This article is a (possible? viable?) response to one of the few criticisms against UBI that actually holds water. My training is not as an economist and so this intended...
From 1974 to 1979, a basic income social experiment known under the name of “Mincome Program” took place in a small canadian town. Evelyn Forget, researcher, is one of the very few persons who have studied the sociological impact of the guaranteed income experiment. She tells us more about her findings, 20 years after the experiment ended.
First of all, can you introduce yourself and tell us how you got interested in basic income?
I’m an economics professor in the faculty of medicine at the University of Manitoba and my basic interest is in health-care costs. You don’t have to work in health very long to realize that many of the conditions you are treating are the consequence of poverty. People are sick because they are poor. I knew about the mincome experiment that took place in the mid-1970s, but i didn’t know what results had emerged from it. I wondered if there was a way to “go back” and find the participants in order to see what effect guaranteed income had on their lives and those of their children.
You produced the most important research studies on Mincome’s basic income experiment. Can you remind us what were the motivations behind this experimentation at that time? How was the experimentation held? How long did it last?
The experiment was introduced in 1974 and ended in 1979. It was conducted in two sites in Manitoba — the city of Winnipeg (pop 450,000 at the time) and the small town of Dauphin (about 10,000 people). What was unique about Dauphin was that all the families that lived in town were participants in the experiment and received income support if their incomes were low enough. Not everyone got the money, but they all got the promise that if their incomes were low enough, they would get support.
The purpose of the experiment was to find out whether people would stop working or work fewer hours if they were guaranteed an income. Many people thought that hours worked would decline significantly. I was interested to know whether there were other effects — if people were healthier and if they stayed in school longer.
Some critics argue that people continued working because they knew or feared this experimentation would have an end. Do you have any arguments that supports or contradicts this view?
The existing welfare scheme actually had strong work disincentives. At the time, any dollar earned meant an equal decline in benefits. MINCOME created an incentive to work because only 50 cents would be taken. No one ever knows if a program will continue but it was believed at the time by most people that this was a pilot project and would be rolled out generally at the end of the decade. I don’t find the “temporary program” argument very compelling. If people are irresponsible, will they really project four years into the future to decide how to behave?
Did you notice negative effects on housing prices, commodity prices or other prices, if ever they were tracked?
They weren’t tracked. This was a period of massive inflation across the country, so it would be difficult to attribute price increases to this particular program.
How was given the income? How were the people tracked not to receive it more than one time a month?
They appeared at the office and filled out forms and produced pay stubs. Their identity was verified.
What were the most striking results you observed?
My own research (pdf) did not look at work effort. Other economists investigated that in the 1980s and they discovered that two groups of people worked fewer hours. Married women effectively used the guaranteed income to ‘buy” themselves longer maternity leaves. When they left the workforce to give birth, they stayed home longer. Secondly, adolescents and especially adolescent boys reduced the hours they worked because they took their first full-time job at a later age.
That was the start of my own research. I wondered, if they are not working, does that mean they are staying in school longer. One of my results is that high school (grade 12) completion rates increased during the study.
My most significant results related to health-care costs. I used medicare results to show that hospitalization rates fell by 8.5% among subjects in the experiment relative to the controls. The reasons for that are reductions in “accidents and injuries” and reductions in hospitalization for mental health issues.
One of the results you observed was that few people stopped working. How do you explain this result and how does it compare with others experiments in the US?
The American experiments had the same results. Few people stopped working and hardly anyone with a full time job reduced the hours they worked at all. This is because a well designed guaranteed income (and this one was designed like a refundable tax credit) creates incentives for people to work. it does a much better job of supplementing the incomes of the working poor than does other kinds of social assistance.
Why has this experiment and its data gone unanalysed for so many years? How did you know about the experiment and why did you decide to work on it?
Governments changed. The experiments were supported by centre left governments at the beginning of the 1970s. By the late 1970s, these governments had been replaced by centre right governments at both the provincial and federal levels. This was largely because of economic events of the 1970s — inflation, unemployment, oil prices, high interest rates. This meant governments were less interested in poverty and more interested in other issues like stabilizing the price level.
I knew about it because I was an undergraduate student in the 1970s, and my economics profs told me this experiment would revolutionize the way Canada delivered social programs. This would be the foundation for social justice.
Do Dauphin’s inhabitants still remember the experiment? What do these people think about it now? And what about the people who worked on the experiment at that time?
We talked to both groups of people. Many participants do remember and are grateful for the opportunities MINCOME offered them and their children. They all mentioned education — either that they were able to get job training, or their children continued in school. Most people I talked to thought it should have continued. The researchers — especially the interviewers who were all young graduates — were moved by their experience. Few had any idea of the depth of poverty that existed or even what rural life in Manitoba was like at the time. Many went on to become academics or social reformers.
Did the experiment help in convincing people about basic income in Canada ? And how about your work? Does it have any relevance for today’s debate?
Interesting you should ask: no, many people are still uncomfortable with basic income, notwithstanding the evidence. I talked to many people who support the concept, but many more think it’s too expensive and people should just work for a living. As was the case in the late 1970s, many people think that we can’t afford social justice.
But people are talking about guaranteed income again. it appears in the press and in public debate regularly. One of the biggest supporters in Canada is Senator Hugh Segal who is a Conservative Senator. I’m not sure he has the ear of the caucus, but he does raise the flag among business people and politicians.
I am heartened by the fact that many of the best changes we’ve made in social assistance over time have looked much like guaranteed income, although they focused only on small groups in the population. In Canada, low income seniors receive a Guaranteed income supplement which is like a guaranteed income for old people. People with dependent children receive a national child benefit, which is like a guaranteed income for people with dependent children. Neither of these are as large as they should be, but they exist. I think the next step is to look at a guaranteed income for the rest of us.
Are there other experiments currently being prepared in Canada? And how differently would you carry out an experiment today?
There are no plans that I know of. Everyone would do some things differently, but I think the basic experiment was really very good. I think I have a better way of getting health data than researchers at the time, but that’s just because different data sources have become available.
Can you tell us a little about the situation of basic income in Canadian society?
I think I’ve already answered this. It is not on the agenda, at least not by the name “guaranteed annual income”. I think people are more comfortable talking about things like a “refundable family tax credit”, which amounts to the same thing. We have moved gradually towards a GAI over time, but current economic events always have a way of intervening.
What are the prospects for basic income in Canada?
It’s hard to say. I think it’s still a long way off, but we have strong advocates across the political spectrum. As long as we can keep the idea alive, it will be considered. One of the difficulties we face in Canada is our federal system. Only the federal government could support such a scheme, but social welfare is a provincial responsibility. It will be a challenge to get all provinces to agree to such a scheme, and it would take strong leadership at the national level. I don’t see this current government offering leadership on this question.
Photo courtesy of Mike Gabelmann
This article was first published in french on revenudebase.info