Basic Income Pilots, Designing a Basic Income

Basic Income Pilots – What are they and what do you need to know?

If a basic income pilot is implemented in Scotland the public will need to be kept up to date on the details, the motivation, and the results of the study. Here are some things to consider when you’re deciding whether you support a basic income pilot in principle, and whether you think it has been a success.

Dr Benjamin Simmons, Citizen’s Basic Income Network Scotland Trustee @vforfive

I have been pleasantly surprised that the recent coverage of the decision of the Finnish Government to allow the basic income pilot to come to an end at the time agreed at the outset of the project has generally been accurately reported, though it would have been nice to avoid misleading headlines about ‘scrapping’ the pilot or the government having ‘given up’. For many people this may lead them to believe that the basic income pilot has been a failure, and with four local authorities in Scotland at an early stage of discussing what a pilot here might look like it is important that we’re realistic about the limitations of the Finnish project and any implications for a Scottish pilot.

Before we go any further it is worth pointing out that as far back as June 2017 the Finnish team leading the project were describing the implementation of the project as a ‘nightmare’ and politicians ‘blowing hot and cold’, so it isn’t really shocking to see that additional funding has not been forthcoming. Nor has the decision been evidence-based, as the decision was taken at the outset of the project not to investigate the impact on the lives of the people in the pilot until 2019.

Research design in the social sciences is tricky enough in an academic environment, so it is easy to understand how implementing an expensive pilot in the real world with very real impacts on the lived reality of individuals is as ambitious as it is difficult. Add to that a frequently partisan media on all sides and the potential for the story of a single individual’s experience to be framed as representative of all recipients and it becomes clear that it is going to require a monumental sustained effort to both kick off a pilot and sail into the media wind until it is completed.

So if a basic income pilot is implemented in Scotland the public will need to be kept up to date on the details, the motivation, and the results of the study. This means being honest about the constraints of a pilot scheme and encouraging people to make up their own mind. Here are some things to consider when you’re deciding whether you support a basic income pilot in principle, and whether you think it has been a success:

What does success look like?

Determining the success or failure of an initiative means deciding up front what you hope the project will achieve. It sounds obvious but a good example of this is that I am frequently asked whether a basic income would save money overall. One of the many potential benefits of a basic income is a reduction of what is called ‘failure demand’. For example, by saving money by reducing welfare payments you create endemic health problems which are expensive for the NHS to treat. A comparable example is the research in Australia showing it is cheaper to house the homeless than to treat the consequences of homelessness in demand for government services.

With that in mind it is no surprise that NHS Health Scotland is playing a key role in developing an evaluation framework for a possible pilot scheme in Scotland. We can confidently predict that alleviating a major cause (poverty) of contemporary social problems (health, crime, educational attainment) will lead to a reduction in the occurrence of those problems and therefore the costs associated with them. Could there be a net saving? Of course. But it could also cost more, and you need to decide for yourself whether it is acceptable to spend more overall to make a massive impact on the quality of life for the 940,000 people living in poverty in Scotland. That is without counting the benefit to society of shorter NHS waiting times or reduced crime generally, or the difficult-to-financially-quantify value of increased gender equality and reduced financial abuse of women in Scotland, or ability of young people from low-income families to pursue further education. For example, I’ve previously written about why we might want to see a rise in divorce, which was reportedly a source of anxiety for the Nixon administration when they were considering basic income.

The Finnish experiment focused only on a specific group, the unemployed, on the basis of the centre-right government’s desire to reduce the unemployment rate. Since we don’t know the results yet we don’t know what the impact here has been, but since the most common objection to the idea of a basic income is that it would encourage laziness it isn’t surprising that this was where the conservative government chose to focus. Of course, the causes of unemployment are complex and different for each individual, and with a major focus on the possibility for people to use a basic income to retrain and return to education the impact of a basic income on someone in unemployment is likely to be significant over a longer period of time rather than causing all job-seekers to take up zero-hours work in a supermarket (it is worth discussing whether this is even desirable). It is thinking like this which is behind the RSA’s recent proposals for a ‘Basic Opportunity Fund’. If the Finnish government really wanted to know the impact of a basic income on work they could also have given it to people currently in work to see if it causes people to drop out of the labour market. If the premise that people don’t work without the threat of poverty is true, surely this would be the best way to test it?

If your criterion for deciding if you are in favour of a basic income pilot is whether it has saved money, then for you the pilot has already failed. Why? Because…

Pilot schemes are not reality

A basic income is such a fundamental restructuring of the welfare state that it is impossible to simulate perfectly how it would function in a reinvented national model by providing a small group of people with some additional income whilst changing nothing else. For example, it would be unfair and harmful to simulate a basic income in a town by increasing taxes on the wealthiest to simulate a higher tax rate. At the same time, someone receiving a basic income in a pilot would possibly pay tax on their earnings at a lower rate (i.e. current rates) than if the programme was implemented nationally and tax restructured accordingly. Consider also how the effects on a community’s economy would be different if they were the only town in the county to receive a basic income, than if a basic income was nationally implemented. Of course businesses are going to choose to set up in a town where people now have more disposable income, but the impact on an individual town will be greater when they have this advantage over the towns around them, which would not be the case in a national model. These are just a couple of examples of the many ways pilots do not represent reality.

A basic income pilot would be an investigation into how a basic income affects the lives and choices of recipients and will necessarily be more expensive in the short term than not doing a pilot, since it would simulate greater welfare spending without increasing taxation elsewhere to fund it. So let’s make that clear from the outset (and be prepared to articulate that to a sceptical press).

But that’s not to say pilots are not useful. An abundance of useful data on individual and group outcomes will be gathered, and things like health outcome improvements can be used to predict future trends, however, we must acknowledge when evaluating a pilot that…

The data does not stop when the pilot ends

The impact on an individual of receiving a basic income will echo throughout their life, even if the payments were to stop. For example, being able to leave an abusive relationship because you are no longer financially dependent on your partner will have an enormous impact on your life outcomes, which will not be fully realised when the pilot finishes, whenever it finishes. Choices we make about our education when we don’t need to worry about needing to work alongside our studies or we are confident about receiving a basic income throughout our lives will impact our careers in an extremely meaningful way.

How can we fully measure the impact of a basic income after two years on someone two years into a four-year degree they would not have been able to take on otherwise? How can we fully measure the savings to the NHS of someone not having a heart attack in 20 years because they were able to change their life for the better when receiving a basic income for a couple of years in their forties? Some problems take longer than a pilot period to solve so we may have no indications of an effect which would only manifest decades down the line. Which leads us to ask an uncomfortable question:

What if the pilot ‘fails’?

By now I hope it’s clear that the results of a pilot must be taken in the context of the limitations of the pilot but it is worth pointing out that if we knew exactly what a basic income would do, and exactly how to implement one, then we wouldn’t need a pilot at all. Any pilot outcome is a good outcome because it provides us an opportunity to learn how to make a better one. The small scale of a pilot means it will be targeted at a particular group, either by a common social situation, geography, or another factor (unless provided by lottery on a national basis). An ideal approach might be to run several different types of pilots side by side to try to get the widest variety of findings. Some may have better results than others.

Thinking back to the first point about deciding up front what success might look like, we must also think about what it means for the idea if results don’t go our way. For example, if I wanted to eliminate poverty by giving everyone £1/day I could conclude at the end of my pilot that giving people money didn’t achieve anything, and therefore we shouldn’t give any money at all, when instead I should realise that I didn’t do enough to make a measurable impact.

I don’t expect it to be an easy journey to clarify the expected outcomes of a basic income pilot in Scotland, and how they might be tested, but I hope that if we can manage the expectations of the public around the scope, aims, and outcomes of a basic income pilot we can make the most of the opportunity it offers to create a fairer and more secure society for all of us.

Stay informed as proposals for pilots in Scotland are developed by joining the Citizen’s Basic Income Network Scotland mailing list

3 thoughts on “Basic Income Pilots – What are they and what do you need to know?

  1. Very thoughtful article. I would expect to see some evidence on impact of basic income on prevention of stresses as its unconditional. And researching mechanisms to determine the saving in other tax and benefit processes as well as the prevention of health and other failure demand. Another issue would be if people receiving basic income agree to give up tax free allowances in return for the guaranteed income in or out of paid work.

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