The 1,200-Euro Experiment: Longitudinal Study on Unconditional Basic Income Launches in Germany
DER SPIEGEL: Mr. Schupp, you plan to pay study participants 1,200 euros per month for three years, with no strings attached. Is a scientific study really necessary to determine that people quite like free money?
Schupp: If that was our study question, then certainly not. Happiness researchers have long since proven that more money increases subjective well-being. But we want to find out much more than that. To what degree does such a reliable, unconditional cash inflow affect people’s attitudes and behavior in relevant areas of life? How, for example, do professional lives change? What about day-to-day activities, community involvement, nutrition or relationships? What role is played by factors such as age, neighborhood, other earnings, etc.? There are a lot of fascinating questions that have yet to be answered.
DER SPIEGEL: But experiments have already been conducted to address those issues. The state-funded project in Finland, for example, that recently came to an end. Or the studies conducted by Mein Grundeinkommen here in Germany, which also initiated the present study.
Schupp: Yes, and each has produced valuable findings. The new element of our study is the quality of the scientific methods used. It has been designed such that we will be able to clearly and exclusively link changes in people’s behavior and attitudes to the monetary payments – and not to any other factors.
DER SPIEGEL: How do you intend to do that?
Schupp: We are applying a key element of social research: randomization. We will establish two groups: One of them will receive the basic income, the other will not. The crucial factor is that we will have people with similar characteristics and living situations among those receiving money on the one hand, and those in the control group on the other – so-called statistical twins. In the best case, in other words, the people are essentially the same, with the only difference being that one receives a basic income and the other does not. Changes measured would then clearly be caused by the money.
DER SPIEGEL: And how are you going to find such statistical twins?
Schupp: By way of an elaborate selection process. Out of the pool of 1 million applicants, 20,000 people will be randomly chosen, who will then be extensively questioned regarding their living situation. Using this data, we will be able to choose 1,500 participants: 120 of them will receive the basic income and 1,380 will receive nothing and be part of the control group. We are the first to study basic income in this fashion and on this scale. It is also important, by the way, that there are people in the sample who are rather skeptical of the unconditional basic income so as not to distort the results from the very beginning.
DER SPIEGEL: The introduction of an unconditional basic income, though, wouldn’t just be noticeable to those with a bit more money in their pocket. It would also have an effect on consumer prices, salaries, production, consumption habits and probably also on the tax system – basically on the economic environment surrounding the recipients.
Schupp: That is true. We aren’t able to simulate a world with an unconditional basic income. To do that, you’d have to introduce it universally. It is important to be clear about the limits of our study: We won’t be able to learn anything about the macroeconomic consequences, nor will we learn about possible power shifts between employers and employees, the net costs or the effects on migration. That is also true of possible additional levels to the study: We are planning variations in which recipients’ incomes are merely increased to 1,200 euros per month or where a simulated tax is applied to the basic income. Our focus is tight: the change in attitudes and behavior of people who receive an unconditional basic income for three years.
DER SPIEGEL: What value will the findings have?
Schupp: At its best, the debate over the unconditional basic income has thus far resembled a philosophical salon, at its worst, a religious war. It is dominated by clichés on both sides: Opponents claim that people would stop working if a basic income were introduced and just sit on the couch streaming videos and eating fast food. Supporters argue that people would continue to perform satisfying work, would become more creative and do more charity work and would save democracy. These stereotypes, by the way, often find their way, in the form of assumptions, into economic simulations about the supposed costs and benefits of a basic income. We can improve those simulations by replacing stereotypes with empirically backed findings, thus leading to a debate rooted more solidly in facts.
DER SPIEGEL: What results are you especially looking forward to?
Schupp: We are investigating many things: effects on health, for example, and on societal cohesion, on democracy. Personally, I am most interested in the labor market aspects: Will more people really take the risk of becoming self-employed? What will be the effect of the new freedom to say “no,” particularly among those who aren’t working because they believe in what they are doing, but because they simply need the money? How will it effect the amount of time people work? Will they stop doing overtime, or will they go part-time? And what will they do with their new free time? If they just sit around in front of their televisions, then it really won’t be beneficial.
DER SPIEGEL: As an experienced social researcher, you surely have some conjectures.
Schupp: At the Socio-Economic Panel, we ask people what they would do if they unexpectedly received 10,000 euros. Around half respond that they wouldn’t change anything and would put the money in savings. It wouldn’t surprise me if a similar share of our basic income recipients do the same. In other preliminary studies, around 10 percent of those questioned said they would quit their jobs. My assumption is that some people, those who work only because they need the money, will actually quit.
DER SPIEGEL: The initiators of this study are clear supporters of the unconditional basic income and some of the scientists involved are at least sympathetic to the idea. What is your personal view?
Schupp: I am not a passionate supporter who is 100 percent behind the basic income. I have too much regard for our current social security system in Germany, which compares well to those in other wealthy industrialized nations. And I consider one maxim of political reform to be correct: Changes should only be introduced once their positive effect has been proven – when the situation following introduction would clearly be better than the current one, once all the pros and cons are looked at. Still, I believe a fundamental reform of our social security system is unavoidable in the foreseeable future. And I believe politicians should be spending far more time on it.
DER SPIEGEL: Why?
Schupp: Because the current funding model – which is linked closely to jobs and work – will reach its limits due to two megatrends: demography and digitalization. When the Baby Boomers go into retirement – around 2030 at the latest – the relationship between those paying into the system and those drawing from it through pensions, health care and old-age care will no longer be tenable. Already, the amount of tax revenues being pumped into the system is significant. Then there’s digitalization, which will transform the world of work.
DER SPIEGEL: Though all serious studies on the issue have found that it won’t lead to fewer jobs – which repudiates an important argument in favor of the basic income, which holds that there soon won’t be enough work for everybody.
Schupp: That could be, but what kind of jobs will they be? Will they be subject to social insurance contributions? Or will we, in the platform economy, have many different forms of self-employment in which workers will not be part of the social insurance system that has worked so well until now? If such people happen to lose their jobs after a few years, then they too will have to be supported. There are good arguments for reforming our social welfare system – away from the link to work and toward a tax-based financing system. It will take a long time. After all, those entitled to a pension under the current system will still have that entitlement. Which makes it all the more important that we begin the reforms now, and not just when the financial difficulties become overwhelming. A committee of inquiry in the German parliament would be a good start.
DER SPIEGEL: There is already a tax-financed safety net: the Hartz IV welfare program for the longterm unemployed and the guaranteed minimum pension. Ever since Germany’s high court severely limited sanctions, it has essentially been unconditional. How is that different from a basic income?
Schupp: There are several differences, starting with attitudes toward recipients. But allow me to highlight an aspect that is often ignored: The basic income would be paid out to everyone, while the current guaranteed minimum welfare system must be applied for. But a huge number of people don’t do so, either out of embarrassment or a lack of knowledge. From the data we have collected as part of the Socio-Economic Panel, we know that only half the senior citizens who qualify for the guaranteed minimum are actually receiving it. It is a similar story with Hartz IV. That might be a good thing if you’re the finance minister. But we as a society shouldn’t accept a situation where so many people are living under the subsistence line – despite having a right to assistance.
DER SPIEGEL: Would we be able to get rid of employment offices if the basic income is implemented?
Schupp: Absolutely not! We still need employment agencies, professional qualifications and assistance for people who have difficulties fulfilling the demands of the labor market. When you’re sitting around at home in early retirement, 1,200 euros per month surely isn’t enough to make you happy.
DER SPIEGEL: The initiators of the study are clear supporters of the basic income, and most of the 140,000 donors likely are as well. At the same time, though, you have emphasized that you have no expectations going into the study. Is that not a conflict for such a well-respected institution as the German Institute for Economic Research?
Schupp: No, because we scientists have the final say when it comes to design and execution. There are clear red lines and all scientific standards will be observed. To be sure, such a cooperation is new for us: During the preparations, we had some difficult discussions – a clash of cultures at times. But I respect the fact that Michael Bohmeyer (the founder of Mein Grundeinkommen) doesn’t claim that the basic income is a cure-all. Without his open-minded approach – his attitude that “if the basic income doesn’t work, then at least I want to know for sure” – my institute and myself in particular would not have participated.
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