Finland Wraps Up Universal Basic Income Trial


Results give way to more questions than answers

Once confined to the ranks of socialist and far left-leaning politicians, Universal Basic Income is gaining traction in mainstream political and economic circles. While conservatives disparage social income programs as infeasible and irresponsible, many-–such as Elon Musk and Bill Gates-–see it as an inevitability of the future, given the rise of automation and artificial intelligence. The argument posits a future society in which the majority of labour-intensive jobs are performed by automated machines. As computational power accelerates in development over time, machine performance eventually spills over into the realm of general intelligence. 

Proponents of this theory state that the job reduction brought about by the rise of AI will result in an employment deficit that will require a fundamental shift in the world economic systems. Critiques of this Star Trek-esque theory state that its proponents are nothing more than modern day luddites, a call-out dating back to the days of the industrial revolution. Others state that the level of automation required to displace a majority of the worldwide job market is still a minimum of several decades away and does not warrant any sort of social or economic experimentation until those effects are felt. Regardless, countries around the world are beginning to seriously investigate the administration of a national social income strategy.

Recently, Finland concluded their two-year long trial of Universal Basic Income. Beginning in 2016, the center-right government began the program in the hopes that a supplemental stream of income would lead to higher employment rates amongst the unemployed participants. 

Prior to the trial, the government reviewed several basic income models, including a full basic income scheme, partial basic income scheme, and a negative income tax. The government decided to pursue a partial basic income scheme amounting to €560 per month (equivalent to the current unemployment benefit issued by the Social Insurance Institute in Finland). Two thousand unemployed individuals were selected to participate in the two-year study.

Although it is quite rare in the western world for a right-leaning party to favour social economic programs such as UBI, the Nordic countries have traditionally been left-leaning economically, albeit socially conservative. According to the recently released results, Prime Minister Juha Sipilä’s government called for the experimental investigation in order to determine whether the introduction of UBI would result in an increased supply of labour. The projected national economic surplus resulting from UBI stands in contrast to the more common argument for UBI originating from the left, grounded in economic humanitarianism. 

Since the recession of the 1990s, the government of Finland has recognized that there were major flaws in its social security systems. Abound in bureaucracy, the simplification of social security has been an objective of most Finnish governments. 

It is not unusual for the Finish government to run policy experiments prior to their installation; rather, the nation prides itself on the use of real-world policy trials, which leads to implementation based on evidence rather than intuition. The results of the trial, however, have given way to more questions than answers.

Based on the published results, UBI did not result in increased rates of employment amongst the participant; in fact, the UBI treatment group saw an average decrease of 0.17 days at work per month (editor’s note: this is not statistically significant). Employment was not, however, the only metric being assessed. Self-reported values of wellbeing and happiness were ranked in interviews among participants and were elevated by a significant margin amongst the UBI group. This is likely due to the increase in freedom and decrease in fiscal anxiety mediated by the additional income.

Trust and satisfaction in life were also assessed by the scoring of: Trust in Other People, Trust in the Legal System and Trust in Politicians. Interestingly, each of these values were elevated in the UBI treatment group as well. According to multiple polling institutes, institutional trust has been eroded over the past decade across multiple western nations, with many citing the rise of populism as a direct product of this mistrust. If nothing else, instituting a bundled UBI payment may result in a partial restoration of trust in those nations that have experienced the degradation of faith in institutions. In the meantime, it remains unclear how the government of Finland plans to act on the newly published results. A conservative government is unlikely to favour a UBI program that does not appear to provide reciprocal economic benefit to the state. That being said, UBI would replace the current Finnish unemployment benefit, resulting in a slight reduction in the net cost of the program.