Can giving everyone free money reduce the stigma of a guaranteed income? – Full Comment – Could a generous dole to all comers pull people out of the labour force for good, at the start of what are supposed to be careers and productive adult lives?
July 19, 2017.   Colby Cosh

Not many people noticed — perhaps because it appeared in a sociology journal instead of the economics literature — but there has been another fresh scholarly spelunking in the data ruins left behind by Mincome, Manitoba’s ambitious 1970s experiment with a universal guaranteed basic income. Mincome is a Canadian event that was forgotten for decades, but it suddenly became retro-mesmerizing to the whole world a few years ago when the idea of a basic income returned to fashionability. It is the most extensive trial of a basic income that was ever performed — yet it turned out to be of not much use.

Boffins working for Ed Schreyer’s NDP provincial government had created a careful experimental design, offering guaranteed incomes (just under C$20,000 in today’s money for a family of four) to selected households throughout Manitoba and to the entire population of Dauphin. Unfortunately, the anticipated cost of the experiment was a wild guess, and while the payments to Manitobans were inflation-indexed, the budget was not.

In a time of volatile inflation that could and did surge into double digits, the result was that investigators could not do much with the information they collected. Captured on inconvenient paper and in obsolete computer formats, the data mostly ended up gathering dust in a National Library and Archives warehouse.

Boffins of Manitoba’s NDP government created a careful experiment, offering guaranteed incomes to selected households

Investigators are trying to revive the ghost of Mincome. The “saturation” part of the study theoretically involving the whole of Dauphin (then and now a small city at the heart of a farming region), allowed University of Manitoba economist Evelyn Forget to look at other government data to infer positive effects from the Mincome program on the area’s hospitals and schools. Forget didn’t use any of the hard-to-access data gathered by the Mincome program itself.

Now someone has. David Calnitsky, a postdoctoral fellow in the U of M’s faculty of social work, and Jonathan Latner, a American postdoc in Germany, have produced a paper that takes advantage of some of the relatively tractable remains of Mincome. They recovered a baseline survey of participants taken at the outset of the program, and also found data from the Mincome “Payments Department” that accounts for all the cheques it wrote. This gave them 37 months of complete “panel” data for a modest number of participating households — some in Dauphin, some elsewhere in Manitoba.

Will a basic income primarily affect individuals, or will it have knock-on community effects?

Calnitsky and Latner are, broadly speaking, basic income advocates. Their main interest is in using the Mincome data to resolve a technical, almost philosophical question about a guaranteed basic income: will it primarily affect the behaviour of individual households, or are there additional community effects to be expected from the universal application of a basic income? Their trick is to contrast the effects on Dauphin — a community which was totally saturated with free money — with the effects on the dispersed households that were singled out for free money in other communities.

Because they are sociologists, they make a bit of a show of not liking brute economic analysis. But because basic income is economics, they have to put on a sort of distasteful economist hat and use economists’ methods to look at what a basic income does to labour market participation. Their estimate is that it has an obvious impact: it fell by 11.3 per cent among Mincome participants in Dauphin, relative to non-recipients elsewhere in Manitoba.

The researchers think they have evidence for a ‘community effect’

This figure was a bit higher for Dauphin than for the isolated Mincome participants, so Calnitsky and Latner think they have evidence for a “community effect.” The basic idea is that if everybody is taking the free money, or could take it, there is less social stigma associated with doing that. The 11.3 per cent net decline in labour force participation sounds dramatic, but that figure represents only those who thought it was worthwhile to sign up for Mincome — about 20 per cent of the households in Dauphin.

So Calnitsky and Latner think this is more good news from Mincome’s tomb. Rather than leading to social collapse, the program just helped a small number of people overlooked by or ineligible for the welfare of the 1970s. Governments at that time, the authors point out, had not yet removed the dumbest clawbacks and “welfare traps” from their social programs. The effects on participation from a permanent basic income might be smaller now.

On the other hand, we don’t have any idea whether the 11.3 per cent estimate would really apply to a permanent and universal basic income, which would have to be self-funding at a national scale. Would the discouragement of work intensify over time? Could a generous dole to all comers pull people out of the labour force for good, at the start of what are supposed to be careers and productive adult lives? The existence of the Calnitsky-Latner paper suggests that there may be more opportunities for clever paleo-research on Mincome. But we cannot quite evade the basic epistemological issue that it was a temporary experiment, and everybody involved understood it to be one.

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