Germany is set to trial a Universal Basic Income scheme

By Adam Payne

Sunday August 23, 2020

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Germany is about to become the latest country to trial a universal basic income, starting a three-year study of how it affects the economy and recipients’ well-being.

As part of the study, 120 people will receive €1,200, or about $1,430, each month for three years — an amount just above Germany’s poverty line — and researchers will compare their experiences with another group of 1,380 people who will not receive the payments.

The study, conducted by the German Institute for Economic Research, has been funded by 140,000 private donations.

All participants will be asked to complete questionnaires about their lives, work, and emotional state to see whether a basic income has had a significant impact.

Universal basic income is the idea that a government should pay a lump sum of money to each of its citizens, usually once a month, regardless of their income or employment status, effectively replacing means-tested benefits.

Its proponents argue that it would reduce inequality and improve well-being by providing people with more financial security. Its opponents say it would be too expensive and discourage people from going to work. The idea has gained traction in recent years amid financial crises and growing inequality in some Western countries.

Jürgen Schupp, who is leading the study, told the German newspaper Der Spiegel that it would improve the debate about universal basic income by producing new scientific evidence.

“The debate about the basic income has so far been like a philosophical salon in good moments and a war of faith in bad times,” he told the newspaper.

“It is — on both sides — shaped by clichés: Opponents claim that with a basic income people would stop working in order to dull on the couch with fast food and streaming services. Proponents argue that people will continue to do fulfilling work, become more creative and charitable, and save democracy.

“Incidentally, these stereotypes also flow into economic simulations as assumptions about the supposed costs and benefits of a basic income.

“We can improve this if we replace these stereotypes with empirically proven knowledge and can therefore lead a more appropriate debate.”

A pro-basic-income lobbying group called Mein Grundeinkommen is funding the experiment. The group has used donations from its supporters to fund monthly €1,000 payments for 668 people since 2014.

Finland experimented with a form of basic income for nearly two years: From January 2017 to December 2018, 2,000 unemployed Finns received €560 a month. But the researchers behind that trial concluded that while it led to people out of work feeling happier, it did not lead to increased employment, the BBC reported.

This article is curated from the World Economic Forum.

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