Public Policy: Universal Basic Income, Potential Benefits and Disadvantages

Universal Basic Income (UBI), the idea of providing every citizen with a guaranteed cash payment, has gained attention as a potential solution to poverty, automation, and economic insecurity. In basic terms, UBI aims to give individuals a baseline financial safety system, freeing them from pressure of survival, poverty, homelesness, and allowing them to pursue work, education, or entrepreneurship without a fear of failure or loosing their access to basic needs.

People arguing in favor of UBI state that UBI could simplify social welfare systems by replacing multiple targeted programs with a single payment. By removing bureaucratic processes and legal procedures, it could reach people more efficiently while reducing stigma associated with welfare. In addition, a guaranteed income may encourage risk-taking, as individuals would be more willing to start small businesses, pursue creative careers, or invest in education.

Several pilot programs provide insight into UBI’s potential. Finland conducted a trial in 2017–2018, giving 2,000 unemployed citizens a monthly stipend of €560. While it did not significantly increase employment, participants reported improved mental health, reduced stress, and greater confidence for their future. Similarly, Stockton, California, launched a program in 2019 providing $500 monthly to a group of residents. Recipients demonstrated better financial stability, increased full-time work engagement, and it resulted in fewer late payments on bills.

Although these promising outcomes happened, many people raised concerns regarding UBI’s costs. Implementing a nationwide program could require significant taxation and take funds from other public services, such as healthcare and education which are essential. Some behavioural economists also debate whether a universal payment could discourage work. While small pilot studies show minimal effects, scaling UBI may cause different results, particularly in countries with varying social norms and cultures. I personally think that we can't know the outcome in terms of human behaviour without seeing it in practice.

A approach that considers both the ups and downs of the UBI may be targeted cash transfers, where resources are directed toward low-income households while maintaining existing social supports. For example, in Brazil, Bolsa Família has successfully reduced extreme poverty by giving conditional cash transfers linked to education and healthcare. These programs both include financial support and incentives for long-term social mobility. This is a great example that cash interventions can be effective when paired with broader policy frameworks.

Ultimately, UBI raises important and quite philosophical questions: What is the role of government in providing economic security? How do we balance autonomy with societal needs? How can policy respond to rapidly changing labor markets? While it is not a ultimate and absolute solution, UBI experiments provide valuable lessons about the importance of income security.