Would Basic Income Make Us Happier?

By Kira M. Newman | May 31, 2016 | 0 comments

How would a guaranteed minimum income affect our happiness, motivation, and sense of meaning in life?

On June 5, Swiss voters weighed in on a referendum for “universal basic income”: a policy that would give every person, rich or poor, working or not, a modest amount of money per year—no strings attached.

Although the referendum didn’t pass, it was the first time an entire country had considered the idea. The United States and Canada conducted limited experiments with similar policies in the 1970s, but momentum stalled amidst changing political tides and controversy over the results.

Swiss proponents of basic income dump 8 million coins in a public square, one for each Swiss resident. Swiss proponents of basic income dump 8 million coins in a public square, one for each Swiss resident.

Now, basic income is back on the table. In addition to the Swiss vote, the technology investor Y Combinator plans to offer basic income to a group of Americans for five years and study what happens. The Canadian province of Ontario will be designing a basic income pilot as a way to support residents who are struggling in today’s labor market. Finland and the Netherlands have committed to basic income experiments that could reach over 100,000 people, and the nonprofit GiveDirectly is raising $30 million to offer thousands of Kenyans a basic income for up to 15 years.

Not everyone is sold on the idea. Some have raised questions about its fiscal feasibility, while others have argued that people protected from risk may incur costs that others will have to pay.

But few advocates or opponents have explored the psychology of basic income—or highlighted research about the policy’s impact on people’s well-being. Admittedly, predicting the effects of widespread policy change is a bit like trying to look through a keyhole. But there are reasons to believe that basic income could make us happier and fundamentally alter—for good or for ill—our sense of motivation and meaning in life.

Happiness for the poor

A few years ago, University of Manitoba professor Evelyn Forget went looking for data on Canada’s 1970s guaranteed income experiment and found it in a warehouse in Winnipeg—all 1,800 dusty boxes of it. When funding for data analysis hadn’t come through, the paperwork had simply been loaded up into cardboard boxes and eventually shipped off to the National Archives.

Under “Mincome,” Canadian families who didn’t earn any income received an amount equal to 60 percent of the low-income cutoff (today, a total of about $10,000 for a family of four—“enough to add some cream to the coffee,” a participant said). For every dollar earned, benefits were reduced by 50 cents. The experiment ran for five years and reached the entire rural town of Dauphin, as well as some residents of Winnipeg. 

After a bit of data gymnastics—cross-referencing data from other sources with what could be salvaged from the jumble—a picture started to emerge. Professor Forget found that, when their family received basic income, people had fewer doctor visits for mental health issues; they were less likely to be hospitalized for such issues, as well as for accidents; and high school students were less likely to drop out. In other words, basic income seemed to be a buffer against the obstacles that particularly afflict people who are struggling to make ends meet. Because it’s offered to everyone, basic income might also reduce the stigma of receiving welfare.

Similar results were found for a 2011-2013 GiveDirectly program that offered funds of around $400-$1,500—more than twice the monthly average household consumption—to rural families in Kenya. Kenyans who received the money not only reported becoming less stressed and depressed over the course of the experiment, but they also showed increases in happiness and life satisfaction. When women were the recipients, their worries decreased while their self-esteem increased. This hints at the potential of basic income to empower women, perhaps because it enables them to leave abusive relationships and make more of their own life choices. 

These findings wouldn’t come as a surprise to Daniel Kahneman and Angus Deaton, authors of a seminal 2010 study on income and happiness. They found that money buys more happiness at incomes below a certain threshold (specifically, for Americans, up to an average annual household income of around $75,000). After that point—where, perhaps, families don’t have to worry about basic necessities anymore—the relationship between income and happiness breaks down.

“The evidence from various sources is that a basic income provides people with basic security, which increases their sense of control over life,” says Guy Standing, co-founder and co-president of the Basic Income Earth Network and a professor at the University of London.

Standing has a point, one that gets to the heart of what financial security means: control. Considerable psychological research suggests that a sense of autonomy is a basic human need, and acting from a place of autonomy has been associated with higher well-being, more creativity, more productivity, and less burnout.

“Basic income allows people to think farther into the future,” says Beth Rhodes, research director at Y Combinator. “You could cut back hours, spend time with a child, leave the labor market to get further training or education, make more decisions, and have a little bit more freedom, in that you’re not going to have to worry about how to pay rent.”

Knowing that whatever you do, you won’t starve or live on the streets is liberating—and that’s part of the promise of basic income.

A threat to motivation?

Basic income doesn’t only influence our access to resources; it also affects our relationship to work, and this effect is perhaps even harder to predict and less clearly positive. If we don’t absolutely have to work, will we still continue to toil away at our jobs? Would this liberation free us, or paralyze us with choice?

Around the 1970s, at the same time that Canada was testing guaranteed income in Manitoba, the United States conducted four experiments with a policy that provided payments to people who earned below a certain financial threshold, enabling them to reach that threshold—what’s called a “negative income tax.” These experiments reached over 7,000 people, setting thresholds that varied from 50 to 150 percent of the poverty line.

People did work less—but it wasn’t as bad as media reports at the time suggested. Across all five experiments in the United States and Canada, husbands reduced their weekly work by up to nine percent, while wives and single mothers reduced their work by up to 30 percent. In Canada, female spouses reentered the workforce more slowly after a break, perhaps allocating more time to child care. Teen men also worked less because they entered the workforce later, likely staying in school longer. Mostly, people weren’t actually working less per week but starting, going back to, or finding work more slowly—an outcome that isn’t inherently a negative one. Investing in education or taking more time to find the right job could be beneficial in the long term, both psychologically and financially. 

This accords with a recent survey of more than 1,000 Swiss, only 2 percent of whom reported that they would completely stop working under basic income. Instead, 22 percent said they would start their own business or work for themselves, and 54 percent would pursue an academic degree.

As Yale University professor Amy Wrzesniewski and her colleagues explain in a recent paper, for some people work is merely a “job”—something they do for the money, a necessary evil that they would avoid if they could. But others have a “calling”—they get innate satisfaction from what they do and see themselves as contributing to the world. In the middle lie people with a “career,” who aren’t simply in it for the money but also value achievement and advancement in their field.

According to this formulation, people with a job might stop working, or at least find a different one, under a basic income scheme. But the rest of us have other reasons to show up at the office.

Unfortunately, we’re experiencing something of a crisis of meaning at work these days. According to a 2013 Gallup report surveying 230,000 workers in 142 countries, 63 percent of people were not engaged at work—unenergetic and “checked out—and another 24 percent actively hated their jobs. Only 13 percent felt passionate about what they did on a daily basis.

Change attitudes first, income second

Barry Schwartz, a professor at Swarthmore College and author of Why We Work, lays part of the blame on our cultural attitudes.

As he explains, when society believes money is the only incentive to work, corporations feel free to design jobs that are monotonous and deadening. That saps motivation, and we start to internalize the view that “work” is something you do only for money, because you have to.

This is why Schwartz is pessimistic about how people would respond to basic income—at least in the short term. “People are shaped by the social institutions within which they live,” he says. “If you gave everybody enough to live on, it wouldn’t surprise me if people basically did just sit on their asses. It’s a real possibility that this would be a motivational disaster.”

Schwartz recalls an experiment he did about 40 years ago in a motivation course at Swarthmore College. At the beginning of the semester, he announced that everyone in the class would get a B, no matter how much work they did or didn’t do—think of it as “basic grades.” Students were assigned tests and papers, but their grades wouldn’t count; they would have to study because they wanted to learn. 

In a humbling surprise, the experiment was an “abysmal failure”: Enthusiastic at first, students started lagging during midterm week, fell behind, and stopped coming to class; only 10 percent even turned in a term paper. But Schwartz didn’t blame the students; he blamed a university system and culture where grades are everything. “I have a feeling that something like this would happen if you took financial incentives away cold-turkey,” he says.

Workers might become the equivalent of college graduates supported by a trust fund, who don’t absolutely need to work and don’t know what they want to do with their lives. We aren’t all budding entrepreneurs bursting with the next big idea, simply held back by the steep price of ramen.

Che Wagner, a 25-year-old co-organizer of the movement for basic income in Switzerland, admits that basic income might make us all a bit uncomfortable. “The idea goes to the personal question: What are you doing in your life?” he says. “Is it actually what you want to do?” That might be a question that we’ve never asked ourselves before.

A more meaningful life

All that said, in the long term, Schwartz is optimistic that people receiving basic income would reconnect with their intrinsic motivation for meaningful, engaging work. He also believes that basic income could change working conditions for the better by giving workers a little more bargaining power—an idea endorsed by other academics.

“An unconditional basic income would make it easier for employees to leave unpleasant jobs,” writes Jan Ott, a researcher at Erasmus University Rotterdam. “It would stimulate employers to treat employees with respect.” If not, employees can leave—and not worry about putting food on the table while they search for a more fulfilling job and a healthier work environment.

And if people are able to find meaningful work, that would open up all the benefits that flow from having a calling, including higher job satisfaction, less stress and depression, more commitment, and a more meaningful life. If they’re able to cut back on their work hours, they could spend time nurturing other major sources of meaning in life, including relationships with their family, friends, and community.

“Work is a big source of meaning for us now,” says Rhodes from Y Combinator. “If there are a lot of people who lose jobs, we have to figure out a new way to find meaning—and if basic income fosters that community and that social engagement, that could be a real opportunity.”

There are other benefits that would even extend to more affluent people. As it turns out, reducing inequality is good for everyone, even those who are most well off. Recent research suggests that the rich are less interested in connecting with others, less able to read others’ emotions, less compassionate, less generous, and worse at savoring everyday pleasures—all associated with lower happiness. The happiest countries are the ones with the most equality, like the nations of Norway, Denmark, Finland, and Sweden.

None of those countries have adopted basic income—and now, neither has Switzerland. But it might be telling, after years of rising inequality in the US and elsewhere, that basic income is suddenly up for debate. The controversy over this policy shows just how conflicted, confused, and hopeful we are about money and work, and their potential to contribute to a more meaningful life.

“It’s an extremely interesting question,” says Schwartz. “Anyone who thinks they know what will happen if this were to go into effect is kidding either you or themselves.”

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About The Author

Kira M. Newman is an editor and web producer at the Greater Good Science Center. She is also the creator of The Year of Happy, a year-long course in the science of happiness, and CaféHappy, a Toronto-based meetup. Follow her on Twitter!


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