A recent study on basic income, backed by OpenAI founder Sam Altman, shows that giving low-income people guaranteed paydays with no strings attached can lead to their working slightly less, affording them more leisure time.
The study, which is one of the largest and most comprehensive of its kind, examined the impact of guaranteed income on recipients’ health, spending, employment, ability to relocate and other facets of their lives.
Altman first announced his desire to fund the study in a 2016 blog post on startup accelerator Y Combinator’s site.
Some of the questions he set out to answer about how people behave when they’re given free cash included, “Do people sit around and play video games, or do they create new things? Are people happy and fulfilled?” according to the post. Altman, whose OpenAI is behind generative text tool ChatGPT, which threatens to take away some jobs, said in the blog post that he thinks technology’s elimination of “traditional jobs” could make universal basic income necessary in the future.
How much cash did participants get?
For OpenResearch’s Unconditional Cash Study, 3,000 participants in Illinois and Texas received $1,000 monthly for three years beginning in 2020. The cash transfers represented a 40% boost in recipients’ incomes. The cash recipients were at least 300% below the federal poverty line, with average incomes of less than $29,000. A control group of 2,000 participants received $50 a month for their contributions.
Basic income recipients spent more money, the study found, with their extra dollars going toward essentials like rent, transportation and food.
Researchers also studied the free money’s effect on how much recipients worked, and in what types of jobs. They found that recipients of the cash transfers worked 1.3 to 1.4 hours less each week compared with the control group. Instead of working during those hours, recipients used them for leisure time.
“We observed moderate decreases in labor supply,” Eva Vivalt, assistant professor of economics at the University of Toronto and one of the study’s principal investigators, told CBS MoneyWatch. “From an economist’s point of view, it’s a moderate effect.”
More autonomy, better health
Vivalt doesn’t view the dip in hours spent working as a negative outcome of the experiment, either. On the contrary, according to Vivalt. “People are doing more stuff, and if the results say people value having more leisure time — that this is what increases their well-being — that’s positive.”
In other words, the cash transfers gave recipients more autonomy over how they spent their time, according to Vivalt.
“It gives people the choice to make their own decisions about what they want to do. In that sense, it necessarily improves their well-being,” she said.
Researchers expected that participants would ultimately earn higher wages by taking on better-paid work, but that scenario didn’t pan out. “They thought that if you can search longer for work because you have more of a cushion, you can afford to wait for better jobs, or maybe you quit bad jobs,” Vivalt said. “But we don’t find any effects on the quality of employment whatsoever.”
Uptick in hospitalizations
At a time when even Americans with insurance say they have trouble staying healthy because they struggle to afford care, the study results show that basic-income recipients actually increased their spending on health care services.
Cash transfer recipients experienced a 26% increase in the number of hospitalizations in the last year, compared with the average control recipient. The average recipient also experienced a 10% increase in the probability of having visited an emergency department in the last year.
Researchers say they will continue to study outcomes of the experiment, as other cities across the U.S. conduct their own tests of the concept.
