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Reweaving the Safety Net: The Best Fit For Guaranteed Income

Jain Family Institute's second installation in a four-part series in 'reweaving the safety net', with an eye towards program design for basic income. Here, they focus on the relationship between basic income and other welfare programs. They find that basic income works well when markets work well, but is a poor substitute for public insurance provision.

2020

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Primary income-support welfare programs that could be consolidated into a single basic income include: earned income tax credit (EITC), Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), temporary assistance for needy families (TANF), and supplemental security income (SSI). Trapezoidal income support structures (like the Earned Income Tax Credit) may fail as an economy-wide stabilizer during periods of economic recession. Relative to annual payments, more frequent, periodic payments of the EITC indicates that periodic payments reduce perceived financial stress, diminish debt accumulation and late fees, and improve mental health. Welfare programs can be split into two categories: “income support”, or “insurance”. Basic income is, in theory, the best way to provide income support. UBI is a 'pay now, tax later' approach. NIT uses means-testing to 'tax first, pay after'. Evidence from Kenya suggests frequency of cash transfers matter. More frequent payments are likely to improve consumption smoothing, while less frequent payments are likely to be spent on large assets.
Stephen Nuñez Michael Lewis Sidhya Balakrishnan
Basic Income Job Guarantee Social Wealth Fund
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