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From what I can tell, the idea of the basic income guarantee is very popular in some circles as an excellent alternative to a lot of modern welfare systems.

Has anybody developed a theoretic or empirical model in which minimum income is tested? In this model, what are the necessary and sufficient conditions for such a model to be preferred to a more traditional alternative?

If anyone has suggested readings on the topic, that would be appreciated as well.

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    $\begingroup$ I can't speak for theoretic models but most often basic income is mentioned as a solution to the welfare trap. Conceptually, it's easy enough to figure out: The minimum wage for workers in most countries does not provide as high a living standard as welfare plus all the side benefits (medicare in the US etc., or in Canada wages earned reduce your welfare payments). As such, people who could get a minimum wage job but realize the full value of the benefits that welfare gives them, do not take advantage of it. Basic income would insure that there is always an incentive to work. $\endgroup$
    – serakfalcon
    Commented Feb 19, 2015 at 0:14
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    $\begingroup$ The always excellent nominally rigid has written an extensive analysis of basic income here: economics.stackexchange.com/questions/1893/… $\endgroup$
    – FooBar
    Commented Jun 10, 2015 at 2:02
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    $\begingroup$ Here's a report from the Namibian UBI experiment: bignam.org/Publications/BIG_Assessment_report_08b.pdf It has a chapter on impact assessment. $\endgroup$
    – Giskard
    Commented Jul 10, 2015 at 6:47
  • $\begingroup$ @denesp that was fantastic. if you put that in an answer with a few notes from the executive summary, that would be far better than mine. $\endgroup$
    – Jamzy
    Commented Jul 27, 2015 at 2:40
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    $\begingroup$ @Jamzy I only skimmed the report, so if you have actually read it I think you are in a better position to make a second answer than I am. $\endgroup$
    – Giskard
    Commented Jul 27, 2015 at 5:39

2 Answers 2

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Thanks to densp for identifying this paper.

It refers to a major pilot project undertaken in Namibia

Background:

The Basic Income Grant (BIG) pilot project took place in the Otjivero-Omitara area, about 100 kilometres east of Windhoek. All residents below the age of 60 years receive a Basic Income Grant of N$100 per person per month, without any conditions being attached. The grant is being given to every person registered as living there in July 2007, whatever their social and economic status.

Before the pilot project, the area was characterised by unemployment, hunger and poverty.

Conclusions:

  • Since the introduction of the Basic Income Guarantee (BIG), household poverty has dropped significantly. Using the food poverty line, 76% of residents fell below this line in November 2007. This was reduced to 37% within one year of the BIG.

  • There was a dramatic increase in economic activity. The rate of those engaged in income generating activities (above the age of 15) increased from 44% to 55%. Thus the BIG enabled recipients to increase their work both for pay, profit or family gain as well as self-employment. The grant enabled recipients to increase their productive income earned, particularly through starting their own small business, including brick-making, baking of bread and dress-making. The BIG contributed to the creation of a local market by increasing households' buying power. This finding contradicts critics' claims that the BIG would lead to laziness and dependency.

  • Huge reduction in child malnutrition from 42% to 17% in 6 months.

  • Increase in school attendances (non attendance due to financial reasons dropped 42%)

  • Drop in crime (theft down 42%)

  • Estimated cost for a nationwide program in Namibia would be 2-3% of GDP. Not cheap, not unaffordable either.

All thing considered, the author of this report seemed pretty happy with the outcome. There were some issues impacting the data. Since it was a localised study, there was a fair bit of migration towards the treatment area. The long term impacts are not yet known as well.

Additional resources:

Haarmann, Claudia; Haarmann, Dirk; Jauch, Herbert; Mote Hilma et al 2008. Towards a Basic Income Grant for all. Basic Income Grant Pilot Project. First Assessment Report, September 2008. Windhoek

Kameeta, Zephania; Haarmann, Claudia; Haarmann, Dirk; Jauch, Herbert 2007. Promoting employment and decent work for all - Towards a good practice model in Namibia. - Research Paper - Presentation to the United Nations Commission for Social Development. Windhoek

Haarmann, Claudia; Haarmann, Dirk (ed.) 2005. The Basic Income Grant in Namibia. Resource Book. Windhoek

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So I have done some additional research, I haven't found the resource I am looking for but I do have some worth posting here. When I do find something better, I will update this answer.

Very much a news article. Nice overview of the points. Not very analytical.

  • Peter Barnes (2014). With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough. Berrett-Koehler Publishers. ISBN 1626562148.

I am getting a copy of this book. I expect it will provide a good overview

Huffington post...

  • Caputo, R. (2008). The unconditional basic income guarantee: Attempts to eclipse the welfare state. International Social Work, 51(4), pp.509-518.

Looks to be the best source so far. Haven't read it all yet. When I do I will update here. It considers three basic income schemes and discusses the advantages and shortcomings.

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