certainly won’t make them Rockefellers, but it may ease their experience during the pandemic. They will fill out questionnaires about how the basic income has affected their emotional wellbeing, home life, and work life. Their responses will then be compared with the responses of a control group: 1,380 people who are not receiving a basic income.

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The German Institute for Economic Research is conducting the study. It is funded by 140,000 private donations collected by a nonprofit group called Mein Grundeinkommen.

That group has been active in this arena for years. In 2014, it used crowdfunding to set up a basic income raffle. By the end of 2019, it had awarded almost 500 basic incomes to people all over the world who had submitted their names. Each received about $1,100 per month for a year. According to FastCompany, 80 percent of recipients said the income made them less anxious, more than half said it enabled them to continue their education, and 35 percent said they feel more motivated at work.

This is consistent with the evidence available so far about basic income, which suggests that it tends to boost happiness, health, school attendance, and trust in social institutions, while reducing crime. The effect on employment status is a bit more equivocal, but a major trial in Finland found that basic income doesn’t seem to be a disincentive to finding work — a concern that critics have raised about basic income.

Still, those worries persist. And critics claim that a basic income could cheat economies out of productivity, and cheat individuals out of the sense of meaning that work can bring. Plus, they say, it’s just plain unaffordable for the government to pay every citizen enough to live on regardless of whether they work. The evidence so far does not support these critiques.

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Finland gave people free money. It increased their trust in social institutions.

Jürgen Schupp, who is directing the new experiment in Germany, told Der Spiegel that the study will allow everyone to have a more evidence-based debate.

“The debate about the basic income has so far been like a philosophical salon in good moments and a war of faith in bad times,” he said. “It is — on both sides — shaped by clichés: Opponents claim that with a basic income people would stop working in order to dull on the couch with fast food and streaming services. Proponents argue that people will continue to do fulfilling work, become more creative and charitable, and save democracy.”

Schupp said he wants to raise the quality of the debate by replacing clichés with empirical knowledge. That’s something everyone should be able to get behind, whatever their preexisting notions about basic income.

Dr. Ansari

dansari@diw.de

Debt for nature swaps: a path to sustainable development.