Basic Income and the Pitfalls of Randomization

This essay evaluates the state of the debate around basic income, a controversial and much-discussed policy proposal. I explore its contested meaning and consider its potential impact. I provide a summary of the randomized guaranteed income experiments from the 1970s, emphasizing how experimental methods using scattered sets of isolated participants cannot capture the crucial social factors that help to explain changes in people’s patterns of work. In contrast, I examine a community experiment from the same period, where all residents of the town of Dauphin, Manitoba, were eligible for basic income payments. This “macro-experiment” sheds light on the community-level realities of basic income. I describe evidence showing that wages offered by Dauphin businesses increased. Additionally, labor market participation fell. By ignoring the social interactions that characterize real-world community contexts, randomized studies underestimate the decline in labor market participation and its impact on employers. These findings depend to a great extent on the details of the policy design, and as such I conclude that the oft-proposed right–left ideological alliance on basic income is unlikely to survive the move from basic income as a broad policy umbrella to basic income as a concrete policy option