Experiments with Basic Income were never going to settle the arguments

Many advocates of Basic Income will be disappointed at the decision in Finland to discontinue the experiments.  The decision seems to have far more to do with a change in the political climate than with any concern about how Basic Income operates; but moral judgments about rewards or disincentives are not the sort of issue that can be resolved with a proof of concept.

The experiments were always likely to be inconclusive. There are things that tests can show – for example, whether there are issues in the mechanisms of payment – and things they can’t, such as the impact of basic income over a person’s life cycle.  If anyone imagined that two years of Basic Income would resolve arguments about work incentives, they haven’t been paying attention.  In the first place, Basic Income is designed to be neutral as to whether or not people work; in the second place, previous income experiments have generally shown incentive effects to be feeble (and the economists who are convinced there have to be such effects have had to work hard to isolate them).  There’s a more substantial problem.  We know, from the introduction of pensions after 1908, that pensions have materially changed the way that older people engage in the labour market; but we also know that the effects took seventy or eighty years fully to materialise.  What that demonstrates, in economic terms, is that not that labour supply is something that responds directly to economic stimuli, but rather that, over time that the curves are liable to shift, reflecting changing patterns of behaviour, norms, expectations and the economic context.   (Two world wars and a health service might have had something to do with it, too.)   A two year programme can’t possibly replicate or predict such effects.

I’ve not seen any evidence to  support the view that Basic Income materially changes work incentives; while there is reason to think that some people will take the opportunity to disengage from work, there will be others who will be encouraged into casual work or self-employment.   The principal concerns I have about BI are quite different – related to the distributive implications and the relationship to existing benefits.  Those issues won’t clearly be addressed by experiments, either.

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