A universal basic income: the answer to poverty, insecurity, and health inequality?

For four years in the mid-1970s an unusual experiment took place in the small Canadian town of Dauphin. Statistically significant benefits for those who took part included fewer physician contacts related to mental health and fewer hospital admissions for “accident and injury.” Mental health diagnoses in Dauphin also fell. Once the experiment ended, these public health benefits evaporated.1 What was the treatment being tested? It was what has become known as a basic income—a regular, unconditional payment made to each and every citizen. This ground breaking experiment, an early randomised trial in the social policy sphere, ran out of money before full statistical analysisafter a loss of political interest.

The link between inequality and poor health outcomes is long established.2 The actual mechanisms behind that link are less understood. The data from the Dauphin study, re-examined by a team from the University of Manitoba in the 2000s, suggest there might be an association between income insecurity and poorer health.1 All adults in Dauphin earning below $13 800 (£11 000; €13 000) were eligible for the grant of $4800 a year. The researchers compared Dauphin with other similar towns and looked for relative improvements in outcomes using public health and schooling data from the time.

Recently, there have been increasing calls for dialogue on a universal basic income (UBI) from political parties, think tanks (including the Royal Society for the Encouragement of Arts, Manufactures, and Commerce (RSA)), civic activists, trade unions, and leading entrepreneurs such as Tesla chief executive Elon Musk. These calls are a response to growing income insecurity, some sense that welfare systems may be failing, and as a preparation for the potential effects of automation and artificial intelligence on employment prospects in industries that might be better served by machines.3 UBI-style pilots are planned in Finland, the Netherlands, and Canada as a potential answer to these questions and concerns.4

While the Dauphin study included just the poorest residents of one small city, if we assume that it indicates a causal link between extra cash and better health then three effects could have been in play. Firstly, the cash sum itself would have reduced economic inequality directly. Secondly, the unconditional nature of the payment could have reduced income insecurity. Thirdly, there is a positive social multiplier whereby positive behaviours associated with greater financial security tend to reinforce one another—for example, more teenagers staying on in school because they see their peers doing likewise. Taken together, these effects could mean that financial insecurity is a key vector through which inequality worsens health outcomes for the least advantaged. It is certainly a serviceable hypothesis.

Dauphin was not an isolated study. A little known, unintentional, basic income pilot took place in North Carolina during the 1990s. Four years into a longitudinal comparative mental health study of Cherokee American Indian and non-American Indian children from ages 9 to 16, a casino was built on Cherokee land. As part of the deal, all Cherokee Indian adults received a share of the profits—roughly $4000 per year each.

The results were again striking. Children whose families received the payments showed significantly better emotional and behavioural health by age 16 relative to their non-tribal peers, who did not receive payments. Parents also reported that the drug and alcohol intake of their partners decreased after the payments began.5 These reported changes among adults were uncontrolled observations, but the researchers noted no other major policy changes during the study.

Mullainathan and Shafir describe a process of cognitive “bandwidth scarcity” whereby scarcity of resources impedes sound decision making with clear potential for negative health outcomes.6 The Canadian and North Carolina case studies suggest that bandwidth scarcity could be confronted through an unconditional universal basic income. Complex systems of tax credits and social security, such as currently used in the UK, send confusing signals, not least through poorly understood and sometimes arbitrary conditions and welfare sanctions that create new hardships for recipients.

Health professionals should be concerned. The evidence suggests that a universal basic income could help improve recipients’ mental and physical health. The RSA has already called for a trial of a universal basic income in the UK.7 It would give people a better foundation and greater control over their lives in and out of work. Failure to test this promising intervention in a rigorous way would be a failure of government and a missed opportunity to invest in the health and wellbeing of an increasingly insecure and unequal society.