The debate on universal basic income, which would substitute a flat, unconditional stipend to all citizens for the thicket of (most) existing welfare benefits, rages on. So, fortunately, does research on the feasibility, cost and effects of various types of scheme, which can only help governments and voters to assess their desirability.

The debate is also quite prone to “confirmatory bias” — a tendency to emphasise the research findings that support one’s sympathies. Take the recent OECD brief on the affordability of UBI. The research exercise asked what sort of UBI could be financed by spreading existing working-age welfare benefits equally and eliminating zero-rate income tax allowances while leaving income tax rates unchanged. Free Lunch highlighted that in three of the OECD’s four case studies, this would be enough to finance the existing guaranteed minimum social assistance level in the country in question. In two of them (Finland and Italy) there would even be significant funds left over; in the third (France) the government would roughly break-even. Only in the fourth, the UK, would such a UBI fall significantly (28 per cent) below the existing minimum social aid guarantee. My more sceptical colleague Chris Giles focused instead on the fact that this would not cut, but could in face raise poverty rates, and that a more generous UBI would require tax increases.

All these facts are, of course, correct, and all constitute relevant information when considering a UBI-type welfare reform. But while the type of study that the OECD brief represents is tremendously useful, it is also typical in what it omits.

First, it tends to look at the distribution of incomes (both by the market and after taxation and benefits) across individuals, but not across time for each individual. That approach ignores the uncertainty and volatility of individual incomes and the cost that this volatility imposes on individuals and society — a key argument in favour of UBI in the eyes of many of its advocates. For a given distribution of, say, annual incomes, the more volatile are month-to-month or week-to-week incomes, the more precious the security and empowerment of UBI would be.

Such income insecurity is more relevant than one might think. A recent report by the GMB union, for example, claims that as much as one-third of British workers, or 10m people, are in “precarious employment”. My colleague Kadhim Shubber argues that the rise of the gig economy is a symptom (and not just a cause) of a world of work that is recreating exploitative patterns of the past by withdrawing stability and predictability from workers. Assessing UBI simply as a means to address poverty and inequality is to forget its role as a means to address precarity even though that is the primary concern of such prominent UBI proponents as Andy Stern, the US union leader.

Another omission is that the debate in rich countries tends, naturally enough, to focus on the affordability and desirability of UBI in rich countries. But there is much to learn — for rich countries, too — about whether UBI would make sense in poorer ones. The answer is, perhaps paradoxically, that there is a good case for low-income countries to leapfrog the rich world in welfare policy.

John McArthur asks how many poor countries could afford to pay a UBI large enough to eradicate extreme poverty. The answer is stunning: 66 countries could do this at a cost of no more than 1 per cent of their national income. Doing so would lift 185m people out of extreme poverty, a quarter of the global total. A further 25 countries could do the same at a cost of between 1 and 5 five per cent of national income, eradicating extreme poverty for another 150m people.

Some poor but commodity-rich countries could do this easily. Shanta Deverajan writes that distributing “just 20 per cent of oil revenues is sufficient to eliminate extreme poverty in Angola, Republic of Congo, Equatorial Guinea, Gabon, and Nigeria”. That is a strong argument for his and his colleagues’ proposal for “direct dividing payments” or my own earlier design of “natural wealth accounts”. The International Monetary Fund, too, has examined this idea.

Some may accept the case for poor-country UBI in theory but object that such countries are administratively incapable of implementing such a reform in practice. They are wrong. As shown by India’s impressive rollout of a universal biometric identification system linked to financial inclusion through electronically accessible bank accounts, UBI is eminently feasible. The Indian government’s most recent economic survey included a full chapter seriously weighing the suitability of UBI. One clear conclusion from this essential reading is that a UBI is likely to be better implemented than existing welfare schemes.

UBI is the new frontier in welfare reform. At the moment it looks more likely to be conquered by the developing world, while countries known as advanced economies look on from behind.

Other readables

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Alan Blinder asks why, after 200 years, economists can’t sell free trade.

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