What Does the First European Experiment With Guaranteed Cash Handouts Tell Us About Universal Basic Income?

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Finland’s experiment with UBI concluded in December 2018, receiving mixed reviews from the international press. Though the Finnish social security agency, Kela, only released a preliminary report, with a final analysis due in 2021, several publications decided to weigh in.

“Finland basic income trial boosts happiness but not employment” – The New York Times

“Study: universal basic income won’t make people work less” – Futurism.com

“Finland’s ‘free cash’ experiment fails to boost employment” – The Guardian

The Finnish center-right government designed the experiment in 2016, as the country experienced painful unemployment rates. Two thousand Finns, randomly selected from a pool of unemployed persons, already receiving government assistance, would collect 560 euro ($635) a month, beginning in January 2017. Guiding the experiment was the question: what is the effect of a safety net on getting people back into the labor force?

Because all the recipients of the government basic income program were unemployed, the experiment was not truly universal. Furthermore, the control group was comprised of five thousand similarly unemployed persons, also receiving government subsidies. In some sense, the Finnish experiment with guaranteed cash handouts could be characterized as welfare-plus.

The results of the experiment must also be put into context. Midway through the testing period, Finnish authorities drastically remodeled unemployment insurance. Those on the dole were required to report their job-seeking activities to Kela, once every three months, or have their benefits cut 4.65%. It is reported that this “activation model” affected approximately 95,000 Finns during the initial rollout, or 50% to which the rule applied.

An increased sense of security in those receiving a guaranteed subsidy might conceivably be influenced by the increasingly insecure conditions for other welfare recipients.

The experiment was flawed, and the results are questionable, but I did learn something about Universal Basic Income from the Finnish trial. Under current Western monetary and political systems, genuine experiments will be hampered.

Olli Kangas, primary architect of the Finnish experiment, said the initial planned study was for 100,000 people. Bureaucrats reduced the scope of the study to a statistically irrelevant level. What’s more, Kangas said to the Nordic Work Life Conference in 2018, “it has been extremely difficult to secure funding… Politicians were willing to provide 20 million euro for the experiment, but just 700,000 euro to evaluate it,” (quoted from basicincome.org).