Universal Basic Income: Analysis of Current Program Designs As a Means of Economic Mobility

Katz, Matthew F.; Katz, Matthew F.

Universal Basic Income (UBI), a type of social welfare program that provides a set level of guaranteed income payments either indefinitely or for a pre-defined time period, has recently received an uptick in attention due to the platform of Democratic Presidential Candidate Andrew Yang and high-profile studies of its implementation in Stockton, California and Finland. Research on the efficacy of UBI as a poverty reduction program is grounded in Milton Friedman’s economic theory of the “negative income tax,” proposed as legislation in 1971 by then-President Richard Nixon. Negative income tax is a progressive tax system where, rather than paying income tax to the government, individuals under a certain income threshold receive payment from the government. UBI proponents applaud its ability to undercut traditional debates surrounding welfare and cash assistance programs (e.g., work requirements, service time limits, high administrative costs, and income level thresholds). However, not all iterations of UBI programs are the same. Most UBI program designs differ in the amount of assistance given, their universality, and whether they replace or supplement traditional safety net programs.

This paper explores the differences between types of universal basic income programs, pulling specific features from program designs outlined in political platforms and current or recent UBI demonstration projects. A review of the current and historical literature on poverty reduction and social welfare programs and the preliminary results of tests of universal basic income was conducted to provide grounds to analyze the effectiveness of specific proposals as a means of economic mobility.

Findings from the UBI program design review demonstrate a need for further analysis of the merits of UBI as a means of generating economic mobility for individuals living in poverty. Evaluation results of other programs grounded in negative income tax theory, such as EITC, provide support for UBI by indicating that there may be no basis for including work requirements as a component of welfare programs. Rather, these findings provide support for abolishing work requirements for welfare programs, while also undermining arguments that cash transfers will result in irresponsible spending. Some UBI program designs propose off-setting their high cost by replacing other social welfare programs with UBI. In reality, this action would result in tasking UBI with providing the nutritional, housing, healthcare, and education assistance currently afforded to families through SNAP, housing vouchers, Medicaid, and Head Start. If universal basic income is extended to all Americans, the tax dollars being used to fund guaranteed income payments to more affluent Americans will effectively distribute wealth upwards, leaving families experiencing poverty with the task of funding their own assistance programs.

Overall, when supplemented by other social welfare programs, the concept of universal basic income holds great promise given its ability to generate economic mobility and provide families living in poverty with restriction-free cash assistance. However, before implementation at the federal level, additional studies are needed to pinpoint precise income thresholds and associated payment amounts in order to justify the cost to the government and also maintain UBI’s efficacy as a poverty reduction program.

Association for Public Policy Analysis & Management

DC Accepted Papers Paper: Universal Basic Income: Analysis of Current Program Designs As a Means of Economic Mobility

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