WARNING: I don't do (micro) Public Finance. And I don't do experimental economics. Those who have read the literature may tell me they are well aware of these problems, or that I'm wrong about something.

Suppose someone asked me to design an experiment to test whether Basic Income would be a Good thing. (They wouldn't ask me, but let's suppose.) I can see two major problems.

1. Temporary experiment vs permanent policy.

Let us suppose that the worst fears about Basic Income were true. If you gave anyone (say) $10,000 per year whether they worked or not, everyone would stop working. Just suppose. Would the experiment be able to tell you that? Because if the experiment weren't able to tell you that, if it were true, it wouldn't be a very informative experiment.

If the experiment were temporary, and known to be temporary, it probably wouldn't be able to tell you that. Because getting $10,000 per year for one year is very different from getting $10,000 per year for life. (Colby Cosh tells me the Dauphin experiment did run for 4 years.)

If people do spend the extra money on taking time off work, that doesn't mean they spend it all immediately. If the average person in the experiment will work for (say) 20 more years, and people spread their extra time off work evenly over their remaining years ("consumption-smoothing"), the effects of a lifetime of basic income will be 20 times bigger than measured by a one year experiment.

It could be even worse than that, because people tend to bunch their leisure towards the end of their lives. We call it "retirement". Maybe the effect of getting $10,000 per year for one year will be that people will retire one year earlier. In which case, the experiment will show zero effect for everyone, except the small fraction of people who were planning to retire soon. If a one year experiment cuts working life from (say) 40 years to 39 years, the effects of a lifetime of basic income will be 40 times bigger than measured by a one year experiment.

You might need to run the experiment for three score and ten years to get some idea of the life-cycle effects. Which is a bit awkward.

2. Funded experiment vs self-funded policy

It's OK if experiments cost money. It's worth paying (sometimes) to get the information. But a basic income policy needs to be self-funding. Free ponies don't grow on trees. If you simply give everyone in the experiment a free $10,000 per year, then (as Stephen Gordon tweeted) good things will very probably happen. But what we want to know is whether good things will happen if we give a group of people $10,000 per year each and that same group of people have to somehow pay for that $10,000 per year each. What we want is a self-funding or revenue-neutral experiment (except for the cost of paying the researchers). The subjects would have to give up all other forms of support that the basic income is designed to replace, and pay the extra taxes that would be needed to make up the difference. Labour supply is not just about income effects; it's about substitution effects caused by changing the marginal (net) tax rate.

Almost any change in tax/transfer policy creates winners and losers. And with informed consent, the losers won't sign the Consent Form. Which would make it a bit awkward getting it past the Research Ethics Board.

It's the external validity of experiments that matters, not the damned T-statistics.

But, as a (moderate) supporter of Basic Income, I think I might just have a Cunning Plan. Which I will leave till later, if and when my head is clearer. But I think we are thinking about this Basic Income thing the wrong way.