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10 OPINION maltatoday | WEDNESDAY • 27 FEBRUARY 2019 Basic income: world's first experiment in Finland shows only modest benefits THE preliminary findings from Finland's basic income experi- ment are out and they show mixed results. Both advocates and critics of the idea of a uni- versal basic income will find cause for consternation and cel- ebration. Though widely antici- pated by basic income enthu- siasts, the Finnish experiment will only fuel further debate on whether or not the idea works. The experiment ran for two years from January 2017 and was implemented by a centre- right coalition government. It was motivated by a distaste for costly welfare bureaucracy and a desire to eliminate work disin- centives that arise when means- tested benefits are withdrawn as recipients increase their earned income. The idea of basic income is hotly contested around the world. Advocates point to a number of other pluses – from the economic benefits to en- hancing psychological well- being. Opponents say it is eco- nomically unfeasible and will discourage people from doing much-needed work. Yet, despite the intensity of this debate, there was little em- pirical evidence on the policy's effects – until now. Although it experienced waves of sup- port going back decades, basic income has never been imple- mented at the national level. The US state of Alaska has a basic income of sorts since 1982, with a small annual payment to each resident funded as a divi- dend from the state's oil revenue. There were also other policy ex- periments in North America in the 1960s and 1970s, and more recently in other countries such as Namibia and India. But, for a number of reasons, the existing empirical evidence has limited value in assessing the effects of basic income "proper" as a fun- damental welfare state reform. The resulting uncertainty and lack of any concrete evidence means that critics of a basic in- come are able to exploit both the public's risk aversion and the favourite bogeyman of the right- wing press: the fabled work-shy benefit scrounger. So the results of the Finnish experiment were highly anticipated, because they might provide a reality check. The results The Finnish experiment paid 2,000 randomly-selected unem- ployed people a basic income of €560 per month, equivalent to the lower-tier unemployment benefit which it replaced. Pay- ment was guaranteed to contin- ue, no strings attached, for the full two years of the experiment – regardless of whether the indi- vidual engaged in job search ac- tivities or received income from other sources. Labour market outcomes were analysed, as well as broader indicators of well-be- ing, and were compared with a "control group" of unemployed people on the existing benefits system. The results show that those pessimistic predictions of a la- bour market exodus did not transpire. Unfortunately for basic income's proponents, nei- ther did the more optimistic ac- counts. Overall, the number of days in employment, and total labour market earnings, were no higher for those receiving the basic income than for those in the control group. This doesn't mean that it had no effects on the labour market. It might be that some people were more likely to find em- ployment and others less likely, with the effects balancing out. From the results presented, we simply do not know. Recipients of the basic income also reported positive effects on their sense of well-being and feelings of trust in other people and the government. But, given that this was self-reported, it may simply reflect a vested in- terest in stressing the advantag- es of the policy. Nevertheless, these effects, plus anecdotal evidence of the wider benefits of the uncondi- tional payment, strengthen the case for basic income. Indeed, advocates have always main- tained that their argument does not rest on labour market effects and reduced bureaucratic costs. Rather it rests on more funda- mental ideas of social justice, freedom and economic security. Some limitations But what is clear is that the findings of Finland's experi- ment are unlikely to settle the question of whether basic in- come is desirable. It is likely that both advocates and oppo- nents will seize on the results as supporting evidence for their positions, as was the case with the North American ex- periments. In the end this impasse around basic income reflects the irrec- oncilable beliefs of supporters and critics regarding their views of "fairness" and the primacy of work in social organisation. The realities of how the labour market is actually affected play second fiddle to these concerns. So it would be surprising indeed if these fairly modest findings were to move anyone from a deeply held position. Another set of reasons that the results will not resolve the controversy relates to limita- tions in experimental design. The study only focuses on the unemployed, so we remain in the dark about how basic in- come might affect the desire of other groups to work, or the broader societal benefits asso- ciated with a basic income be- ing universal. Another core feature was the low level of payment, which meant many recipients still had to apply for additional unemployment benefits – if they were entitled to them – just as they did before. Thus, the majority of people in the treatment group did not ben- efit from the lower bureaucracy and freedom that basic income is meant to bring. A final limitation is that the ex- periment did not try and model the effects of the tax changes that would be required to fi- nance a universal basic income. Yet, tax rises are a constraint that most advocates accept as a practical political reality. It should be emphasised that these are only preliminary findings, with further analysis to follow later in the spring and again next year. But, it seems likely that insights generated by the Finnish experiment will in- evitably fall short of the expec- tations – and hopes – of many following the debate. theconversation.com Advocates have always maintained that their argument does not rest on labour market effects and reduced bureaucratic costs. Rather it rests on more fundamental ideas of social justice, freedom and economic security Luke Martinelli is Research Associate within the Institute for Policy Research at the University of Bath 10 Luke Martinelli the findings of Finland's experiment are unlikely to settle the question of whether basic income is desirable