A Universal Basic Income: The Answer to Eradicating Poverty and Unleashing Ingenuity?
August 25, 2017
Imagine receiving a monthly check from the federal government that covers all your basic expenses. Think food, shelter, clothing. What would you do? Would you take that leap of faith to be the entrepreneur you’ve always dreamt of being? Take on another professional challenge you’ve eyed for the last twenty years but never pursued because it presents too much of a financial risk? Or would you grow lazy, spending your days on the couch watching reruns of the latest hit Netflix series?
These are the questions plaguing government officials around the world today as they debate the merits and risks of a universal basic income, or UBI. But first, let’s clarify what this term means.
What is a universal basic income?
Let’s take each word individually:
- Universal – This means all members of the population are recipients. Hidden in here is the idea of unconditionality, meaning people are not required to do anything or meet any qualifications to be eligible. Everyone is eligible. Everyone receives the money. No strings attached.
- Basic – This refers to the fact that the funding is meant to be sufficient to cover one’s basic needs.
- Income – This suggests the money is a regular cash transfer from the government or a steady stream of income promised and delivered by the government. Guaranteed for life.
Piecing these ideas together, we can define UBI as a routine cash transfer from the government meant to cover basic needs that is delivered to all members of a population. As one organization pioneering on-the-ground research in the field succinctly puts it, “The core idea…is that we should use cash transfers to guarantee a minimum standard of living in society.” 
What’s the debate?
While the topic has long been a point of interest, it has been more recently debated beyond its altruistic developing world roots as people consider the impact of automation in the developed world. In fact, Mark Zuckerberg commented on the idea in the commencement speech he gave at Harvard this spring.
Those in favor of instituting a universal basic income believe it could be the solution to poverty, the answer to job elimination given increasing automation, and an initiative that could simplify the incredibly complicated US welfare system. Meanwhile, those opposed claim it’s too expensive and will encourage people to stop working altogether. This question of how a universal basic income could and would be funded upon implementation has found its way to the spotlight in the US. Solutions range from eliminating all welfare programs to simply raising taxes.
Has the US ever tried a universal basic income?
Not truly. Between 1968 and 1982, the US conducted four negative income tax experiments, something many consider a viable alternative to a universal basic income. As shown in the figure below, however, a negative income tax fails to meet all elements of our definition of a UBI.
In fact, as the figure shows, no country in the world has quite managed to do this. Variations of UBIs have been piloted, but these experiments have lacked the specifications and rigor required to be considered implementations of a true universal basic income. GiveDirectly, a non-profit based in NYC dedicated to global poverty alleviation, is, however, changing the landscape. The organization has recently launched the largest true UBI experiment to date, involving more than 26,000 people over the course of 12 years. Launched in the fall of 2016 in several rural villages in western Kenya, the experiment has garnered the support of leading US scholars and drawn the attention of leaders worldwide.
So…what’s the answer?
There remains no clear answer, particularly in the US. There is hardly agreement on the impact instituting a universal basic income would have on the country, let alone the logistics of implementing one. In fact, one recent study suggests instituting a UBI to replace all welfare programs in the US would come at the expense of the elderly and achieve minimal progress in the way of poverty reduction.  Perhaps a more viable alternative is a negative income tax. Child allowances are another idea that has been brought to bear. Whatever the answer, it is clear we have something to learn from Kenya.
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The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.
Additional Blog Posts
 Matthews, Dylan. “What Happens If You Replace Every Social Program with a Universal Basic Income.” Vox, May 30, 2017. https://www.vox.com/policy-and-politics/2017/5/30/15712160/basic-income-oecd-aei-replace-welfare-state.