Another Study Makes the Case for Universal Basic Income

Latest Findings

Would a regular check from the government help or hurt Americans’ financial standing? That’s what a three year-long study from nonprofit research organization OpenResearch, backed by OpenAI CEO Sam Altman, set out to find out.

The findings showed that participants didn’t drop out of the workforce, but spent more on basic needs.

UB-Why?

Proponents of UBI consider it a key step toward alleviating inequality across the country, but critics argue that it could create a free rider problem, or worker shortages.

To examine the potential effects, OpenResearch provided $1,000 per month to roughly 1,000 low-income participants across Texas and Illinois, along with $50 per month to a control group of some 2,000 participants.

The study’s experimental group increased their spending by an average of $310 per month, with most of that money going toward essentials like rent, transportation, or food, rather than discretionary purchases. The spare cash also seemed to encourage budgeting and setting financial goals, and recipients were 10% more likely to enter the job hunt.

Other reports have come to similar conclusions, including experiments run by counties in California, Massachusetts, New York, and Texas. The UBI conversation has made notable headway in Oregon, where the issue will be on the ballot this fall.

Not a Complete Solution

Anecdotally, UBI remains an imperfect solution. In a testimony from the study reported by Business Insider, one recipient admitted to being less cautious with finances once the $1,000 checks started coming in, and regretted not saving more by the study’s end.

Overall, however, the findings indicated a generally positive shift in participants behavior, rather than the feared dropout of the workforce that could create additional problems for the economy.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

SOSS242072301