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A Dutch City Is Experimenting With Giving Away A Basic Income Of $1,000 A Month

Utrecht is one of four Dutch cities trying to figure out what happens if you give your citizens free money.

Illustrations: A-R-T via Shutterstock

If you give people $,1000 a month, no strings attached, will they pocket the money and do nothing with their lives (nothing, that is, that's socially useful)? Or, will they use the $1,000 as a platform to earn more money and live a richer, more productive life?

This question is at the heart of the debate over basic income, a radical social policy idea that's been getting a lot of attention recently. Last year, Finland announced a big experiment in basic income, and several other countries and cities are seriously considering it, including four in the Netherlands: Utrecht, Tilburg, Groningen, and Wageningen.

To some, basic income sounds like an expensive give-away—something we can't afford at a time when public budgets are under pressure as never before. To others, it is a way to fix problems in the welfare system, a means to incentivize work, and a necessary adjustment in the age of automation when well-paying low-skill jobs are likely to be fewer and further between.

In Utrecht, Heleen de Boer, a councilor for the Green Party, likes the idea because she thinks it will encourage welfare claimants to play more of a role in society. "We think social welfare as it is today is very demotivating, because people have to search for a job, do all these administrative things, and they have little money," she says.

"They're not [allowed] to have a small job, and people are obliged to look for a job that just isn't there. That's bad for their self-image. We think if we let people be free, they'll be more able to think about things they want to do, like starting a company, or doing jobs with small hours. They'll be more a part of society."

Utrecht has applied to the Dutch central government to conduct a welfare experiment called "See What Works." This will compare the effect of four types of basic income plus a control. The first will give people about $980, ask nothing in return, and allow as much work as people want (a pure version of basic income). The second will require people to volunteer—say, to do shopping for a elderly person—and take money away if people don't volunteer. The third will offer extra money if people volunteer. And, a fourth will give people money, but not allow them to work.

Working with the University of Utrecht, the city wants to recruit 250 people for See What Works, then select volunteers at random for the five tracks. It will then see what effect each of the payments have on how much people want to work, their level of well-being, and how much they use public services, like health care. If approved by the government in Amsterdam the Hague, the program would run for two years.

People often say basic income is "giving money to people to do nothing." But, as de Boer points out, that criticism is more relevant to today's welfare system where people generally aren't allowed to work if they're on benefits. With a basic income—which in its fullest form could be paid to all citizens regardless of income or employment status—people could do as much or as little as they liked. It would be up to them. Proponents argue that a basic income isn't a free ride—$1,000 isn't enough to live an expansive life; it's a stepping stone.

"In fact, now we are giving people money to do nothing, and they're trying hard to get a job, but they're not really adding to society," de Boer says. "We think people aren't lazy. If you give them money, they don't sit on the couch because they're social animals. If you give them space to think about they want to do, they will participate more than they want to now."

There are other reasons why basic income could be a good idea. For one, it could be a way of simplifying the welfare system, so government doesn't constantly have to check on everyone's status before paying out money. In theory, means-testing saves money because you're paying only people who need it. In practice, it often leads to additional bureaucracy and "gaming" by participants.

A basic income could replace multiple types of public assistance—from health care to earned tax credits—with a single payment and allow people more choice over their spending. This aspect is especially appealing to libertarians and conservatives who hate government and want people to take responsibility for their lives rather than rely on government to make decisions for them.

For now, we don't really know if a basic income would encourage people to work or not (experiments have been tried before, but a long time ago), whether it would save money, and what version would be best (should basic income go to all citizens, just some, and should people have to contribute something in return?). Hopefully experiments like those in Finland and Utrecht will give us solid data to work from.