The idea of Unconditional Basic Income (UBI) has received widespread attention in recent decades as a possible policy solution to some of the most pressing social justice challenges facing contemporary societies. Despite not being a new idea, it remains a radical proposal that has so far failed to garner widespread political support.
A UBI is an income of sufficient amount to guarantee decent living conditions, paid unconditionally in cash to all citizens and legal residents of a political community without considering the financial situation of the recipients. A UBI is characterized by being unconditional, meaning obligations-free, individual (contrary to other benefits which are given to households), universal (ensuring everyone in a given political community the same guaranteed minimum income), and ideally of a sufficiently high amount to guarantee a dignified existence and civic participation. The radical nature of a UBI resides in its unconditional nature: it secures for everyone the same universal minimum income, independent of whether they meet requirements such as having assets under a certain threshold or being unemployed.
The idea has been theorized since the eighteenth century, namely by Thomas Paine in ‘Agrarian Justice’, where he proposed a UBI in the form of a land dividend. As such, it is rooted in the idea of granting everyone an amount based on people’s shared ownership of a given resource, such as land. Since then, the idea has evolved, particularly in the twentieth century, with philosophers and political economists from across the political spectrum proposing some form of dividend or negative-income tax. Albeit different, the idea of a negative-income tax shares some similarities, namely in outcome, with an idea such as a UBI.
While there is strong literature on the moral value of implementing a UBI, discussing both objections to the policy but also how it can be superior to other mechanisms or promote freedom for everyone, there is only a nascent literature on the costs and ex-post benefits of implementing a UBI. As such, this project aims to contribute to this knowledge gap, while also taking into consideration the arguments from the ongoing moral debate on UBI, but also the evidence stemming from the increasing number of UBI and guaranteed income experiments taking place all over the world, As such, this project not only inherits and expands the rich legacy and network of the pre-existing FCT funded project on UBI experiments – the UBIEXP project – coordinated by the PI of this proposal (Roberto Merrill) but it also contributes in a novel way to the ongoing literature on UBI, by advancing the policy development proposals and transdisciplinary efforts which were previously accomplished, in a moral and socio-economic dimension.
The original contribution of this project will be to expand and systematize the methodology and analysis regarding the nascent literature on the moral, economic and social benefits, costs (and savings) of UBI, building upon the leading current examples of such studies for Canada, Switzerland and Australia. This theoretical work will allow us to focus on the Portuguese case study, integrating and extending the best research practices found in these previous international comparative studies from 2017-19. This will be the first time that a comprehensive feasibility analysis for an EU nation is conducted, serving as a potential template for other nations to model a high-level UBI. Initial research findings and association of the UBIEXP team with actual research published by researchers integrated to the team, in particular by Karl Widerquist (the Co-PI of this project proposal) and by Richard Pereira, strongly indicates the level of UBI in Portugal can be much higher than previously thought.
Combined with recent findings from various guaranteed income experiments internationally, it has been demonstrated that UBI recipients were far more adept at improving their living conditions and extricating themselves from poverty than anticipated by most researchers, even with cash transfer amounts slightly below the official poverty level. The moral grounding for a UBI has thus changed in recent years and requires a thorough integrated analysis of both the moral and the socio-economic dimensions of the potential benefits of a UBI, one that considers the full cost of poverty and the public savings available from guaranteeing all citizens a sufficient basic income to offer decent living conditions.
Questions of how to finance a UBI are both moral and empirical since how to finance a UBI changes its distributional implications. As such, this project brings together expertise on the ethics of a UBI with empirical and computational work on the benefits and costs of a UBI. There are strong challenges to addressing the cost question since pilots are small scale, and simulations have strong assumptions, so bringing together all of these angles is important.
Drawing on UBIEXP results and the report published by the PI of this project proposal on a UBI experiment for Portugal (Merrill, 2021), the main goal of the project is to understand the cost and benefits of implementing a UBI, namely how one should consider the financial costs of implementing a UBI, and how it interacts with tax systems and welfare mechanisms, but also the potential benefits (both economic and social) that might indirectly lower or increase the costs associated with a UBI in the short, medium and long run. While the analysis will span across several geographies, using already existing information on places like the UK, a particular focus on the Portuguese case will be conducted. As such, the project will be looking to explore what is usually called the feasibility objection to UBI, which states that it would not be possible to implement it in most countries, given its financial costs, but also the inherent tradeoffs with current tax systems and welfare states.
As Basic Income experiments have shown, a UBI or even a guaranteed income can have significant impacts on various outcomes – from the number of hours worked, education outcomes, caregiving activities or even stress and hospitalization rates (Forget, 2011; Widerquist 2018; Merrill, Neves & Laín, 2022), to food security, crime rates (Calnitsky & Gonalons-Pons, 2021), and behavioural issues among adolescents (Akee et alii, 2013; 2018). Such impacts are not only beneficial for society but can also have important implications in economic terms: in the Canadian experiment in the 70s, a Minimum Income scheme reduced hospitalization rates significantly. Such results can have impacts in national health budgets. Understanding the benefits, alongside the costs, of implementing a UBI helps us bridge the gap between microsimulation models on the economic impacts of a UBI, and the relevant literature on the moral and social value of UBI and the past and recent results of basic income and guaranteed income pilots taking place all over the world. As such, it provides a novel contribution to existing literature on UBI.
The project is divided in four modules:
Module 1: The moral value of Unconditional Basic Income
This first preliminary module consists of a literature review and collective discussion on the already existing arguments on the moral value of UBI. It will partly be a summarized output of the main contributions from the UBIEXP Project, but also from previous events and publications of members from the research team. This Module tries to answer the following questions: Why a UBI? How does it interact with existing welfare stated and social assistance mechanisms? How can a UBI help solve some of our contemporary challenges? We consider how the moral arguments for or against a UBI must be reconsidered against the backdrop of a global pandemic that has further concentrated wealth in the hands of a few and rendered visible the frailties of existing safety nets and the looming ecological crisis, which requires both lifestyle changes and a largescale transformation of the current economy and associated jobs. These moral arguments should be considered against a growing tide of populist and nativist governments.
The first Module will be the shortest one, and should pave the way for the upcoming ones.
Module 2: Ex-post benefit analysis of a UBI
The second and third modules are the most exploratory ones and will build the foundations for the final output where a focus on the Portuguese case will be conducted.
The second module is exploratory, but will inherit the contributions from the UBIEXP project, namely the body of work published, but also the rich network of researchers who have and are still engaged in UBI pilots across the world. To uncover the potential benefits of implementing a UBI, this Module looks at both theoretical discussions from the moral value of UBI, summarized on Module 1, but also evidence from UBI pilots, to understand what the benefits are of implementing a UBI in the short, medium and long run. This analysis assesses the emerging evidence on the financial and non-financial benefits of a UBI in a range of areas. For example, we consider: How a UBI affects health outcomes, and hence health expenditure? Whether a UBI can increase the bargaining power of workers and, if so, how that translates into civic engagement or changes in salaries and employment rates? How a UBI affects education rates, and what the impacts are for society at large, including labor markets?
Module 3: The cost of implementing a UBI
In this third module we start by looking into existing research on the financial costs of implementing a UBI, and extend existing works by looking at its interactions with tax systems and benefit systems. This is mostly a theoretically driven analysis, where trade-offs are analyzed. Some of the questions we will be focusing on are: how to define possible financial scenarios? What might be a sufficiently high UBI given inherent costs? Which benefits should be deemed essential, and which ones should be made redundant with a UBI and why?
The research team is composed of researchers from a range of disciplines, from philosophy to economics. As such, much of this module will include important inputs from economists on the more technical aspects of defining the financial costs of UBI.
This module also includes a survey of potential revenue sources for a UBI. Should it be financed through regional, national or international taxes? And if so, what should we be taxing – labor, financial transactions? Or should we finance it through the commons? Should we consider new taxes, such as the “robot-tax”? Should it be financed through debt, and what are the intergenerational debates if that is the case? Should it be privately financed? These questions are essential to answer the feasibility objection to UBI.
New financing sources to augment the UBI proposal have also only very recently been analyzed, developed or considered in conjunction with UBI, and those will be quantified for Portugal. These include high and increasing land values and other natural resources, the novel use of carbon pricing in some jurisdictions, and many other new revenue-generating proposals that work together to protect the commons and simultaneously provide financing for UBI. Comparative use of Sovereign Wealth Funds across dozens of jurisdictions will also be employed in the project, in order to determine the potential of using these finance and savings vehicles for UBI and other public goods for current and future generations of Portuguese.
The final inputs of Module 3 allows a more refined analysis of the true cost of a UBI, and how can we consider whether it is affordable or not, in a particular context.
Module 4: Zoom in The Portuguese Case
The final stages of the project looks to apply some of the analysis conducted in the previous modules, by looking at the Portuguese case. Given that only one paper has discussed the feasibility question of a UBI in the Portuguese case, this final Module will look to contribute directly to an inherent gap in our understanding of the feasibility objection to UBI in the country.
To do so, the module looks to answer the questions of why a UBI might be a good option for Portugal, and might be justified by some of the country’s challenges, but also the political landscape, where the topic has been looming. It looks at some scenarios of how much can a UBI cost, by considering the interaction between UBI, the Portuguese tax system and the welfare state. It also uncovers the potential benefits of implementing UBI in this specific site. This builds on the insights from Module 2 and 3. Finally, a report on potential scenarios for implementing a UBI, with both a cost and benefit analysis and trade-off analysis will be produced. The analysis might also result in a potential scenario for a pilot project in the country.
A UBI is an income of sufficient amount to guarantee decent living conditions, paid unconditionally in cash to all citizens and legal residents of a political community without considering the financial situation of the recipients. A UBI is characterized by being unconditional, meaning obligations-free, individual (contrary to other benefits which are given to households), universal (ensuring everyone in a given political community the same guaranteed minimum income), and ideally of a sufficiently high amount to guarantee a dignified existence and civic participation. The radical nature of a UBI resides in its unconditional nature: it secures for everyone the same universal minimum income, independent of whether they meet requirements such as having assets under a certain threshold or being unemployed.
The idea has been theorized since the eighteenth century, namely by Thomas Paine in ‘Agrarian Justice’, where he proposed a UBI in the form of a land dividend. As such, it is rooted in the idea of granting everyone an amount based on people’s shared ownership of a given resource, such as land. Since then, the idea has evolved, particularly in the twentieth century, with philosophers and political economists from across the political spectrum proposing some form of dividend or negative-income tax. Albeit different, the idea of a negative-income tax shares some similarities, namely in outcome, with an idea such as a UBI.
While there is strong literature on the moral value of implementing a UBI, discussing both objections to the policy but also how it can be superior to other mechanisms or promote freedom for everyone, there is only a nascent literature on the costs and ex-post benefits of implementing a UBI. As such, this project aims to contribute to this knowledge gap, while also taking into consideration the arguments from the ongoing moral debate on UBI, but also the evidence stemming from the increasing number of UBI and guaranteed income experiments taking place all over the world, As such, this project not only inherits and expands the rich legacy and network of the pre-existing FCT funded project on UBI experiments – the UBIEXP project – coordinated by the PI of this proposal (Roberto Merrill) but it also contributes in a novel way to the ongoing literature on UBI, by advancing the policy development proposals and transdisciplinary efforts which were previously accomplished, in a moral and socio-economic dimension.
The original contribution of this project will be to expand and systematize the methodology and analysis regarding the nascent literature on the moral, economic and social benefits, costs (and savings) of UBI, building upon the leading current examples of such studies for Canada, Switzerland and Australia. This theoretical work will allow us to focus on the Portuguese case study, integrating and extending the best research practices found in these previous international comparative studies from 2017-19. This will be the first time that a comprehensive feasibility analysis for an EU nation is conducted, serving as a potential template for other nations to model a high-level UBI. Initial research findings and association of the UBIEXP team with actual research published by researchers integrated to the team, in particular by Karl Widerquist (the Co-PI of this project proposal) and by Richard Pereira, strongly indicates the level of UBI in Portugal can be much higher than previously thought.
Combined with recent findings from various guaranteed income experiments internationally, it has been demonstrated that UBI recipients were far more adept at improving their living conditions and extricating themselves from poverty than anticipated by most researchers, even with cash transfer amounts slightly below the official poverty level. The moral grounding for a UBI has thus changed in recent years and requires a thorough integrated analysis of both the moral and the socio-economic dimensions of the potential benefits of a UBI, one that considers the full cost of poverty and the public savings available from guaranteeing all citizens a sufficient basic income to offer decent living conditions.
Questions of how to finance a UBI are both moral and empirical since how to finance a UBI changes its distributional implications. As such, this project brings together expertise on the ethics of a UBI with empirical and computational work on the benefits and costs of a UBI. There are strong challenges to addressing the cost question since pilots are small scale, and simulations have strong assumptions, so bringing together all of these angles is important.
Drawing on UBIEXP results and the report published by the PI of this project proposal on a UBI experiment for Portugal (Merrill, 2021), the main goal of the project is to understand the cost and benefits of implementing a UBI, namely how one should consider the financial costs of implementing a UBI, and how it interacts with tax systems and welfare mechanisms, but also the potential benefits (both economic and social) that might indirectly lower or increase the costs associated with a UBI in the short, medium and long run. While the analysis will span across several geographies, using already existing information on places like the UK, a particular focus on the Portuguese case will be conducted. As such, the project will be looking to explore what is usually called the feasibility objection to UBI, which states that it would not be possible to implement it in most countries, given its financial costs, but also the inherent tradeoffs with current tax systems and welfare states.
As Basic Income experiments have shown, a UBI or even a guaranteed income can have significant impacts on various outcomes – from the number of hours worked, education outcomes, caregiving activities or even stress and hospitalization rates (Forget, 2011; Widerquist 2018; Merrill, Neves & Laín, 2022), to food security, crime rates (Calnitsky & Gonalons-Pons, 2021), and behavioural issues among adolescents (Akee et alii, 2013; 2018). Such impacts are not only beneficial for society but can also have important implications in economic terms: in the Canadian experiment in the 70s, a Minimum Income scheme reduced hospitalization rates significantly. Such results can have impacts in national health budgets. Understanding the benefits, alongside the costs, of implementing a UBI helps us bridge the gap between microsimulation models on the economic impacts of a UBI, and the relevant literature on the moral and social value of UBI and the past and recent results of basic income and guaranteed income pilots taking place all over the world. As such, it provides a novel contribution to existing literature on UBI.
The project is divided in four modules:
Module 1: The moral value of Unconditional Basic Income
This first preliminary module consists of a literature review and collective discussion on the already existing arguments on the moral value of UBI. It will partly be a summarized output of the main contributions from the UBIEXP Project, but also from previous events and publications of members from the research team. This Module tries to answer the following questions: Why a UBI? How does it interact with existing welfare stated and social assistance mechanisms? How can a UBI help solve some of our contemporary challenges? We consider how the moral arguments for or against a UBI must be reconsidered against the backdrop of a global pandemic that has further concentrated wealth in the hands of a few and rendered visible the frailties of existing safety nets and the looming ecological crisis, which requires both lifestyle changes and a largescale transformation of the current economy and associated jobs. These moral arguments should be considered against a growing tide of populist and nativist governments.
The first Module will be the shortest one, and should pave the way for the upcoming ones.
Module 2: Ex-post benefit analysis of a UBI
The second and third modules are the most exploratory ones and will build the foundations for the final output where a focus on the Portuguese case will be conducted.
The second module is exploratory, but will inherit the contributions from the UBIEXP project, namely the body of work published, but also the rich network of researchers who have and are still engaged in UBI pilots across the world. To uncover the potential benefits of implementing a UBI, this Module looks at both theoretical discussions from the moral value of UBI, summarized on Module 1, but also evidence from UBI pilots, to understand what the benefits are of implementing a UBI in the short, medium and long run. This analysis assesses the emerging evidence on the financial and non-financial benefits of a UBI in a range of areas. For example, we consider: How a UBI affects health outcomes, and hence health expenditure? Whether a UBI can increase the bargaining power of workers and, if so, how that translates into civic engagement or changes in salaries and employment rates? How a UBI affects education rates, and what the impacts are for society at large, including labor markets?
Module 3: The cost of implementing a UBI
In this third module we start by looking into existing research on the financial costs of implementing a UBI, and extend existing works by looking at its interactions with tax systems and benefit systems. This is mostly a theoretically driven analysis, where trade-offs are analyzed. Some of the questions we will be focusing on are: how to define possible financial scenarios? What might be a sufficiently high UBI given inherent costs? Which benefits should be deemed essential, and which ones should be made redundant with a UBI and why?
The research team is composed of researchers from a range of disciplines, from philosophy to economics. As such, much of this module will include important inputs from economists on the more technical aspects of defining the financial costs of UBI.
This module also includes a survey of potential revenue sources for a UBI. Should it be financed through regional, national or international taxes? And if so, what should we be taxing – labor, financial transactions? Or should we finance it through the commons? Should we consider new taxes, such as the “robot-tax”? Should it be financed through debt, and what are the intergenerational debates if that is the case? Should it be privately financed? These questions are essential to answer the feasibility objection to UBI.
New financing sources to augment the UBI proposal have also only very recently been analyzed, developed or considered in conjunction with UBI, and those will be quantified for Portugal. These include high and increasing land values and other natural resources, the novel use of carbon pricing in some jurisdictions, and many other new revenue-generating proposals that work together to protect the commons and simultaneously provide financing for UBI. Comparative use of Sovereign Wealth Funds across dozens of jurisdictions will also be employed in the project, in order to determine the potential of using these finance and savings vehicles for UBI and other public goods for current and future generations of Portuguese.
The final inputs of Module 3 allows a more refined analysis of the true cost of a UBI, and how can we consider whether it is affordable or not, in a particular context.
Module 4: Zoom in The Portuguese Case
The final stages of the project looks to apply some of the analysis conducted in the previous modules, by looking at the Portuguese case. Given that only one paper has discussed the feasibility question of a UBI in the Portuguese case, this final Module will look to contribute directly to an inherent gap in our understanding of the feasibility objection to UBI in the country.
To do so, the module looks to answer the questions of why a UBI might be a good option for Portugal, and might be justified by some of the country’s challenges, but also the political landscape, where the topic has been looming. It looks at some scenarios of how much can a UBI cost, by considering the interaction between UBI, the Portuguese tax system and the welfare state. It also uncovers the potential benefits of implementing UBI in this specific site. This builds on the insights from Module 2 and 3. Finally, a report on potential scenarios for implementing a UBI, with both a cost and benefit analysis and trade-off analysis will be produced. The analysis might also result in a potential scenario for a pilot project in the country.
