Chalk up another win for basic income.
A new study published in the Quarterly Journal of Economics found that giving poor people in Kenya unconditional free money raised their short-term well-being and led to greater spending on food and other necessities.
The findings follow a slew of evidence in favour of basic income, a policy solution to wealth inequality that has become one of the hottest ideas over the last year.
Basic income advocates point to the system’s straightforward logic as its greatest strength. By reorganising the tax system so the ultra-wealthy essentially pay for the poor to escape poverty, via monthly checks, no-strings-attached, an entire state or nation could prosper.
In the latest study, researchers from the Busara Center for Behavioural Economics, in Nairobi, Kenya, looked at the effects of giving over 500 households in Kenya — some single people, some larger families — direct cash transfers for a period of nine months.
Data came from the NGO GiveDirectly, which for the last five years has been wiring small amounts of money to random groups of people in East Africa. The goal is to see what kind of improvements extra cash makes on people’s lives. A larger experiment, involving 6,000 people over the course of a decade, is slated to begin later this year.
The researchers tracked how people fared at both the village level and within individual households, even randomizing the gender of the recipient and the amount they received, which in most cases was a few dollars a day.
The result: People who received the money were happier, more satisfied with life, less stressed, and depressed less often. They also spent more on investments such as agriculture and home repair, experienced greater food security, and made more money if they were self-employed.
Typically, the cash transfers given to men led to increased spending on assets and consumption, while the money given to women contributed to things that would benefit children, like health and education.
Much of the research has found that people rarely abuse the money they’re given. They don’t spend it on vices like gambling or alcohol; rather, they know what would make them happiest, and they work toward making that a reality — even if it only comes in increments of a few dollars each day.
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