Is basic income as expensive as everyone says it is?

Spoiler Alert: It Ain’t $3 Trillion

the real cost of UBI, simplified

The Big Cost Question

Many people on both sides of the unconditional basic income (UBI) debate are making a big mistake in their math. I was too for a while. It’s all over my earlier articles, and I find myself adding notes to them to explain that I was wrong. Fortunately, acknowledging this mistake only makes the case for a UBI much stronger.

This post is for people who already have a fairly comfortable grasp of the concept of UBI. If you are new to the idea and would like a good primer, you can read this great article by Scott Santens.

A major and recurring complaint about UBI is the cost. A commonly proposed plan for implementing UBI calls for $12K/year per adult and $4K/year per kid. The apparent cost of this program, calculated by simply multiplying the total number of American adults and kids by the benefits they’d receive, would be around $3.2 trillion. If you’re asking me, that would still be worth it, but that’s not the real cost, so it’s irrelevant. The actual up front cost is less than a third of this, at around $900 billion (not including any hypothetical savings and benefits we might reap from having a better system in place).

Scott Santens and Karl Widerquist, both of whom I respect and admire, have written important explanations (click on their names above to see those explanations) of this common misconception. They have opened my eyes, but I must admit that in both cases their arguments and examples didn’t quite fully connect the dots for me in a quick and fundamental way. There was still a little too much going on, distracting me from the main point. And Karl’s original cost estimate paper was academic and complex enough to make my eyes start crossing as I parsed through it.

The cost argument is one I keep getting presented and having to answer, and linking those other articles often doesn’t clear up the confusion, so here’s a new and very simplified example I’ve developed in an attempt to cut right through to the fundamentals of it for anyone who’s trying to make this case. Feedback is highly welcome.