PhD researcher Maximilian Linek analyses potential responses to a BI, using a large-scale survey in Germany.
If the government gave every citizen an unconditional sum of money every month, like a salary, what would they do with it? This idea of a Universal Basic Income (UBI), which aims to ensure a basic standard of living for all, has gained interest in political and public debates in recent years.
Hertie School PhD Researcher Maximilian Linek wanted to know what people would do if they received this “no-strings-attached” monthly cash – would they live their lives differently?
Linek surveyed registered members of the Berlin-based, pro-UBI non-profit, Mein Grundeinkommen e.V. (My Basic Income), which runs a monthly crowd-funded lottery to give away unconditional 12-month cash payouts. In a survey of 72,134 of the group‘s registered users in Germany in October 2018, Linek asked how people would change their time spent on work, education, volunteering, sport, care, socialising, and hobbies, given a particular basic income scenario. He also asked a control group to report how they would like to change their current time use. This helped provide a reference for balancing out any overly optimistic intentions in the first group.
What Linek discovered is that a basic income would likely have only a small effect on how people spent their time. While a BI scenario of 500 euros produced smaller intended time changes than the control group, responses to 1,500 euros of BI were very close those of 1,000 euros of BI. This is a useful finding for the design of future experiments to test the effects of BI. “Future BI experiments should make monthly transfers that are larger than 500 euros, but not necessarily larger than 1,000 euros, as the marginal utility of BI seems to decrease after that amount,” Linek writes in the working paper, “Time Use with Basic Income: Evidence from a Large-Scale Experiment”.
Those who expected to receive a basic income said they intended to reduce time spent on work, sport, socializing, and hobbies, while increasing time spent on education, volunteering, and care, compared to the control group. In fact, such negative effects on sport, socializing, and hobbies contradict economic theory, Linek says. These effects likely arise because people in the control group reported unrealistically large changes to their time use in their current situation (control group) compared to those told they will receive BI (treatment group). Linek said that while he anticipated such overoptimism, he did not expect to to be stronger than when people were told they would receive an amount like 500 euros of BI.
“The treatment effects are generally small,” Linek writes. The largest absolute effect is an intended 2.5-hour reduction of weekly working time with a BI of 1,500 euros – a 9% reduction, he noted. Larger relative effects - the size of effects relative to the amount of time spent currently - for 1,500 euros were found only for education and volunteering. “This evidence suggests that BI will not significantly change people’s daily routines,” Linek says in the paper. Still, the indication that people would reallocate time to education, volunteering and care suggests that BI could have socially desirable effects, he notes.
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