Struggles from below

Many ecologists link the Covid-19 pandemic to the overreach of our species into the global ecosystem; specifically our encroachment into wildlife habitats that has exposed us to a litany of new viruses and diseases. At the same time, our incessant polluting of our environment is leading to ever rising rates of droughts, floods, wildfires and other natural disasters. As the world struggles to meet its environmental targets set out in the UN’s Sustainable Development Goals and the Paris Agreement, we can expect natural disasters like Covid-19 to occur at a far more prolific rate going forward, and we’ll need to find mechanisms to protect the world’s most vulnerable from the consequences. 

In our top read this week, by Vox’s Kelsey Piper, we learnt a little more about one such mechanism: universal basic income (UBI). In Kenya in 2017, researchers started a trial of UBI—a periodic living subsidy provided by the state—to study its effects on people’s well-being. The 12-year trial would give around 6,000 recipients a daily stipend equivalent to 75 cents. Another control group would receive payments for two years (ending in December 2019), and another a simple lump-sum payment. 

But earlier this year, the Covid pandemic struck and Kenya’s government was forced to impose a strict lockdown to halt the spread of the virus, which had crippling effects on the economy.  

That prompted the researchers to check how receiving the UBI affected communities hit by an economic crisis like this one. Nobel Prize-winning MIT economist Abhijit Banerjee, GiveDirectly’s Michael Faye, University of California San Diego’s Paul Niehaus, and MIT’s Tavneet Suri recently released a working paper on the findings. 

The results found that even a small UBI can have extremely positive effects in a crisis. Food insecurity was widespread among Kenya’s rural communities such as those in the UBI study, and 68% of the control group had reported going hungry in the previous 30 days. But the UBI improved the situation, even for those that had stopped receiving payments in December. “Recipients were 4.9-10.8 percentage points less likely to report experiencing hunger,” the paper reported, and “3.6-5.7 percentage points less likely to have had a household member sick during the last 30 days.” The UBI recipients were also less likely to be feeling depressed. 

The study’s findings indicated that when times were good, the UBI had allowed many of the recipients to start businesses. And despite incomes being severely diminished after the onset of the lockdown, the UBI ensured that the economic consequences for the recipients were far less devastating than they would otherwise have been.

For years, UBI advocates have argued that the concept would benefit society in both the good times and the bad: in the good, it encourages people to invest in the future, allowing them to start business or invest in education or training; in the bad, it mitigates the downside of those risks by affording people a basic subsistence. Critics, however, argue that UBI is inherently open to abuse, with cash spent irresponsibly, and discourages recipients from finding work.

There have been several UBI experiments around the world in recent years, reporting mixed results. A previous scheme in Kenya gave cash payments to poor people between 2011-2013, and resulted in improvements in households' wellbeing and food security.

Finland was the first government to pilot a UBI scheme, running over two years, but the researchers found that although it improved recipients’ happiness, it failed in its aim of increasing employment and was therefore discontinued. 

And the Californian city of Stockton, where one in four of the population lives in poverty, introduced its own pilot last year, providing $500 a month to 125 people earning below the median income of $46,000. Although it’s too early for any conclusive results, researchers have so far found that 40% of the income is being spent on food. 

The Covid crisis poses its own unique challenges to a society, but lessons from this latest Kenyan trial can be broadly applied to economic crises of all varieties, whether deriving from pandemic, hurricane, or drought. UBI is far from a panacea, but this study indicates that it could be a useful tool in our economic armoury as we brace for the inevitable consequences of our environmental gluttony.