Over the past 15 years, the idea of giving everyone a “basic income” has been heralded as a promising solution for economic justice and even ending poverty. Democrats have shown an interest and even some Silicon Valley executives see value in the idea if AI dramatically disrupts the job market.
But recent studies have found that giving poor people unrestricted cash did not produce lasting improvements in their mental health, stress, or, in some cases, even self-reported financial well-being — leading to renewed chatter on the merit of these cash transfers to the poor.
The new research findings are disappointing, and it makes sense to think money should ease stress. It’s not outlandish to hope that a few extra thousand dollars a year would make people feel noticeably better. But if we take a step back, we can see that that’s not really how money works for people higher up the ladder, either. I know plenty of well-off individuals who still frequently feel anxious and stressed, and I’d bet you do, too.
There have been over 160 basic income pilots in the US and more studies all around the world. The debate is complicated, and some people may no longer be as excited about the idea. But the movement is still barreling forward, and it’s clear from my reporting that new pessimism in some corners is far from the full story.
How to think more constructively about cash transfers
There are nuances to the disappointing new findings. Researchers and advocates have pointed out that the Baby’s First Years research, one high-profile study, was conducted partly during the pandemic, when the control group was receiving substantial cash transfers from the federal government anyway. The pandemic also caused unusually stressful disruptions to the lives of children and adults, which could obscure how well the money would have worked in circumstances other than a global public health emergency.
When it comes to another buzzy study, the OpenAI guaranteed income study, research director Elizabeth Rhodes emphasized that just because there wasn’t an average positive effect doesn’t mean some families didn’t benefit from the cash. “The study itself was not a referendum on a specific policy,” she said. Many participants experienced what she described as “one step forward, two steps back” — they wanted to save their monthly $1,000 but kept facing emergencies that forced them to spend it.
In other cases, she said, maybe a family now finally had money to pay for housing, but then they discovered they needed a credit score of 700 and three times the proposed rent in income, meaning that, even with the cash infusion, they still couldn’t move into better accommodations. Rhodes said her team is still trying to figure out which barriers inhibit people from thriving even with the subsidy and added that people with “any social support” seemed to do better than those navigating systems on their own.
More broadly, some point out that cash just can’t, on its own, solve market failures that exist in America for basics like health insurance, child care, and housing. And lastly, some researchers have spoken out to say some public criticisms, like that “money did not make a difference,” stretch far beyond what the actual research showed.
Here's my take: It’s certainly possible that more conservatives and tech moguls lose enthusiasm for cash in part because of these studies. Last year, OpenAI’s Sam Altman mused that instead of a guaranteed income, perhaps people should receive guaranteed AI computing time. Other billionaires may discover new shiny interventions that excite them more.
But it would be a mistake to conclude these threats, and even the new randomized controlled trials, have halted the movement for cash aid in the US or abroad. Some local governments in California recently voted to invest more in cash transfer experiments, and a new GiveWell study recently found that cash grants in Kenya both cut poverty and saved lives. There are also other positive ongoing studies on cash transfers, like a program in Flint, Michigan, that gives pregnant women and new mothers aid. Early results have found the cash increased prenatal care, improved birth outcomes, and reduced postpartum depression.
In reporting this story, I learned that some funders are currently exploring new experiments to fund, and in some cases, at potentially much larger scale than has ever been tested in the US.
There’s still a lot of opportunity to help people materially and psychologically by giving them unrestricted money. These high-quality new studies need to be considered alongside a much broader, older, and continually evolving research base that emphasizes that cash matters for reducing poverty and hunger. It’s been shown over and over that cash keeps families housed and bills paid, helps parents afford child care, boosts children’s school attendance and graduation, improves physical and mental health, and sets kids up for higher earnings and stability as adults. We know cash helps people weather emergencies and access high-quality interventions like therapy that are too expensive for many.
I’ve spent the last few years reporting on the potential of tenants using cash instead of cumbersome housing vouchers. The idea is that landlords might be much more likely to accept cash because it’s more convenient than working with housing authorities for vouchers and that cash could be easier and more dignified for the tenants to use, too. These new studies have done nothing to change my optimism about that idea. In fact, just last week, a new randomized controlled trial found that direct cash rental assistance sharply reduced forced moves and homelessness while improving housing quality.
It does seem like we’re getting further from the utopic Silicon Valley vision of UBI as a panacea against automation, but I, and many people, would say good riddance.
You can click here to read Rachel's piece in its entirety on Vox.com.
