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Economists Are Not Very Enthusiastic About The Idea Of A Universal Basic Income

At least, not when asked about a very specific proposal, in which everyone–even Bill Gates–receives a check for $13,000 each year. But the broader idea still has a lot of traction.

Economists Are Not Very Enthusiastic About The Idea Of A Universal Basic Income
[Photo: Jezperklauzen/iStock]

These days, all kinds of sensible and brilliant people, from Elon Musk to the prime minister of Finland, are voicing support for universal basic income. The idea of giving everyone–or at least some people–enough to lift them out of poverty without having to work some menial job is very of the moment. Executives like Musk are asked about it all the time, and executives like Musk generally think it’s a good call; the tech elite are some of the idea’s most enthusiastic supporters.

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But among economists–who presumably would need to be on board if a basic income were to become mainstream policy–support is far from universal. They generally see the idea as appealing in theory, but unworkable, expensive, or creating the wrong type of incentives in practice. They worry it will stop people from working, and generally from participating in society. When the IGM Economic Experts Panel–which surveys economists from “the most elite research universities” on policy questions–asked economists about basic income, the response was noticeably negative.

The economists were asked to weigh in on a very specific scenario: Everyone in the U.S.–regardless of other income–gets $13,000 a year, and to pay for the program, the government phases out other benefits, including Social Security, Medicare, Medicaid, housing subsidies, household welfare payments, and farm and corporate subsidies. This is essentially the idea put forward by labor leader Andy Stern last year in his book Raising the Floor. This hypothetical program would cost about $3 trillion per year (more if children were covered as well).

Of the more than 40 economists surveyed in the IGM Economic Experts Panel, only one–Steven Kaplan at the University of Chicago–fully agreed with the proposal. Most either disagreed or disagreed “strongly.”

“A more efficient and generous social safety net is needed. But [universal basic income] is expensive and not generous enough,” said Daron Acemoglu, at MIT, speaking for several colleagues.

“Bill Gates would get 13K, which is crazy. Raising taxes is costly and so redistribution should be targeted to those who need help most,” said Oliver Hart, at Harvard.

“A minimum income makes sense, but not at the cost of eliminating Social Security and Medicare,” said Eric Maskin, also at Harvard.

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“The simplicity is attractive but deceptive. Coupled with universal health care and tax reform it could work. but we are far from that,” said Christopher Udry, at Yale.

Basic income fans like Stern argue that universality is important because universal benefits are generally more popular than selective ones, because nobody feels cheated, and because they’re easier to administer. The trouble is, paying everyone the same is almost frivolously expensive–Bill Gates, despite his personal billions, would receive a check–and necessarily takes money away from more needy people. An alternative not considered by the economists here would be to pay everyone the same but means-test an appropriate amount through the tax system. That is, Gates would get his $13,000 but have to pay it all back at tax time.

As for how we might move forward on a basic income, it may be better to start smaller and more local than the IGM proposal–for instance, at a city or state level. Before sweeping away dozens of federal programs, it makes sense to build up evidence that a basic income actually works as planned, and exactly how that can be accomplished. There are several big trials now underway, including GiveDirectly’s in Kenya, Y Combinator’s in Oakland, and Finland’s recently started project, that should give us more idea.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.

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