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How People Spend Universal Basic Income: Food, Housing, Transportation

  • Interest in universal basic income has increased due to the pandemic, Elon Musk, Sam Altman and economic difficulties.
  • A common question regarding this concept is how people spend their money.
  • Experts and early testing suggest that UBI is primarily spent on essentials like food and shelter.

Interest in a universal basic income (UBI) is only intensifying as the pandemic and other crises expose the shortcomings of emergency aid programs, which figures like Elon Musk and Sam Altman warn that AI will make human workers obsolete and that a historic one-two punch of inflation and rising borrowing costs are weighing on household budgets.

UBI generally refers to a recurring cash payment to all adults in a certain population, regardless of their wealth and employment status, and without any restrictions on how they spend the money.

It was hailed as a safety net in case people lost their jobs or couldn’t work; help with mental health because it relieves financial worries; a buffer that allows people to be more selective about the work they accept; a tool to fight poverty, inequality and the suffering of unemployment; and a way to recognize the value of domestic work such as caring for children and the elderly.

UBI is typically associated with a progressive tax system that ensures that wealthy beneficiaries are net losers from the program, because they pay more to fund it than they receive.

Yet a common question and concern regarding UBI remains how people spend their money.

How are UBI funds used?

Early evidence from the trials indicates that people primarily use their UBI funds to cover basic living costs such as food, housing and transportation, rather than indulging in vices such as drinking, gambling and drugs.

The net beneficiaries of UBI are likely the people who are struggling to get by, so it makes sense that they spend most of their money on essentials, said Karl Widerquist, a philosophy professor at the University from Georgetown, Qatar and author of several books on RBI. Business insider.

UBI champions say it will boost the economy by encouraging the unemployed to take jobs because they won’t lose their benefits, and improve people’s mental health and happiness.

But “if beneficiaries spent their income not on meeting their basic needs, on developing their human capital or on saving for the future, but rather squandering it, that would be worrying,” said Fabian Wendt, assistant professor of political science. at Virginia Tech. department.

THE Guaranteed Income Pilot Dashboarda joint project of the Stanford Basic Income Lab and the Center for Guaranteed Income Research, brings together data from more than 30 pilot programs in the United States involving nearly 8,300 participants.

It shows that approximately 36% of UBI funds were spent on retail sales and services; 32% on food and groceries; 9% on transport; 9% on housing and utilities; 6% on financial transactions such as savings and investment; 4% on travel, leisure and entertainment; 2% on health care and medical expenses; 1.5% on miscellaneous expenses; and 0.6% on education costs.

This distribution could be the result of UBI trials focused largely on poorer populations, who are more likely to use the money to cover the cost of basic necessities and pay their bills, and who do not have little left to save or invest. As for the lack of spending on health and education, this could reflect the availability of government programs like Medicare and Medicaid as well as public education.

Similar experiments yielded similar results:

  • Rebecca Hasdell, a research advisor at the Stanford Basic Income Lab, recently conducted a review of 16 studies and found that beneficiaries spent more on food and assets such as livestock in poorer countries, but that their purchases of productivity increased less. -an improvement in tools, and a mixed impact on savings and investment.

  • GiveDirectly, a non-profit organization, provides universal basic income to 20,000 people in some 200 royal villages in Kenya over 12 years. Two years later, he reported an improvement in household and business savings, and beneficiaries saving and financing larger projects through banks and credit associations.

  • UpTogether donated $5,200 to 1,000 individuals and families in San Antonio, Texas over a period of approximately 25 months. Recipients said they took great pride in covering their bills, paying for food, housing and transportation, paying off debt and saving, and covering their medical expenses.

  • For example, Monique Gonzalez said the money helped her buy shoes, school supplies, Christmas gifts and sign one of her children up for softball.

  • Another participant, Stephanie Hendon, was able to leave a shelter with her four children and rent a three-bedroom apartment. She also bought a new car, new clothes for her children and landed a new job, setting herself up for success in the future.

Why spending may not matter

Concerns about low-income recipients wasting their UBI may be overblown, experts say.

“Strong evidence shows that low-income people do not use drugs, alcohol or tobacco more than high-income people,” Widerqist said, adding that depression and other forms of mental illness are the main drivers of drug use.

“To the extent that UBI relieves people of destitution, we should expect it to decrease vice-related spending,” he said.

“Some people get into the habit of spending poorly, but that has nothing to do with where their income comes from,” said Matt Bruenig, founder of a think tank called the People’s Policy Project.

“Many people who receive income from their paychecks waste their money on drugs or gambling,” he continued. “Does this tell us there’s something wrong with our program of paying people money for their work? That’s obviously stupid.”

Douglas MacKay, associate professor of public policy at UNC-Chapel Hill, agrees that social safety nets should not force recipients to make “good choices” but rather show them respect by treating them like capable adults to make their own decisions.

“I think there are good reasons to give people money, even if they sometimes spend it in ways that others consider ‘reckless,'” MacKay said.

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