Study Shows Finland’s UBI Experiment Has Potential Success

Study Shows Finland’s UBI Experiment Has Potential Success

The result of Finland’s landmark experiment with universal basic income (UBI), a once-fringe concept where the government grants citizens free cash without any obligations, could serve as an interesting victory for lawmakers considering implementing their own alternatives across the globe. 

In a recent study published by Kela, the Finnish government’s social security agency, researchers found that by offering 2,000 unemployed citizens a simple monthly check of €560 (or $635 USD) over two years, recipients were shown to grow social and political trust with their institutions, feel less stressed, and were able to improve their living standards as they continued seeking work. 

“The basic income recipients of the test group reported better wellbeing in every way than the comparison group,” wrote chief researcher Olli Kangas, referring to those receiving standard welfare.

UBI Stats Finland Kela

The recent study follows their February report which showed similar results in increased happiness and regular job seeking engagement. While the Finnish government was unable to meet certain expectations, releasing a statement saying the intended goal was to generally “promote employment,” the new findings counter anti-UBI narratives on how money without strings attached leads to less interest in work. Fixing unemployment, however, requires a greater focus on job creation programs and job-seeker training instead of simply throwing money at the problem. The money is simply a means of getting by while searching for work.

“Our results weren’t that surprising as it kind of confirms what we know from other pilots,” said Minna Ylikännö, another lead researcher at Kela agency study. “People’s wellbeing is enhanced when they have some kind of financial security. They feel secure, so they feel better — that’s something which we see in other countries too, not just a Finnish experience.” 

This is a fair statement given Canada, Italy, Scotland and India’s recent forays into basic income experimentation, utilized not just with the intention of boosting jobs numbers but for the moral rationale of helping everyday people. 

“We have taken a decision that every poor person in India after Congress forms government in 2019, will be guaranteed minimum income,” once declared Rahul Gandhi, leader of India’s opposition party. “Every poor person in India will receive at least minimum income in their bank accounts from the government. There will be no more hunger or poverty.”

This sounds all well and good for political posturing, but it raises questions about how much free money can and will be granted. 

“Basic income is figuring more in policy debates, but we don’t have a big evidence base about what we can expect to actually happen,” argues professor Luke O’Malley, a UBI researcher for Bath University who spoke with Wired. “On one hand, basic income would make it possible for more people to enter employment — and go in and out of it quite easily — but if you give people an unconditional income, perhaps they’ll focus on other things. But this study has generated some really significant empirical evidence.”

The costs matter. In the context of Finland, €560 per month is significant for a poor person’s wellbeing but also small enough as not to create an inflation scare. This is almost half what’s being proposed by Andrew Yang, a populist-capitalist running for the 2020 Democratic nomination, whose central policy is based around UBI. While it’s unclear where Finland tied their UBI funds to, Yang has proposed linking UBI funds to a new Value-Added Tax (VAT) of 10% on big tech companies and automation.

In addition, Yang has outright expressed interest in consolidating certain benefit programs into UBI, such as standard unemployment, food stamps, disability and the like. The reason for Finland’s low cost, as opposed to Yang’s ideal, could be a result of the cost of their UBI being conducted alongside an abundance of other generous welfare programs. 

With these programs also comes the assumption that people can truly prove their eligibility. As noted by Wired journalist Sanjana Varghese, certain countries wouldn’t really benefit from increasing public trust within their institutions. Countries such as the United Kingdom — known for allowing 100,000 citizens who are sick and disabled to wait for their benefits — could benefit from cutting the welfare bureaucracy (as the study shows) while at the same time facing the turmoil of an unstable Brexit where austerity could kick in. 

“The existing system of welfare will affect people’s labor prospects, and how the institutions work too,” O’Malley continued. “There’s simply no substitute for doing detailed studies in particular contexts.”

It’s common knowledge that a UBI system would have to come with conditions. It would have to come with inflation controls for both money and service costs, programs which help workers back into the workforce and protections from millionaires scrapping their bare minimum worker benefits since UBI exists. When millionaires, billionaires and their capitalist gods from Mark Zuckerberg to Milton Friedman suggest such ideas, it’s fundamental to take their deal with massive grains of salt. 

“There are some libertarian versions of UBI, but you do still need support to help people back into work, and give them some kind of community support,” said Anthony Painter, the director of Action and Research at the RSA. “It needs to be progressive.”