OpenAI CEO Sam Altman has been a longtime supporter of basic income, perhaps because it helps justify his vision of a future in which artificial intelligence will displace millions of jobs and push much of the working-age population out of the workforce. Now, a new study funded by Altman finds that basic income probably wouldn’t actually achieve what the tech mogul had hoped.
Altman has long been a financial supporter of Open Research, an organization that on Monday released the first findings from a multiyear effort to study the impact of basic income on underrepresented groups. From November 2020 to October 2023 (a particularly pandemic year), the program provided 1,000 people living in the nation’s poorest households (those earning roughly $30,000 a year) with $1,000 a month to study the impact. A control group of 2,000 people in similar economic situations received $50 a month.
The researchers concluded that while a regular stipend can help recipients pay for basic expenses like housing, transportation, and groceries, it doesn’t necessarily lead to promotion, and the study suggests that stipends will never replace work (as some in Silicon Valley suggest).
According to the researchers, the payment of a basic income had little impact on a person’s “quality of employment” (i.e., their ability to get a better job) and was not significant enough to lead to important “investments in human capital” (the education and training that lead to better jobs). It’s not that the money was useless, it’s just that there wasn’t enough of it to support these important areas (at least for this particular sample of the population for this particular period). The study, published by the National Bureau of Economic Research, states:
…We find no effect on employment quality, and the confidence intervals allow us to exclude even small improvements. Younger participants are more likely to have more formal education, but we find no significant effects on investment in human capital. Overall, our results suggest a moderate labor supply effect that is not offset by other productive activities.
Beyond these findings, the study shows that the regular payments had a variety of economic effects on program participants. For example, the report notes that while many participants expressed “increased interest in starting a business” as a result of the payments, this interest ultimately “did not translate into a significant increase in entrepreneurial activity for the average recipient by the end of the study.” The report notes that many participants “dreamed about starting their own business, but the cash alone may not have been enough to actually get them going.”
In some cases, the study found that benefits correlated with job losses. [participants] The report noted that workers simply wanted to take a “break” from work and that “the break was more valuable than the additional income.”
The study also found that while basic income helped some recipients pay for medical procedures (the study said they were more likely to receive dental care and were allowed to go to hospital), it had little impact on their overall physical health.
…We found no transfer effects across multiple measures of physical health captured by multiple well-validated survey measures and biomarkers derived from blood draws. Even very small improvements in physical health can be ruled out, with effects suggested by cross-sectional correlations between income and health far exceeding their confidence intervals.
In another part of the study, the researchers noted that “while cash may have enabled some recipients to receive more clinic or hospital care, leading to reduced alcohol and drug abuse, we found no direct evidence that it increased access to health care or improved mental or physical health on average.”
While the basic income payment had a very positive effect on recipients’ mental health during the first year of the study (the researchers noted “large improvements” in “self-reported measures of stress and psychological distress” during this period), there were trends of diminishing returns after that: “the payment did not improve mental health after the first year,” the study said.
Much of the data on mental and physical health likely came from surveys. Eva Bibart, an assistant professor at the University of Toronto and one of the researchers on the program, said the findings come from “incredibly detailed data from enumeration surveys, online surveys, administrative records, and custom mobile apps over a long period of time with very high response rates.”
Overall, the primary purpose of the benefits was to help program participants meet their most basic needs, such as paying for groceries and rent. “The largest expenses for participants at the time of enrollment were food, housing, and transportation, with increases in these categories accounting for more than half of the estimated impact on recipients’ expenses,” the report said.
The stories of recipients of the program seem to help highlight the broader systemic problems facing America, and the fact that, for most people, a little discretionary time won’t necessarily solve them. One recounting of the story of a recipient named “Jeremiah” illustrates, in the researchers’ words, “the complex relationship between health and economic security,” and shows how his basic income was insufficient to alleviate the broader problems he faced.
Jeremiah, like many of our participants, has long-term health issues that make it difficult for him to maintain stable employment. But his precarious financial situation makes prioritizing health nearly impossible. For Jeremiah, cash was one piece of the puzzle that helped him make ends meet. But another important piece of the puzzle was missing: a job that offered comprehensive health insurance and paid sick leave, in this case. For Jeremiah and others like him, an extra $1,000 a month in income alone may not be enough to overcome larger systemic barriers to accessing health care and reduce health disparities.
There are probably a million different ways to interpret the reasons for this not-so-great finding, but it’s easy to see that solving poverty is not a quick or easy process: income inequality in the US is currently so high, and the costs of basic services (housing, education, health care, food) are so high, that one could argue that sending some Americans an extra $1,000 a month, while better than nothing, would not be enough to dramatically change their economic prospects.
