Basic Income/Negative Income Tax

A Privately Funded Experiment in a Universal Basic Income

Dozens of villages in Kenya will soon be receiving payments.

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GiveDirectly

A U.S.-based group is preparing a pilot program in Kenya that will test the effects of a universal basic income—the increasingly popular concept of giving virtually everyone in a community unconditional payments on a regular basis. Unlike past large-scale experiments of this sort, this one is being run and funded privately.

The organization behind the effort is GiveDirectly, a charity whose work in Africa is based on the idea of giving people cash without restrictions on how the money can be spent. (The underlying anti-paternalist principle is that the needy know their needs better than outsiders do.) That outlook led naturally to an interest in the basic income, and so the organizers conceived a randomized control trial:

• In one set of villages, every adult will receive monthly payments equivalent to 75 cents a day for two years.

• In another set of villages, every adult will receive such payments for 12 years.

• In yet another set of villages, the adults will receive a single lump-sum payment equivalent to what the two-year group will be receiving.

• The last set of villages is the control group, so they don't get any money at all.

The aim here, GiveDirectly's Ian Bassin explains, is "to isolate the effects of what most people consider a 'basic income'—that is, a permanent payment over time—from something resembling more traditional temporary supports. For example, when someone knows they have a long-term, guaranteed floor below which they cannot fall, do they take more risks like starting a business or going back to school? And does that security produce greater overall returns?"

The current plan is for 41 villages to go on the 12-year plan, 80 to go on the two-year plan, 80 to get the lump sums, and 100 to be in the control group. (The size of each category could shrink if GiveDirectly doesn't hit its fundraising target.) To answer the first question that probably popped into your minds: No, a villager can't change which deal he's getting by moving from one town to another. Once enrollment has started in a village, no new arrivals can take advantage of the payments there. Conversely, if you're already enrolled in the program, you still get the money if you leave your village. After all, one potential outcome the researchers want to look for is whether people will use their payments to move somewhere with greater opportunity.

The group expects the experiment to cost about $30 million, and they have thus far raised around $23 million toward that. (The lump-sum payments are being funded separately, with the money coming from GiveDirectly's ongoing efforts in Kenya. They expect the costs there to be a little higher than $6 million, which is well within the program's usual annual budget.) One village in the 12-year group is already receiving funds—sort of a test case to work out any logistical kinks in advance. If all goes according to plan, the rest will start receiving their money early next year.

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  1. Even though the results in a place like Kenya will vary wildly from the results in a first world nation, I guarantee that extravagant claims and extrapolations will be made based on this experiment.

    1. That is the first thing that popped in my head. This experiment will tell us about the participating villages and nothing else. It won’t inform us about any other cultures, even ones on the other side of Kenya much less first world cultures half a world away.

      I suggest this is a feel-good project for some proggies mixed with the charity vulture types who get paid out of the collections. I would like to see a list of administrative salaries.

      1. About 85% of the $30 million is budgeted to go to the recipients. The rest is delivery and management costs. Here is a breakdown for one of their other programs.

        1. 15% administrative costs seems pretty good for this kind of thing.

          I’m not sure how this will play out or how useful it will be in a western civ context, but I am actually interested in seeing how the outcomes to this.

      2. In the US, 7-11 sales would soar. Beer, cigarettes, scratch-offs, maybe even those quasi-donuts.

  2. For example, when someone knows they have a long-term, guaranteed floor below which they cannot fall, do they take more risks like starting a business or going back to school? And does that security produce greater overall returns?

    Cowboy poetry? Free to be artists and poets?

    Land of the Lotus Eaters?

    Guess we will see. Unless SOMALI PIRATEZ come loot them.

    1. “SOMALI PIRATEZ” or to a progressive, Libertarians!

    2. Oh you can bet most of this money will be extorted.

    3. They will spend it on prostitution and gambling.

    4. Developing new artisanal mayonnaise flavors.

  3. The results should be interesting, especially if they also track mobility within and out of these villages. Part of the whole reason to increase income is to improve mobility and access to global markets. Will the individuals in the villages continue to receive payments if they move to a city, or are they restricted to their petri dishes?

    1. Covered in the article, they receive the money regardless of any movement.

      1. Sure, it’s easy to look smart if you read the full article.

        1. “read the full article”

          Those words…I understand them. But when you put them together like that…???

          1. I always believed the “F” in “RTFA” stood for something other than “full.” Go figure. TIL.

    2. I’d also wonder how much security is being provided to the recipients. One of the biggest problems of building wealth in many developing countries is the risk that someone will come along and it take it by force.

      1. I’ve already booked my plane tickets.

      2. Or the government declaring your currency invalid so they can make you put it in the bank where they can take half of it.

  4. Even if we ever implemented a universal basic income, it’s a pipe dream to think that other forms of wealth redistribution would be done away with. It would simply be another handout stacked on top of those we already have.

    1. That’s my biggest beef. Welfare isn’t just for the people who benefit from the programs, it is also for the people who’s job it is to administer the benefits. That cost is far from negligible.

      1. Last I looked the administrative cost for Federal welfare programs was 93 cents on the dollar. Recipients get 7 cents for every tax dollar going in.

        1. Holy shit you actually believe that don’t you? Not even Limbaugh lied about this so fantastically.

          1. Yet curiously you did not provide any substance to your refutation.

            1. What you actually believe that welfare spends 93% on administrative costs? I have to disprove this?

              Is your Google broken?

              1. Is yours? I didn’t say anything about the factual accuracy of Suthenboy’s claim. You did. So pony up and prove it.

      2. It’s also worth noting that many (perhaps most) of the people who ‘need’ entitlements would still need them after getting a universal basic income. Many would buy lottery tickets, nicer cars, and other unnecessary amenities instead of health insurance or saving for retirement.

        The leftist notion that most people are poor because of perpetual bad luck is a fiction. Sure, one might say it’s a form of bad luck to have bad parents, a shitty community, and a worthless school system, but giving someone money doesn’t retroactively make a person better educated, better raised, and more prudent. That’s kind of the whole reason we give them things they need, not money: because the major reason for most of their poverty is either stupidity, mental illness, apathy, or some other personality defect would likely lead them to waste the money.

    2. Exactly this. The left would lie claiming it would replace all other government benefits. Then once implemented, they would notice that some people are doing better than others because they decided to work to supplement their basic income. Then they would scream ‘unfair! We need social justice!’. Then we would pile the old handouts right on top of it for the underachievers. You will never make social justice assholes happy, ever. Even if every citizen were rich beyond their wildest dreams, it would still somehow be unfair.

      1. I wonder how effective a Constitutional amendment would be in slowing that slide. I’m on the record as saying that I could live with a UBI if it completely replaced the current welfare state. Doing so by amendment might be the least risky way of achieving that.

        1. Only way of maybe achieving that, I think.

        2. If you can amend away the ostensibly constitutional justifications for the welfare state, like the General Welfare clause and the Commerce Clause. Good luck with that.

    3. No, you can trust the left to make good faith promises and then keep them once the moment finally arrives. And since we’re talking about UBI, that moment will of course be a libertarian moment! /CATOtarian

  5. GiveDirectly, huh? I recall hearing a radio blurb on this but for some reason I remember it being called GiveMoney. I think this approach makes sense in Africa where the cost of making sure a restricted program is enforced is so great that just sprinkling cash from helicopters makes more sense. I heard universal basic income getting some more play on the npr last night too. I strongly suspect that we aren’t so far from that already what with the vast numbers enrolled in social security disability.

    1. Helicopters??? That sounds expensive!

      1. Metaphorical heliobopters are free.

        1. So is metaphorical medical care.

    2. GiveMoney? Is that tied in with The Human Fund?

  6. Interesting research and I support them doing it. But I’d would rather have seen one additional group where the money was contingent on working and the additional money capped to be no greater than the money received from work. My guess, is that a group with work contingent additional income would have had significant higher growth in per capita income.

    1. The experiment deviates from one of the usual parameters of the Basic Income idea? the fall off.

      Usually, there’d be a fall off rate, say, 50%. So, for every 2? earned from work, you’d get 1? less of Basic Income until you reached the point where you’re making 2x the Basic Income level and presumably you’d earn enough to support yourself without Basic Income.

      1. The “right” way to do an UBI is without a fall off. I figured out once via rough back of envelope calculation, that we could be deficit neutral by ending all welfare programs(including SS), providing everyone a UBI at poverty level, with a flat tax of 35%.

        So there isnt a “fall off”, but every dollar you earn outside the UBI would be taxed at 35%. So low income earners would be paying more in income tax than now, so I guess that is kind of a fall off.

      2. A “fall off” would disincentivize working. That’s the reason the UBI generally is proposed to be the same for everyone.

        One problem though is that there still is a fall off, effectively, because the law of decreasing marginal utility. $20,000 is worth a lot more to someone who makes $20,000 a year than someone who makes a million a year. The guy making $20,000 a year may well be willing to quit his job and just live off a $20,000 UBI if the option were offered, instead of keeping his job and making $40,000. However, the cardiologist making $600,000 a year wouldn’t even notice the $20,000 UBI relative to his earned income, so he wouldn’t change his behavior at all.

        For this reason, in order to truly offset this effect, you would actually have to *increase* the basic income the more money a person makes from working, presumably up to some cap, to avoid disproportionately disincentivizing poor people from working.

  7. “based on the idea of giving people cash without restrictions on how the money can be spent”

    Buttt, DRUGS! You can’t just let people do whatever they want with money!

  8. The government is going to be the confounding feature. What will a local government do if it’s people are being subsidized by outside funding?

    1. They’ll need in on it. The rights palms must be greased. Which means the peasants 25 cents a day would suddenly be 2 cents a day.

    2. That’s a good question. When well meaning furriners dump food on the market in these undeveloped countries, local agriculture often grinds to a halt because the foreign largess pushes food prices so low there’s little incentive to grow food beyond subsistence levels. This form of foreign largess, I suspect, would push labor prices relatively high depending on how generous these handouts are. So if for example, you’re in a country where you can earn $2 per day for some grueling farm work, and people suddenly get paid $20 per day just for breathing, what happens to the cost of farm labor in that region? I guess the experiment will help us figure that out, but I dare say that it will retard the long term development of Kenyans.

      1. It absolutely does. Everyone needs to see the documentary Poverty, Inc. It goes through these case by case, and explains the mechanism of the foreign aid-NGO-industrial complex, the incentives of its agents, and the actual effects on industry in the victimized nations.

        1. Seems like the vast majority of people would prefer to find a shortcut around economic reality rather than try to understand it.

    3. Local Government on the village level probably consists of Chief and some elders. I would bet they are getting a cut for just letting people sign up for this.

      Feel good do gooder assholes need to leave people alone. The UN, USAID, and any number of NGO’s have fucked up a lot of people making them dependents on others good feelings.

      Other than offering them work in a local industry by investment, or seeing to their immediate needs during a natural disaster, stay the fuck out of peoples lives.

  9. For example, when someone knows they have a long-term, guaranteed floor below which they cannot fall, do they take more risks like starting a business or going back to school? And does that security produce greater overall returns?

    Prediction: most people will sit on their asses. Two years is enough time for a dependence culture to form. Then, when the rug is pulled out from under them, people will begin starving in the streets. The international wailing over this crime against humanity will force them to continue the benefits in perpetuity. Welfare doesn’t go away.

    On the bright side, we can learn a lot from this experiment. Too bad a bunch of poor Africans will have to pay the price. You have to break a few eggs to make progs feel good.

    1. To progs, people like that are like zoo animals or lab rats. They like to ‘observe’ them. This is why they make such a fuss over why uncontacted tribes in remote locations should just be ‘left alone’. Leave them alone to live a primitive brutal existence and die by age 25, so that we can observe them.

      1. That and they don’t want us to “corrupt” them with our exploitative, oppressive capitalist culture. Hence the idiots praising the “quaintness” of time-stopped Havana and the romanticizing the great spirituality of Native American culture.

      2. +1 Prime Directive.

        No wonder Kirk broke it every other week.

    2. ^this. How many times do we need to re-learn this lesson?

      Equality of outcome vs. equality of opportunity. WE ALREADY KNOW WHICH ONE WORKS BETTER.

      1. And obviously a person born with a million dollars in his trust fund and a person born with a piece of shoe leather to eat have equal opportunities.

        1. Do you ever wonder why people born into wealthy families tend to do better in life economically than people who win a comparable amount of money in the lottery? Because if you’re born into a family with millions of dollars, chances are your parents (or their parents) were smart, disciplined, educated, and fiscally competent, and passed those traits (to some extent genetically, but more than that, via good parenting) onto their children.

          Take an average 18 year old poor kid and an average 18 year old middle/upper class kid, give them each an equal sized nest egg, and see what happens. Hell, just notice the fraction of (mostly of humble origin) professional athletes (for basketball and football it’s like more than half) that are either bankrupt or in debt within 10 years of leaving the sport. Conversely, take away all of a rich kid’s money, and he’ll still most likely end up making more 15 years down the road than a poor kid who didn’t have any to begin with. The reality is, the most economically valuable thing most rich/middle class kids get from their parents isn’t their inheritance, but the economic virtues conducive to success.

        2. A million-dollar trust fund is only a worthwhile step up if you know how to use it; and if you know how to use it, then you can get it by other means.

        3. Yeah, just look at lottery winners. Give em $100 million and 10 years later they’re broke. Clearly, that unequal opportunity had strong predictive power over their lifelong wealth and earning potential.

          1. Citation needed for these folk claims. People born with money don’t always do great either, but that’s not really my fucking point is it.

            1. Citation needed

              Is your Google broken?

  10. It’s an interesting concept but I question whether the results, whatever they are, will be applicable to individuals and groups with different cultures, values, standards of living, etc. And the group sizes seem fairly small.

    1. Yes, whatever might happen over there would not give us much predictive insight into how such a program might work in San Fran, or Detroit, or Santa Fe, etc.

  11. OT: Randy Forbes’ corruption machine tries to get even with Scott Taylor

    Supporters of Rep. Randy Forbes, still angry at his loss in a primary last summer, have taken revenge on a fellow Chesapeake Republican who managed the campaign that defeated the veteran lawmaker.

    The Chesapeake GOP voted to reject Scott Weldon’s application to join the city branch in mid-October, four months after he orchestrated the winning 2nd Congressional District race of state Del. Scott Taylor.

    It’s pretty well known around this area that if you want to get anything built in Chesapeake that might make waves, the best way is to hire Forbes’ wife as a consultant. His little money machine is over and his GOP cronies don’t like it.

  12. The group expects the experiment to cost about $30 million, and they have thus far raised around $23 million toward that. (The lump-sum payments are being funded separately, with the money coming from GiveDirectly’s ongoing efforts in Kenya. They expect the costs there to be a little higher than $6 million, which is well within the program’s usual annual budget.)

    Wait. I’m not familiar with the intimate details of crowd-funding and non-profit work, but this reads a little iffy. Is this saying they expect it to cost $30 million to give away $6 million? They expect it to cost $30 million to study giving away $6 million? $6 million per year, or just $6 million in total over the course of the program?

    Assuming at some point this makes mathematical sense to someone, I’d love an explanation, and then maybe it will make sense to me as well.

    1. You have to account for the shrinkage of recipients giving away their allotments in exchange for magic beans.

      Because if they had any goddamn sense they wouldn’t have been born in a poor-ass African country.

    2. The math works fine…if you are an administrator of the ‘experiment’. You don’t think they are doing it for free, do you?

    3. The lump-sum payments are being funded separately, with the money coming from GiveDirectly’s ongoing efforts in Kenya. They expect the costs there to be a little higher than $6 million,

      Reading iz 4 proggies.

        1. All you’re showing me are more signs of your lack of attention to detail.

          1. Says the unhappy internet person who called me a proggie.

            You’re doing so well. You’re just misunderstood.

            1. No, that commenter is a randomly returning pile of shit. Perfectly understood.

            2. Wow. How embarrassing for you.

    4. I read it as “the lump sum (one time) payments to the group paid up front will total 6 million. Give Directly already has these funds in the budget” The 30 million figure is for all of the remaining monthly payments. Plus monitoring and etc.

      But I could be mistaken

      1. That’s basically it. They don’t have the $6 mill in hand yet, so I had to phrase it a little oddly, but their usual annual budget for that program is way more than $6 million and they don’t expect it to drop off.

  13. I’m so glad we have an opportunity to experiment on these noble savages.

    1. Here’s a privately funded effort in Oakland, with shorter duration. A friend shared this with me after I shared the above article. We have been discussing UBI recently. So what I really mean is, apologies for the weird editorial slant of the Guardian article.

      Silicon Valley has, paradoxically, become one of the most vocal proponents of universal basic income (UBI). Venture capitalist Marc Andreessen, web guru Tim O’Reilly and a cadre of other Silicon Valley denizens have expressed support for the “social vaccine of the 21st century”, and influential incubator Y Combinator announced on 31 May that it will be conducting its own basic income experiment with a pilot study of 100 families in Oakland, California ? a short hop over the San Francisco bay.

    2. So noble. So savage.

      1. So noble, much savage. Do it right!

        1. I did.

  14. They need another group which will have freedom, rule of law, and property rights. Turn them loose and see what happens.

    1. Possibly a small city state.

  15. It won’t go according to whatever plan they have.

    I wouldn’t take much from the results either. A person in Kenya has a completely different living standards and considerations than we do in North America. The temptation to use UBI to buy an Xbox or flat screen TV is big here. I reckon there wouldn’t be too much delayed gratification here. Just a guess.

    1. Or much of it here.

      1. Sorry, I meant to say there.

        1. If it is, so be it. That’s the *natural* state of people. Government welfare could never remedy that except to enable it.

    2. I don’t know that you can even extrapolate much from village to village. How did the control group get picked? How did the lump sum villages get picked? How did the 12 year villages get picked? How are they similar and how are they different? I think the number of variables is huge and probably not being fully accounted for.

      1. How many people are going to move to the 12 year village after 2 years?

    3. It won’t go according to whatever plan they have.

      Are you familiar with the concept of an “experiment”?

      1. Someone’s got a welfare boner.

        1. Nowhere near as big as the boner you have for your daddy.

          1. Well, I’m convinced.

          2. Do we see the return of ‘you’re an idiot’?

          3. Be a bitter asshole all the time, Hail. People like that.

            1. S/he’s been here several times under different handles; asshole from one end to the other. Nothing added, just pedantic whining.

            2. Well I can tell how popular it is around these parts.

          4. Well, his dad is pretty hot.

  16. “Quick, move to Lump Sum Village!”

    Seriously, I love the fact that this is an experiment. Go for it.

  17. A U.S.-based group is preparing a pilot program in Kenya that will test the effects of a universal basic income?the increasingly popular concept of giving virtually everyone in a community unconditional payments on a regular basis.

    I’m wondering about the ramifications of it becoming an ‘aid-based’ economy. A foreign group is providing the funds here. Let’s say the study shows positive results, does Kenya have the economy and revenue to continue a universal income? If not, will it be continued in perpetuity by outside groups/governments? If so, does that change the value equation?

    It’s one thing for a country to implement its own minimum basic income but it seems to me you’re kind of… poisoning the well on this study in how its being conducted.

  18. It won’t even work as a test because one of the major arguments against doing this is it would simply cause inflation and everyone would be just as poor as they started after prices came up. But that inflation won’t occur on the small scale of a village where they still buy all their things from other places that won’t be involved in this experiment.

  19. I don’t know the details regarding the reparations currently paid to Native Americans, but it seems like that system would be an example showing how the subject experiment will turn out.

  20. No, a villager can’t change which deal he’s getting by moving from one town to another. Once enrollment has started in a village, no new arrivals can take advantage of the payments there.

    So there are rules which govern these fictional, imaginary lines?

    1. How would they know? Biometeric enabled database?

  21. Meanwhile on another corner of the planet we will resume testing the hypothesis that society improves by taking money away from poor people but it also improves by giving money to rich people.

    1. Gee, Tony, I’m pretty sure we’re testing whether an ignoramus of your caliber can remember to breathe.
      So far, it seems so, to the detriment of mankind.

      1. For some reason when I picture you I picture a person with the physical capacity for being potty trained but nonetheless the inability to part with his adult-diaper lifestyle.

    2. Tony, why did you rape all those Taiwanese children?

    3. taking money away from poor people

      Who knew liberals had a problem with taxes?

  22. “The underlying anti-paternalist principle is that the needy know their needs better than outsiders do.” This guy needs to get out of the house more often. If implemented in the U.S., the end result of this will be not only a guaranteed income for the poor, but also the additional benefits that they are already collecting.

    1. Why? Because such a ridiculous assumption is necessary for you to reject a perfectly good idea outright? Obviously any such scheme implemented here would replace existing means-tested welfare programs. That’s the entire point.

      1. And yet, no it wouldn’t. What happens when some people use their basic income to by things other than basic necessities, and still end up without health insurance, shelter, food, retirement funds, etc.? You and I both know what will happen: progressives won’t have the heart to cut the chord and will provide such people and will insist that we still provide those people with medicaid, public housing, food stamps, social security, etc. And once it’s been established that anyone who squanders their ‘basic income’ on consumer goods will still get their basic necessities covered by the old-fashioned welfare state, there will be little reason not to spend the ‘basic income’ on fun things, as spending it on actual necessities will just render you ineligible for the other programs.

        Here’s the test. When someone blows their monthly check the day after they get it on something useless, are you (or the bulk of the Democratic electorate) going to be willing to say ‘sorry, but you made your bed, now lie in it’ and send them off to starve in the cold? No, I don’t think so. And that’s why a UBI is not a good idea; in the end, it won’t replace the other programs; it would just be added on top of them.

        1. Thank you MarkLastname. I thought that was implicit in what I said but some people could not see it. Your explanation is exactly what would happen.

        2. Seeing as homeless people starve to death in the cold every winter, I’m not sure your grasp of American generosity and altruism is on-target.

          1. Seeing as homeless people starve to death in the cold every winter

            Name five people who died last winter in the United States from involuntary homelessness.

  23. I think it’s interesting that no one has mentioned why Silicon Valley is interested in this idea.

    It’s because Silicon Valley is afraid most jobs are going to go away, and unlike in previous “revolutions”, they won’t come back different this time. We’ve already see the industrial base of the US get hollowed out, and it was replaced with more service jobs. And even as some new factories are coming back, it’s with fewer and fewer workers, and more robots. Autonomous cars (or long-haul trucks, at least) will drive out whole industries, eventually it’ll be cheaper to have a Burget-Bot then employ a high school drop-out, and so-on. And there are no new jobs on the horizon.

    That’s why Silicon Valley is interested in this. Because they don’t want to deal with a new French Revolution in fourty years because the gap between the rich and poor (nothing in between) is even starker then it is today.

    You are, of course, free to think that fear is unfounded. But I think it’s relevant to the conversation on why they’re looking into it.

    1. And there are no new jobs on the horizon.

      According to… people who have too much money and too little sense.

      There will always be jobs. They might not be nice or safe or pay a “living wage” or otherwise be too demanding for a tech CEO to get his hands dirty doing, but they will continue to exist as long as people continue to demand something better than living in caves, i.e. for the remainder of the existence of the human race.

    2. To elaborate…

      An automation-based economy cannot wholly eradicate manual jobs in a market economy. No matter what other factors there might be, people have to have money to consume the things produced by automation. No jobs = no money = no capital to spend on automation = no automation.

  24. Is there some way to get updated on this story, as it unfolds? I would love to hear more about it down the years.

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