Business Impact

In 2017, We Will Find Out If a Basic Income Makes Sense

Will the people who get free money live happier, more productive lives?

In 2017, we may find out if a universal basic income is a good idea.

The concept is simple enough: Governments pay people for doing nothing. In place of state benefits, people would receive income regardless of their situation. Proponents say that such a system could alleviate poverty, and help provide people who are just about managing with a little freedom to escape low quality jobs and access education. As more jobs are lost to automation, the argument goes, a universal income will become even more important.

Problem is, we don’t yet know whether free money makes people happy, healthy, creative, and productive, or encourages them to watch TV and drink beer. But answers are on the way.

Y Combinator's Sam Altman is a big booster of the idea of a basic income.

The New York Times explains that early next year the Finnish government will randomly choose 2,000 unemployed people and pay them a regular wage for doing nothing, no strings attached. The selection will include the whole gamut of society, from professionals to manual laborers, and they will be paid for two years.

Meanwhile, a similar initiative will kick off in Oakland, California, as Y Combinator gives 100 families $2,000 a month. In a blog post announcing the experiment, Sam Altman, Y Combinator’s president, explained that “the income will be unconditional … People will be able to volunteer, work, not work, move to another country—anything. We hope basic income promotes freedom, and we want to see how people experience that freedom.”

Other test schemes in Amsterdam and Canada could soon follow suit.

But when MIT Technology Review explored the topic earlier this year, we found some potential problems with the concept. First, the economics of such a plan are based on the assumption that the rise of automation is gobbling up jobs while creating plentiful wealth to share with great efficiency—but that kind of automation may not materialize for some time. Second, buying people out of the workforce feels like an excuse to stop training them to succeed in a shifting job market. And third: it’s damned expensive.

But really, data is the only way to work out if it’s a good idea or not. Even Altman, a keen proponent of the idea, says he hopes the results will answer important questions about whether basic income works. "What's unclear to me is: will people be net-happier or are we just so dependent on our jobs for meaning and fulfillment?" he mused this week during an interview with Business Insider.

The trials have a lot to prove, then. But this time next year, we might finally have a better understanding of whether giving away money for nothing makes sense.

(Read more: New York Times, Business Insider, “How Technology Is Destroying Jobs,” “Basic Income: A Sellout of the American Dream”)

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