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Finland has an ambitious New Year’s resolution in mind: learn how offering free money for two years helps the unemployed get back to work.
Starting Monday and lasting until 2019, the federal social-security institution Kela will distribute roughly $590 each month to 2,000 jobless Finns.
Regardless of whether they find work during that period, the money will keep coming in at the beginning of each month – a trial version of basic income, one of the past year’s most popular theories of how to solve poverty.
Under universal basic income, people receive a standard amount of money just for being alive. By handing out the money to everyone, regardless of their income status, UBI advocates say, the system prevents people from falling through the cracks.
Marjukka Turunen, the head of Kela’s legal benefits unit, says the experiment in Finland should provide insights on two fronts.
The first is whether basic income could help clean up Finland’s messy system of social security. Depending on residents’ specific needs, Turunen says, they could be on one of 40 different benefit systems. Each benefit – whether for someone who’s sick, unemployed, a student, or so on – is calculated differently and must be changed when the person’s status changes.
“That’s really a burden for customers and Kela to do all those status changes,” Turunen tells Business Insider. A form of basic income could allow people to apply for only one status indefinitely.
The experiment will also provide clues about how people behave when they’re receiving free money. Skeptics say people will sit on their couch all day. Proponents say they’ll actually use the money to make their lives better. (Limited evidence from developing countries suggests it’s more of the latter.)
Turunen suspects the experiment will compel at least a few wannabe entrepreneurs to make the leap into starting their own business – a risky proposition in Finland today because business owners who are forced to close shop don’t receive unemployment benefits. It’s not unlike the system in place in most US states.
“The system nowadays, it’s pretty negative for people who try to do something – even little – in their lives and get something out of it,” she says.
A basic income might turn a risky move into a much safer one.
Turunen doesn’t expect the trial to lead to larger basic-income studies in Finland. The current experiment is tax-free, and in a small country like Finland the cost would be too great.
But other long-term experiments are picking up the slack. Basic income is part of government conversations in Canada, India, and the Netherlands. A pilot project run by the Silicon Valley firm Y Combinator is soon launching in Oakland, California, and the charity GiveDirectly has launched a massive 12-year study in Kenya.
Turunen, for her part, expects basic income to continue gaining in popularity if the data from those experiments keeps coming back positive.
“Some people might stay on their couches, and some might go to work,” she says. “We don’t know yet.”