How universal basic income would work best — and it might not be monthly cash payments, a Nobel prize winner's new research suggests
Abhijit Banerjee, co-founder and co-director of the Abdul Latif Jameel Poverty Action Lab (J-PAL) and Nobel Laureate in economics, and other researchers release short-term results of the world's largest and longest universal basic income (UBI) experiment in Kenya, led by GiveDirectly. The experiment is producing unexpected outcomes as data suggests that one-time lump sum payments may have more lasting impacts than monthly payments, particularly in areas such as education investment.
Abhijit says, "USD 22 is not quite enough to start a business. So you have to figure out a way of turning your small amounts of money into a big amount of money. The contrast with the lump-sum is that the lump-sum is precisely to get it once, and that has its downsides: if it's gone, it's gone. But it has the advantage that you don't need to save it up little by little to get to your goal to start a shop. You have the money to start a shop. So in each of these, the kind of the incentives are very different."
Monthly cash payments through universal basic income programs work for those in need. But a different type of payment might work even better.
Nobel prize economist Abhijit Banerjee, alongside the late Princeton's Alan Krueger, UC San Diego's Paul Niehaus, MIT's Tavneet Suri, and Michael Faye of GiveDirectly — a nonprofit that gives cash to those in need —recently released the short-term results of a universal basic income experiment in Kenya.
Starting in 2017, GiveDirectly began conducting the longest and largest UBI study of 300 villages in Kenya that analyzed the impacts of four different types of direct payments.