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What Will Happen When 100 Oakland Residents Get Free Money for a Year?

June 1, 2016
by Dana Sitar
Staff Writer
Basic income

What would you do if you didn’t have to spend your working hours earning money to pay for basic needs?

That’s the question that’s been weighing on the minds of governments, private organizations and researchers around the world lately. And it’s finally made its way to our own backyard.

Starting this summer, an experiment will grant 100 Oakland, California, residents $1,000-$2,000 per month for six to 12 months.

The money truly comes with no strings attached — it’s free and unconditional.

It’s part of a basic income experiment spearheaded and funded by Silicon Valley business incubator Y Combinator.

Why People Are Getting Free Money

The experiment is a short-term pilot to prepare the team, which health and education expert Elizabeth Rhodes, Ph.D., will lead, for a larger long-term study, Y Combinator reported on its blog yesterday.

This and similar studies aim to answer some huge questions about the way money and work affect our lives:

  • How does a basic, unconditional income affect people’s happiness, well-being and financial health?
  • How will people spend their time when they don’t have to work to survive?

Researchers are conducting or planning similar experiments in:

  • Germany, where nonprofit organization Mein Grundeinkommen crowdfunds and raffles off year-long basic incomes of 1,000 € ($1,115) per month, apparently regardless of residency.
  • Kenya, where charitable organization Give Directly is putting together funding and a plan for a basic income experiment in conjunction with its existing operations in East Africa.
  • New Zealand, which is starting a conversation about a universal basic income in response to the changing — and increasingly unstable — way people work.

As the original Canadian experiment shows, the idea of a basic income isn’t brand-new.

“In the last five years we’ve taken on a new respectability,” Guy Standing, a British economist who co-founded the Basic Income Earth Network in 1986, told Five Thirty Eight. “But in the last two years it has become an avalanche.”

Unemployment and wages are constantly up for debate.

The stability of Social Security is increasingly uncertain.

And robots are taking over jobs everywhere from manufacturing to Pizza Hut.

These economic realities are making basic income look like less of a utopian dream and more like a practical way to pre-empt a looming strain on our national budget.

The Pros and Cons of Basic Income

Aside from a handful of cities that will pay you to live in them, no one has given money away so unconditionally.

Proponents and opponents, of course, have theories, but we don’t actually know how people will react to free money.

“I wouldn’t say it’s our responsibility [to find out if basic income works], and there’s no way we could figure it out alone,” Matt Krisiloff, who is heading Y Combinator’s basic income project, told Motherboard.

Rhodes echoed the sentiment: “We’re not sure this is the best solution, but we want to study this because it hasn’t been studied.”

Most notable, probably, is the assumption that people will simply stop working if we give them money for nothing.

“A universal basic income has many undesirable features, starting with its non-negligible disincentive to work,” argued economist Eduardo Porter in a recent New York Times piece against the idea.

The people who support the research, however, consider the possibility that people might be more productive and creative when they’re not chained to work because of money.

In its Request for Research earlier this year, Y Combinator wondered, “Do people, without the fear of not being able to eat, accomplish far more and benefit society far more? And do recipients, on the whole, create more economic value than they receive?”

We’re excited to follow these projects and learn the answers to these questions!

How Can You Get Involved?

Researchers are still hammering out the details of the Oakland experiment, but say they are already talking with Oakland officials. They’ll choose participants randomly, and how you might wind up in that pool is unclear.

They chose Oakland because of its proximity to Y Combinator headquarters and also for its “great social and economic diversity.”

The city “has both concentrated wealth and considerable inequality,” the incubator pointed out.

The experiment will cross economic and social lines. Income and employment status won’t affect eligibility.

As they design the pilot, researchers welcome input, which you can send to basicincome@ycr.org. They particularly want to hear from Oakland residents and plan to host public events in the city.

For now, if you want to be involved, our best recommendation is to stay informed.

Lack of public interest can kill exciting projects like this as quickly as they start. Whether you want to see basic income proven to be our salvation or just exorbitant spending, these experiments are important.

Follow the developments by Y Combinator and others as they move forward to learn the results over the coming years.

Your Turn: What would you do with unconditional basic income?

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).

by Dana Sitar
Contributor for The Penny Hoarder

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