Finland’s UBI Experiment Nets Happier Residents But No Extra Jobs

Home » Money Management » Economic News » Finland’s UBI Experiment Nets Happier Residents But No Extra Jobs

Finland’s UBI Experiment Nets Happier Residents But No Extra Jobs

In recent years the concept known as universal basic income has gained steam as a potential alternative to the existing welfare state and/or a necessary preparation for upcoming changes to the economy. While economists and think tanks of many policial stripes have floated their own ideas and theories for what such a program would look like and what it would accomplish, there have only been a handful of real-world deployments of UBI. Among the most watched of these trails has been one conducted in Finland over the past two years. With the program reaching its halfway mark, as MarketWatch reports, this week saw an update on Finland’s UBI test showing mixed results.

To test the potential of a basic income, The Social Insurance Institution of Finland selected 2,000 unemployed individuals between the ages of 25 and 58 to participate. Each of these people have been receiving payments of €560 (or about $636) a month. Holding true to the philosophy of basic income, these payments come with no strings attached, allowing each participant to spend them as they see fit. Payments were also exempt from income taxes.

First the good news: a new report on the country’s basic income experiment shows that the well-being of participants has increased. Researcher Minna Ylikanno noted that those receiving payments were not only less stressed but also healthier than their counterparts who were still part of the country’s regular unemployment benefits program. On that note, the basic income came in below the €1,000 ($1,135) a month that the unemployment benefits offer — although these benefits are subject to a 30% income tax.

As for the bad news, it seems that Finland’s test has failed to disprove the notion that a basic income would disincentivize recipients from seeking employment. Instead it found that those receiving the basic income and those in the “control group”  worked nearly the same number of days during the first two years of the test. As Ylikanno explained, “The basic income may have a positive effect on the wellbeing of the recipient even though it does not in the short term improve the person’s employment prospects.”

While that is certainly a blow to those hoping that such an implementation of basic income would show expected benefits such as increased entrepreneurship, it should be noted that there are many factors yet to be considered. For one, while Finland is certainly testing “BI,” it’s missing the “Universal” aspect. Because of this one could argue that the current experiment isn’t taking into consideration how those who are currently employed might benefit the economy were they to also receive no-strings-attached payments. Because of this and because the test is only two years in, The Social Insurance Institution of Finland warns “it was not yet possible to draw any firm conclusions.” Nevertheless, expect these early results to be heavily featured in future debates about the viability of UBI.

Comments

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

WalletHub Ranks the Best Small Cities to Start a Small Business

We've all seen various annual lists looking at the top cities to start a small business (we've definitely discussed them here as well). However these studies often look at major markets and metro areas — so what about some of America's hidden gems? That's why the personal finance site WalletHub...

Telecom T-Mobile Launches Mobile-First Checking Account for All

Over the past few years, a lot has changed in the world of mobile service plans. From the dismantling of subsidized devices, the fall and subsequent return of unlimited data, and the bundling of streaming services into mobile plans, U.S. carriers have continually worked to find ways to one-up each...

Venmo Reportedly Working on Credit Card Offering

Even in our digital age, it seems some physical fallbacks are still hard to shake. Case in point: the popularity of plastic in the face of many payment options. This continued reliance is probably why we've seen several FinTech startups known for their disruption and innovation taking things back to...