Experiment on Universal Basic Income Found People Spent Free Money Mostly on Food

By:
Chris Gaetano
Published Date:
Oct 4, 2019
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An 18-month, privately funded program that started in February and involves 125 people in Stockton, Calif., found that, when you give people $500 of free money to spend each month, the most common thing they spend it on is food, according to Fortune. Stockton is a city of 300,000 where a quarter live at or below the poverty line, which made it an ideal location to test a concept called universal basic income. 

A universal basic income is, at its most simple, giving people money on a regular basis with no strings attached. This is in contrast to the numerous welfare programs already in existence, which tend to have stringent means tests and other restrictions. Unlike many ideas, it has advocates among both the economic left and right, as well as critics. While proponents agree on the basic idea that people should get regular cash payments, ideas about how exactly to implement such a thing vary widely, as one might imagine for something backed by both market libertarians and left wing socialists. While the particulars may vary, nearly half of Americans believe that, in the wake of labor force disruptions brought on by mass automation, there should be some sort of universal income program for those replaced by machines. Democratic presidential candidate Andrew Yang has based his platform on the idea of a universal basic income for all Americans, citing this automation threat. 

What the study found was that people spent 40 percent of their free money on food, 24 percent at discount dollar stores and big box retailers like Walmart, 11 percent on utility bills and 9 percent on car repairs and fuel. The remainder was spent on services, medical expenses, insurance, self-care and recreation, transportation, education and donations. Of the participants in the study, 43 percent were full or part-time employed, 2 percent were unemployed and not looking for work, 8 percent were retired, 20 percent were disabled, and 10 percent were staying home to care for children or an aging parent. 

While this was the first study of its kind in the United States, Finland recently concluded a similar study of its own, giving 2,000 people a check for 560 euros a month. It found that while those who received the money were both happier and healthier than those who did not, but the payments had little impact on employment, although one participant said the extra income gave her the room to start her own business. 

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