The first results from the world’s biggest basic income experiment
Abhijit Banerjee, co-founder and co-director of the Abdul Latif Jameel Poverty Action Lab (J-PAL), and Tavneet Suri, co-chair of the agriculture sector and research affiliate at J-PAL, are evaluating and reporting on GiveDirectly's universal basic income scheme in Kenya, the world's largest UBI programme. Two years into the twelve year programme, researchers find that individuals who receive a lump-sum payment earned more, invested more in education and started more businesses than the group that receives monthly payments. Tavneet explains, "The lump sum group doesn’t have to save. They just have the money upfront and can invest it."
Large sections of my brain that could contain useful knowledge are instead filled up with dumb tweets I saw years ago. One of my absolute favorites was someone identifying himself only as “Side Hustle King,” who would ask his followers, “Would you rather get paid $1,000,000 right now or $50 every month for the rest of your life? I’ll take Option B. That’s what passive income is.”
To save you some arithmetic: Unless you plan to live at least another 1,667 years (which is what it would take to make $1 million in $50 monthly increments) and do not care about inflation, Side Hustle King is mistaken. Option A is far better. It’s a case in point that, sometimes, you should take the lump sum, not regular payments.
GiveDirectly, a charitable nonprofit that sends cash directly to low-income households, has identified another such case, one where the answer was a little less obvious. For years now, GiveDirectly has been conducting the world’s largest test of basic income: It is giving around 6,000 people in rural Kenya a little more than $20 a month, every month, starting in 2016 and going until 2028. Tens of thousands more people are getting shorter-term or differently structured payments.