Problems with UBI: Will we lose our social connections?

Universal basic income plans are undoubtedly an honorable approach to wealth distribution and equality, but what are the problems with UBI? Do they address the full scope of societal inclusion?

23 Apr 2019

For many people, a job is much more than a paycheck. In ideal situations, it reflects the person’s passion or aligns closely with their values. It might also act as a way to make an impact. As the world continues to see a growing divide between rich and poor, a universal income program might seem to be able to solve the problem and help bridge the gap. These programs go by many names including Universal Basic Income (UBI), Citizen’s Income (CI) and Basic Income Guarantee (BIG) to name a few. They are however largely based on the same concept of providing periodic payments to individuals with no or very limited requirements. While many countries – the US, Canada, Namibia, Brazil, Kenya, Finland, the Netherlands, Uganda – have experimented with these programs, it has just been through trials and pilots. 

Nobel economist Peter Diamond thinks that even if we’re in the early stages of these experiments, they are worthwhile and so are their results.

“What matters here is to have both sufficient incomes going around, the beginning of a basic income,” says Diamond. “And secondly, to have opportunities for people to do things that they want to do given the level of financing that they have and may be comfortable with.”

Diamond, who won the prize in Economic Sciences in 2010, has done extensive work in optimal taxation and pension policies. He sees UBI as an extension to other social programs, like health insurance or child benefits, that can be incentivized, tested and refined. 

“You see how people respond to the different incentives and then think of design more broadly, incorporating what's been learned,” he says. “Then we see where it goes and what happens to total growth.”

The effects of these programs are pertinent particularly in the Western world where our work lives are so imbued with our overall lives.

“People work for money and because it gives them pleasure or pride,” says Diamond. “I think many people are looking for things to do that they will value, that they will appreciate being engaged in.”

People work for money and because it gives them pleasure or pride.

– Diamond

Bengt Holmström, a Nobel Laureate from Finland, has been given the rare opportunity to watch his own country experiment with UBI. The Finnish pilot, which ended at the end of 2018, provided a baseline salary to people taking part in the experiment called a “citizen wage.” A key feature was that people were not required to search for work in order to receive the "salary" and also did not constrain their ability to work on top.

While some countries discuss UBI as an employment supplement for those in lower socioeconomic classes, the Finnish pilot or other programs like it, make the set amount available to everyone, regardless of income level.

There is however one aspect that Holmström thinks all UBI programs are neglecting, one that has nothing to do with money. What he's referring is the social aspect of being employed. 

“Take this new generation of young people,” he begins. “If they get born into a society where half of the population doesn’t work, they may just think of that as normal. For me, that’s a very bad thing.”

As Holmström sees it, people want to be appreciated and need to have a role in society that extends beyond having a salary, so this is a potential problem with UBI that should be considered.

“Work is so much more than money,” he says. “The lack of long-term relationships, that’s going to have big effects, not just on how we produce things, but I think on the whole sociology of humans.”

If [young people] get born into a society where half of the population doesn’t work, they may think of that as normal. For me, that’s a very bad thing.

– Holmström

Holmström thinks that losing one’s job is hard not just because you lose a salary, but because people feel unappreciated and less valuable as citizens. Many people faced with unemployment, also feel that their ability to contribute to society in a meaningful way has been taken away from them. This coupled with the loss of personal connections is where Holmström worries.

“There’s a reason that we have relationships and this social side of work is extremely important,” he says. “When you interview unemployed people, they are very quick to point out the loss of these social connections.”

For now, the best approach may be to simply continue with different implementations of these types of programs, making them as interdisciplinary as possible, and ensuring that the tracking of psychological effects is kept paramount. Until then, take some time to enjoy lunch with your colleagues. Who knows, the opportunity may not be around forever.

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