8 ms·

How Finland's Basic Income Experiment Will Work

99 points by nkurz 11y ago

dang 11y ago
This story already had a major discussion (https://news.ycombinator.com/item?id=10688207 https://news.ycombinator.com/item?id=10688207), but the current article contains more information about what is actually planned. Instead of treating this as a dupe like we normally would, let's try leaving it up with the request that people discuss the specifics of this experiment, and perhaps what other sorts of experiments could be run and how one might evaluate them—and leave the more generic for-and-against basic income stuff to the other thread.
pegas1 11y ago
The minimal income shall be given in exchange for voting rights. Pick one or the other.
- guard-of-terra 11y ago
  I'm not sure you're right but also not sure that you're wrong. We don't know how many people are going to rely on basic income as main mode of income and why.
  - mrec 11y ago
    I'm sure he's wrong with that particular phrasing. If a real problem does arise with a non-working majority perpetually voting to increase their BI, a more flexible answer would be to make the vote conditional on having paid a certain amount of tax, either in that year or over their lifetime to date or some combination of the two. But let's not roll back the clock a few decades on universal suffrage until we're absolutely sure we need to. EDIT TO ADD: a core principle behind BI is that paid employment is not the only socially valuable form of activity. I believe that. Taking away the vote from people who aren't making a contribution in $$$ form would fly in the face of it.
- vkou 11y ago
  Why not just auction off voting rights?
distances 11y ago
There's nothing concrete decided yet for this, only a preliminary study has been started [0]. According to this press release, the next steps in the plan are 1. The preliminary study was launched at the end of October 2015. 2. A review of existing information and experiences [...] will be presented [...] in spring 2016. 3. Following on from this, an analysis [...] will be produced in the second half of 2016. 4. The universal basic income experiment is planned to be launched in 2017. [0] http://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/contrary-to-reports-basic-income-study-still-at-preliminary-stage http://www.kela.fi/web/en/news-archive/-/asset_publisher/lN0...
DIVx0 11y ago
I really like the simplicity and efficiency of Guaranteed Income. Social welfare is one of the 'costs of doing business' in a modern civilization. Cut the crap and just give everyone basic resources without reservations. The way I see it if someone really does not want to work, they'll go to great lengths to cheat the system and the government will spend a great deal combating these people. Just giving the bum money will be cheaper for everyone. More importantly a basic income will free up people who will take jobs just because they have to. This will actually open up jobs for people who want to work hard to rise above the basic level. It will give people freedom to explore things that would not be feasible otherwise. This will generate more art, more music, new science and philosophies. Perhaps my thoughts are too idealistic but I think its more reasonable than trying to police welfare or telling everyone to just be more bootstrappy.
- notahacker 11y ago
  There are many people here who spend their day job writing algorithms to monitor people's responses to certain stimuli -even down to the individual level - in order profile users and tailor services to ensure that a few advertising cents per person are spent efficiently. I'm genuinely unable to fathom why when it comes to solving the diverse, expensive and very real problems a social safety net is designed to capture, that "give everyone a fixed large chunk of cash each year" is so widely perceived as the "most efficient" solution on here. The separate ideal world argument that BI would ensure that people don't "have to" work (unless they're foreign, obviously) obviously flies a little in the face of the efficiency argument too.
  - patmcc 11y ago
    >>I'm genuinely unable to fathom why when it comes to solving the diverse, expensive and very real problems a social safety net is designed to capture, that "give everyone a fixed large chunk of cash each year" is so widely perceived as the "most efficient" solution on here. I don't know if it's the absolute most efficient, but I suspect it's a lot more efficient than the current collection of social safety nets - especially assuming the tax agency is already decent at doing it's job, giving everyone a few hundred dollars a week is pretty easy to administer, and can be taxed back from higher earners easily. If instead you have multiple decision trees about who gets particular benefits and who doesn't, you suddenly need a bureaucracy, and those are always expensive. Fundamentally I want my society to feed, clothe, and house people who can't manage to do it themselves for whatever reason. At that level it's not that diverse; does it matter if someone is disabled, drug addicted, chronically unemployable, a single mother with no support, a refugee, whatever? They can't come up with rent and food money, let's give it to them.
s_q_b 11y ago
The studies in this area are very clear. The most efficient way to help the poor is direct cash grants. However anathema to our national ethic, this is what works, and form must follow functionality.
- notahacker 11y ago
  I'm going to go out on a limb and suggest that studies of direct cash grants to the extreme poor in developing countries have essentially zero applicability to a welfare/welfare replacement system in Finland...
- paulddraper 11y ago
  References?
  - akvadrako 11y ago
    https://en.wikipedia.org/wiki/Mincome https://en.wikipedia.org/wiki/Mincome Mincome was an experimental Canadian basic income project that was held in Dauphin, Manitoba, during the 1970s. It was only half "unconditional", the rest income-dependant, but it did seem to have good effects.
BBopUndRawkS 11y ago
All three of the photos in the article are taken within a block of each other, and I know the woman in the pea-coat walking away from the train. Finland is a really small place.
- soperj 11y ago
  That's kind of funny, but it's not really that small. I haven't been all over finland (but a bit of it, helsinki & area, turku, lahti, tampere, and up to oulu.) Still haven't seen the Northern Half of the country. New Zealand is definitely smaller, but it feels easier to visit both islands than the northern half of finland.
PlzSnow 11y ago
This story is so vague, it is basically meaningless. The limited experiment may or may not happen in x years. I understand that people here WANT it to happen and therefore discuss it as if it WILL happen. Unfortunately reality is going to get in the way.
_rpd 11y ago
I think it's hard for these experiments to yield answers to important questions about basic income because of the fact that participants know it is an experiment. With a 2 year length, people aren't going to adjust their long term plans regarding the expectation of how much they will have to work. The extra cash is just a windfall. Reaction to a long term political commitment will be different - once people trust that the basic income will "always be there." Similarly, some local landlords and businesses may raise prices to soak up the extra disposable income, but they know that their actions will be scrutinized and publicized. Is 2 years of marginal extra profit worth the loss of good will? Again, I think the answer is different once there is a long term political commitment. The answer to this last question is important, because it likely leads to the basic income being adjusted for price inflation, and then an inflationary spiral or price controls. To me, this is the central problem with basic income (I think the "motivation to work" issue is a red herring), and I don't see how basic income experiments can shed light on it.
- Retric 11y ago
  A huge benefit to BI in the long term is it allows people to move to cheaper areas. Subsidized housing on the other hand creates lot's of perverse incentives. So, ideally you don't want to adjust for regional cost of living. Remember, if a store in NYC can't find anyone willing to work at X$/hour they must raise wages and prices. This sends really important signals up and down the economy.
  - ci5er 11y ago
    > A huge benefit to BI in the long term is it allows people to move to cheaper areas. And do what? Abide? One thing that people want to test is whether this would disincentivize work. People choosing to move to where there may well be no jobs sounds as if it is disincentivizing work.
    - gozur88 11y ago
      >And do what? Abide? Why not? Not everyone is ambitious. Heck, I doubt more than about 25% of any generation would work if they didn't have to. It's one thing to be pulling down $100+/hr in a rewarding job building the digital future, but if you're working a fry vat you're gonna quit the first time the boss pisses you off.
xrange 11y ago
Yes, speaking of experiments, I don't see why the U.S. doesn't run a large scale experiment to see what the effects of a basic income are. Select a small but not insignificant demographic. Pay them a not-means-tested monthly stipend. Since this is only a test, you should be able to pay for it with a modest tax on paychecks for the rest of the citizens. Then wait a while, and see what happens. We would want to make sure it cuts across a broad swath of society, so that special interests don't wreck havoc when interpreting the results. So we'd want rich and poor, of all races, etc.. We should then be able to look at the recipients, and tell if they were more likely or less likely to be employed. And we should be able to see if they spending their time creating cutting-edge art, and new innovative music, while writing inspiring novels, and discovering new scientific facts and mathematical theorems. To be doubly sure that we aren't merely papering over any medical insurance issues (what with medical inflation and all), we might also create a separate medical payment system to cover their medical expenses. Of course, this should be a long running experiment, so that any short term economic and societal effects will have time to average out. Let's propose to run this experiment, for, I don't know, maybe 80 years.
- _rpd 11y ago
  I wonder if data from lottery winners with "lifetime" stipends in the right range could be useful? Or perhaps a basic income experiment lottery could be sanctioned to gather the data. It might even be self-funding.
  - danieltillett 11y ago
    A very good idea. It would even be easy to implement at profit :)
- adventured 11y ago
  In a country as rich as the US, with wealth so heavily stacked to the top 1/3, I'd have to argue in favor of dropping the rich out of any basic income testing or implementation. For the same reason that they shouldn't be participating in any other traditional welfare programs currently. The only way a full implementation of a basic income can work - and be enough to matter - in a country with as large of a population as the US, is by dropping the top economic tiers out of it; make over $X, you don't qualify. The US could afford to give the poorest 50 million adults a $2,000 per month basic income. Federal + State + Local welfare spending total, is a bit over $1 trillion annually (including Medicaid). You could parse that $2k down to $1k across 100 million adults, but at that level it won't be enough to replace all the benefits people are deriving from welfare today (the health coverage alone would severely drain that $1k level). The downside is, giving the bottom 50 million adults a $2,000 check every month, would enrage the middle class. One of the benefits of current welfare programs, is you don't see it the way you do cash being spent, and I believe most people think of cash payments entirely differently than they do eg free healthcare. Want to give all adults enough money? You can't do it. There is no math that will ever get you there, unless you plan to abolish the US military, part of Social Security and Medicare, and raise taxes simultaneously. 230 million adults * $1,000 per month = $2.76 trillion per year (almost the whole federal budget), it's obviously laughable.
cpursley 11y ago
I'm all for this experiment, but please, can we get rid of the Basic 'Income' _doublespeak_? Income is earned. Call it Basic ['benifits', 'welfare', 'necessities', 'coverage'].sample. Anything but the Income misnomer.
- danieltillett 11y ago
  Better tell the rentiers this [1]. 1. https://en.m.wikipedia.org/wiki/Unearned_income https://en.m.wikipedia.org/wiki/Unearned_income
- paulddraper 11y ago
  You're think of earned income. Income is anything that...well...comes in.
murbard2 11y ago
There are two big issues with basic income: 1) Even if you spent the entire $2T annual federal budget on a basic income, it would come to about $500 per person per month. The cost is simply gargantuan. 2) It would not replace welfare, it would come on top of it. This is because welfare isn't about helping the poor, it's about giving political power to the lawmakers. This power comes in the form of large administrative bodies, where political allies can be given cushy jobs, and in the form of an electoral clientele. Basic income doesn't have these two features, so from a public choice theory, it will not replace the welfare state. Case in point, when the Reagan administration tried to apply Milton Friedman's negative income tax, he distanced himself from it as they wanted to do it on top of other welfare programs. This is exactly what public choice theory dictates.
ahallock 11y ago
There is another social factor to basic income, and State-based welfare, that I'm not sure is being mentioned: it allows people to become more isolated because they can be less dependent on friends, family, and neighbors. I'm not sure if that's a positive for society in the long run.
osmala 11y ago
Lets start with simple facts, current government is formed by rightwing parties. [Not so rightwing by american standards]. ~1000€ is what ultra leftwing party's youth group proposes. ~600€ is what the Green leftist party proposes The right wing parties talks about creating motivation for people to get to work with the basic income. A newspaper supporting prime minister party's talk about either partial basic income of 550€ with it replacing most benefits or full basic income of 800€ with absolute cutting of other benefits. What I'd like to see most is basic income combined with true flat tax. No tax deductions, minimal bureaucracy. If we are going to pay certain minimal support to everyone to keep them from going too desperate, we could as well pay it to everyone and then start taxing from first euro earned with the flat percentage. Instead of current system in which people send lots of separate applications for different benefits and then people paid by government has to work. And when you get raise you probably need to get new tax form from tax office to give your employer. What well made basic income should give is instead of having long plateau after the minimum everyone is guaranteed to get one way or other, is a way for everyone to get that minimal guaranteed all the time and any marginal employment would increase income over that. And most of the cost would be got from reducing number of government employees required to handle it. Everyone doing the math should consider that only real cost of basic income is when someone earns less than (1/taxrate)*basic income and more than what government currently gives to poor. And it eliminates cost of MANY government jobs handling papers for benefits, and makes easier to take a job for a day or two or week or two because you cannot loose benefits for it. Or loose benefits for starting your own business.

99 points by nkurz 11y ago

dang 11y ago

This story already had a major discussion (https://news.ycombinator.com/item?id=10688207 https://news.ycombinator.com/item?id=10688207), but the current article contains more information about what is actually planned. Instead of treating this as a dupe like we normally would, let's try leaving it up with the request that people discuss the specifics of this experiment, and perhaps what other sorts of experiments could be run and how one might evaluate them—and leave the more generic for-and-against basic income stuff to the other thread.

pegas1 11y ago

The minimal income shall be given in exchange for voting rights. Pick one or the other.

guard-of-terra 11y ago
I'm not sure you're right but also not sure that you're wrong. We don't know how many people are going to rely on basic income as main mode of income and why.
- mrec 11y ago
  I'm sure he's wrong with that particular phrasing. If a real problem does arise with a non-working majority perpetually voting to increase their BI, a more flexible answer would be to make the vote conditional on having paid a certain amount of tax, either in that year or over their lifetime to date or some combination of the two. But let's not roll back the clock a few decades on universal suffrage until we're absolutely sure we need to. EDIT TO ADD: a core principle behind BI is that paid employment is not the only socially valuable form of activity. I believe that. Taking away the vote from people who aren't making a contribution in $$$ form would fly in the face of it.
vkou 11y ago
Why not just auction off voting rights?

distances 11y ago

There's nothing concrete decided yet for this, only a preliminary study has been started [0]. According to this press release, the next steps in the plan are 1. The preliminary study was launched at the end of October 2015. 2. A review of existing information and experiences [...] will be presented [...] in spring 2016. 3. Following on from this, an analysis [...] will be produced in the second half of 2016. 4. The universal basic income experiment is planned to be launched in 2017. [0] http://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/contrary-to-reports-basic-income-study-still-at-preliminary-stage http://www.kela.fi/web/en/news-archive/-/asset_publisher/lN0...

DIVx0 11y ago

I really like the simplicity and efficiency of Guaranteed Income. Social welfare is one of the 'costs of doing business' in a modern civilization. Cut the crap and just give everyone basic resources without reservations. The way I see it if someone really does not want to work, they'll go to great lengths to cheat the system and the government will spend a great deal combating these people. Just giving the bum money will be cheaper for everyone. More importantly a basic income will free up people who will take jobs just because they have to. This will actually open up jobs for people who want to work hard to rise above the basic level. It will give people freedom to explore things that would not be feasible otherwise. This will generate more art, more music, new science and philosophies. Perhaps my thoughts are too idealistic but I think its more reasonable than trying to police welfare or telling everyone to just be more bootstrappy.

notahacker 11y ago
There are many people here who spend their day job writing algorithms to monitor people's responses to certain stimuli -even down to the individual level - in order profile users and tailor services to ensure that a few advertising cents per person are spent efficiently. I'm genuinely unable to fathom why when it comes to solving the diverse, expensive and very real problems a social safety net is designed to capture, that "give everyone a fixed large chunk of cash each year" is so widely perceived as the "most efficient" solution on here. The separate ideal world argument that BI would ensure that people don't "have to" work (unless they're foreign, obviously) obviously flies a little in the face of the efficiency argument too.
- patmcc 11y ago
  >>I'm genuinely unable to fathom why when it comes to solving the diverse, expensive and very real problems a social safety net is designed to capture, that "give everyone a fixed large chunk of cash each year" is so widely perceived as the "most efficient" solution on here. I don't know if it's the absolute most efficient, but I suspect it's a lot more efficient than the current collection of social safety nets - especially assuming the tax agency is already decent at doing it's job, giving everyone a few hundred dollars a week is pretty easy to administer, and can be taxed back from higher earners easily. If instead you have multiple decision trees about who gets particular benefits and who doesn't, you suddenly need a bureaucracy, and those are always expensive. Fundamentally I want my society to feed, clothe, and house people who can't manage to do it themselves for whatever reason. At that level it's not that diverse; does it matter if someone is disabled, drug addicted, chronically unemployable, a single mother with no support, a refugee, whatever? They can't come up with rent and food money, let's give it to them.

s_q_b 11y ago

The studies in this area are very clear. The most efficient way to help the poor is direct cash grants. However anathema to our national ethic, this is what works, and form must follow functionality.

notahacker 11y ago
I'm going to go out on a limb and suggest that studies of direct cash grants to the extreme poor in developing countries have essentially zero applicability to a welfare/welfare replacement system in Finland...
paulddraper 11y ago
References?
- akvadrako 11y ago
  https://en.wikipedia.org/wiki/Mincome https://en.wikipedia.org/wiki/Mincome Mincome was an experimental Canadian basic income project that was held in Dauphin, Manitoba, during the 1970s. It was only half "unconditional", the rest income-dependant, but it did seem to have good effects.

BBopUndRawkS 11y ago

All three of the photos in the article are taken within a block of each other, and I know the woman in the pea-coat walking away from the train. Finland is a really small place.

soperj 11y ago
That's kind of funny, but it's not really that small. I haven't been all over finland (but a bit of it, helsinki & area, turku, lahti, tampere, and up to oulu.) Still haven't seen the Northern Half of the country. New Zealand is definitely smaller, but it feels easier to visit both islands than the northern half of finland.

PlzSnow 11y ago

This story is so vague, it is basically meaningless. The limited experiment may or may not happen in x years. I understand that people here WANT it to happen and therefore discuss it as if it WILL happen. Unfortunately reality is going to get in the way.

_rpd 11y ago

I think it's hard for these experiments to yield answers to important questions about basic income because of the fact that participants know it is an experiment. With a 2 year length, people aren't going to adjust their long term plans regarding the expectation of how much they will have to work. The extra cash is just a windfall. Reaction to a long term political commitment will be different - once people trust that the basic income will "always be there." Similarly, some local landlords and businesses may raise prices to soak up the extra disposable income, but they know that their actions will be scrutinized and publicized. Is 2 years of marginal extra profit worth the loss of good will? Again, I think the answer is different once there is a long term political commitment. The answer to this last question is important, because it likely leads to the basic income being adjusted for price inflation, and then an inflationary spiral or price controls. To me, this is the central problem with basic income (I think the "motivation to work" issue is a red herring), and I don't see how basic income experiments can shed light on it.

Retric 11y ago
A huge benefit to BI in the long term is it allows people to move to cheaper areas. Subsidized housing on the other hand creates lot's of perverse incentives. So, ideally you don't want to adjust for regional cost of living. Remember, if a store in NYC can't find anyone willing to work at X$/hour they must raise wages and prices. This sends really important signals up and down the economy.
- ci5er 11y ago
  > A huge benefit to BI in the long term is it allows people to move to cheaper areas. And do what? Abide? One thing that people want to test is whether this would disincentivize work. People choosing to move to where there may well be no jobs sounds as if it is disincentivizing work.
  - gozur88 11y ago
    >And do what? Abide? Why not? Not everyone is ambitious. Heck, I doubt more than about 25% of any generation would work if they didn't have to. It's one thing to be pulling down $100+/hr in a rewarding job building the digital future, but if you're working a fry vat you're gonna quit the first time the boss pisses you off.

xrange 11y ago

Yes, speaking of experiments, I don't see why the U.S. doesn't run a large scale experiment to see what the effects of a basic income are. Select a small but not insignificant demographic. Pay them a not-means-tested monthly stipend. Since this is only a test, you should be able to pay for it with a modest tax on paychecks for the rest of the citizens. Then wait a while, and see what happens. We would want to make sure it cuts across a broad swath of society, so that special interests don't wreck havoc when interpreting the results. So we'd want rich and poor, of all races, etc.. We should then be able to look at the recipients, and tell if they were more likely or less likely to be employed. And we should be able to see if they spending their time creating cutting-edge art, and new innovative music, while writing inspiring novels, and discovering new scientific facts and mathematical theorems. To be doubly sure that we aren't merely papering over any medical insurance issues (what with medical inflation and all), we might also create a separate medical payment system to cover their medical expenses. Of course, this should be a long running experiment, so that any short term economic and societal effects will have time to average out. Let's propose to run this experiment, for, I don't know, maybe 80 years.

_rpd 11y ago
I wonder if data from lottery winners with "lifetime" stipends in the right range could be useful? Or perhaps a basic income experiment lottery could be sanctioned to gather the data. It might even be self-funding.
- danieltillett 11y ago
  A very good idea. It would even be easy to implement at profit :)
adventured 11y ago
In a country as rich as the US, with wealth so heavily stacked to the top 1/3, I'd have to argue in favor of dropping the rich out of any basic income testing or implementation. For the same reason that they shouldn't be participating in any other traditional welfare programs currently. The only way a full implementation of a basic income can work - and be enough to matter - in a country with as large of a population as the US, is by dropping the top economic tiers out of it; make over $X, you don't qualify. The US could afford to give the poorest 50 million adults a $2,000 per month basic income. Federal + State + Local welfare spending total, is a bit over $1 trillion annually (including Medicaid). You could parse that $2k down to $1k across 100 million adults, but at that level it won't be enough to replace all the benefits people are deriving from welfare today (the health coverage alone would severely drain that $1k level). The downside is, giving the bottom 50 million adults a $2,000 check every month, would enrage the middle class. One of the benefits of current welfare programs, is you don't see it the way you do cash being spent, and I believe most people think of cash payments entirely differently than they do eg free healthcare. Want to give all adults enough money? You can't do it. There is no math that will ever get you there, unless you plan to abolish the US military, part of Social Security and Medicare, and raise taxes simultaneously. 230 million adults * $1,000 per month = $2.76 trillion per year (almost the whole federal budget), it's obviously laughable.

cpursley 11y ago

I'm all for this experiment, but please, can we get rid of the Basic 'Income' _doublespeak_? Income is earned. Call it Basic ['benifits', 'welfare', 'necessities', 'coverage'].sample. Anything but the Income misnomer.

danieltillett 11y ago
Better tell the rentiers this [1]. 1. https://en.m.wikipedia.org/wiki/Unearned_income https://en.m.wikipedia.org/wiki/Unearned_income
paulddraper 11y ago
You're think of earned income. Income is anything that...well...comes in.

murbard2 11y ago

There are two big issues with basic income: 1) Even if you spent the entire $2T annual federal budget on a basic income, it would come to about $500 per person per month. The cost is simply gargantuan. 2) It would not replace welfare, it would come on top of it. This is because welfare isn't about helping the poor, it's about giving political power to the lawmakers. This power comes in the form of large administrative bodies, where political allies can be given cushy jobs, and in the form of an electoral clientele. Basic income doesn't have these two features, so from a public choice theory, it will not replace the welfare state. Case in point, when the Reagan administration tried to apply Milton Friedman's negative income tax, he distanced himself from it as they wanted to do it on top of other welfare programs. This is exactly what public choice theory dictates.

ahallock 11y ago

There is another social factor to basic income, and State-based welfare, that I'm not sure is being mentioned: it allows people to become more isolated because they can be less dependent on friends, family, and neighbors. I'm not sure if that's a positive for society in the long run.

osmala 11y ago

Lets start with simple facts, current government is formed by rightwing parties. [Not so rightwing by american standards]. ~1000€ is what ultra leftwing party's youth group proposes. ~600€ is what the Green leftist party proposes The right wing parties talks about creating motivation for people to get to work with the basic income. A newspaper supporting prime minister party's talk about either partial basic income of 550€ with it replacing most benefits or full basic income of 800€ with absolute cutting of other benefits. What I'd like to see most is basic income combined with true flat tax. No tax deductions, minimal bureaucracy. If we are going to pay certain minimal support to everyone to keep them from going too desperate, we could as well pay it to everyone and then start taxing from first euro earned with the flat percentage. Instead of current system in which people send lots of separate applications for different benefits and then people paid by government has to work. And when you get raise you probably need to get new tax form from tax office to give your employer. What well made basic income should give is instead of having long plateau after the minimum everyone is guaranteed to get one way or other, is a way for everyone to get that minimal guaranteed all the time and any marginal employment would increase income over that. And most of the cost would be got from reducing number of government employees required to handle it. Everyone doing the math should consider that only real cost of basic income is when someone earns less than (1/taxrate)*basic income and more than what government currently gives to poor. And it eliminates cost of MANY government jobs handling papers for benefits, and makes easier to take a job for a day or two or week or two because you cannot loose benefits for it. Or loose benefits for starting your own business.