Instead of a Universal Basic Income program, why not implement a "Universal Basic Needs" program?

Question

Universal Basic Income is the idea that everyone receives some basic income so that poverty and inequality can be prevented, especially in cases of market failures and automation.

Although I like this idea, would it not be better to satisfy everyone's basic needs as opposed to offering them an income? What I mean is, instead of giving everyone xxxx units of currency every month, why not assure everyone access to basic needs such as food, housing, healthcare, education, and social life-enhancing activities, by sponsoring those consumptions?

I mean, many countries already do that for healthcare and education, and it seems equally achievable for food (e.g. a limited free quota of food from designated general stores in your area for every person per month) and housing (e.g. building a plethora of large housing complexes that consist of very small rooms that people who can't afford a place of their own can sign up for) and activities (e.g. sponsoring get-together activities such as sports, movie-watching, etc).

I find this idea better for various reasons:

1. It will directly target the problem. The problem is poverty. We want to ensure a minimum standard of living. Why not offer people those services and needs that ensure that standard of living, rather than just giving them a sum of money and hope they spend it wisely? Otherwise, we risk people misspending the money. For example, think of people addicted to drugs, alcohol, gambling, or simply people who aren't financially apt and spend beyond their budgets.

2. It will be cheaper. This is obvious: by focusing on specific needs, you can streamline the delivery of those needs, and thereby achieve a cheaper and more efficient allocation of those resources.

3. It doesn't distort incentives. If only basic needs are covered for, if a person in the society wants to do something that goes beyond those needs (like eat at a fancy restaurant or buy a diamond ring), then they still have to work for it.

Answer 1

Different people have different needs. Determining those needs is difficult, expensive, and subjective. Universal basic income has been proposed as a simple solution that should work well enough for most people with minimal bureaucracy. People with special needs would still need other forms of support.

Some reasons why universal basic income is supposed to be a good idea:

1. It does not distort the incentives. Unemployment benefits are often incentives against taking a low-income job. If you take a job, you lose the benefits, and your effective tax rate can easily be as high as 80% or even 90%. With universal basic income, a low-income job improves your standard of living much more.
2. It simplifies the system. Instead of different benefits with different requirements, standard deductions, multiple tax brackets, and other ways of supporting low-to-middle income people, there would be just the universal basic income and a single tax rate. (In some proposals, there would be another tax bracket for high incomes.)
3. Guaranteed income gives people control. When people feel they are in control of their lives, they tend to be happier and more productive.

Of course, we don't really know whether universal basic income works as advertised, because there have not been any large-scale experiments with it.

Edited to make the answer more explicit: There is no widespread agreement on what are the needs welfare is supposed to address, or who is entitled to which forms of support. When a new party or coalition gains power, it often changes the welfare system in various ways. Eventually the system becomes a complex patchwork of conflicting aims and requirements that is difficult to understand and expensive to operate. I listed a few points on how various UBI proposals try to fix the observed deficiencies in needs-based welfare systems. In particular, the third point explains why UBI proponents think giving people money is better than addressing their needs directly.

Answer 2

It will be cheaper.

No. It will be more expensive. It will be far, far more expensive. Yes, you may save a few pennies if you hand out food instead of cash.

The problem is, you need people to assess what every person needs. And you have to keep doing that. People need shoes, but you don't need to give them new shoes every week. So you need operational people, and lots of them. You need people to determine what valid needs are. Which you need to reassess every year because needs change over time. So you also need policy makers. And you'll have to handle complaints. Because you will end up giving people a bag of rice when they really need shoes. Or you keep giving a family milk while their kids are lactose intolerant. Or you said "not going to fix that" to a family whose roof is leaking. So you need a complaints and legal department to handle that.

And those costs far outweight the pennies you save.

Otherwise, we risk people misspending the money. It doesn't distort incentives.

So, the alternative is the government decides what you eat, how you are dressed and how often you can see a movie? How big is the problem of poor people having dinners in fancy restaurants?

Answer 3

We’re already trying that, and it’s not working out so great

The original point of proposing Universal Basic Income, at least as proposed in the United States by people like Charles Murray, was to replace the majority of the welfare programs that already exist that are organized around providing for specific needs, because those programs aren’t very good at helping poor people in practice.

In the United States, we sponsor food consumption through food stamps. We sponsor consumption of housing through the Section 8 program. Healthcare for poor people is sponsored through Medicaid. Education consumption is sponsored through federal student loan programs and all sorts of other aid. We’re following the broad approach you think would be better and have been for at least 50 years or more.

Why isn’t this working out so great? Let’s look at your assumptions.

It will directly target the problem... people might misspend the money...

It directly targets problems that politicians and government bureaucrats can clearly identify. Those problems may not be the problems that poor people actually have. The solutions that politicians come up with are often not actually the best ones, because they don’t know what problems poor people have. Poor people tend not to be very civicly engaged. So they end up designing things around the interests of middle-class or richer people.

Also, poor people still find ways to misspend the money. One of the flaws of the food stamp program is that people do illegally exchange the stamps to get money that they use to purchase things that aren’t food.

It will be cheaper... because you can focus on providing specific certain things...

No, for two reasons.

The first reason is that, having a complex welfare system requires employing lot of government workers, e.g. college educated people who have potentially six figure salaries. Printing checks and giving them to poor people with no strings attached is a lot cheaper because you don’t need to employ lots of people to administer that.

The second reason, is that the government is really bad at providing most goods and services efficiently compared to the market. That’s because government can use its special coercive powers to ignore things that provide useful information about scarcity, like prices. It’s also because the government doesn’t suffer from losses if it spends money poorly the way businesses and individuals do; it can use taxation to ignore that. That’s why most welfare in the United States involves giving some sort of special money to someone else for a specific purpose already; it’s easier to give WalMart a couple of extra bucks than it would be to build and run “designated general stores in your area”.

It doesn’t distort incentives

The mistake you make here is that you are focused solely on the person receiving the help. Even then, you are still incorrect. If someone stands to gain income but lose benefits, they can be inclined to turn down the income of the benefit of more income is smaller than the loss of benefits. This is called a “poverty trap”, and it’s just as much a problem for your needs-based approach as it is for the UBI people.

I could write endlessly on this topic, so let’s just focus on one example: housing subsidies. Housing subsidies encourage people to stay exactly where they are instead of moving to somewhere else where better economic opportunities may be available. Housing subsidies also cause inefficiencies in the housing market; the poor people can get in cheaper than market price, but a whole bunch of people coming in cheaply means more people come in than otherwise would, which leads to shortages in housing, which means prices go up in the rest of the market that isn’t “affordable”. When you do this over a great many people, and all of the affordable housing is in one place, you create neighborhoods where nobody can afford to leave, an insular island of poor people collecting benefits because it’s too expensive to take a job in the next town over. Welcome to the Inner City, brought to you by the Housing Act of 1937.

Answer 4

Once upon a time, Germany did that in the form of Sozialhilfe, welfare payments for the needy. The Sozialhilfe system was supposed to make sure that all people had the minimum required to live in society, which included not just food, clothing, and shelter but also things like a radio, a bicycle, etc. If they had little or nothing, for instance one of the spouses after a divorce, the welfare office would provide.

This was done away with as part of the Hartz reforms. These reforms are highly controversial because of what they did to unemployment benefits/insurance, but few people recall how the Sozialhilfe was organized before the reform.

• It prescribed how welfare recipients should set their priorities.
• It was both inefficient and degrading for a recipient to go to the office and say "I don't have a winter coat, gimme," and for the case officer to ask "well, what clothing do you have?"
• It did not force/teach them to work with a household budget, save up for expenditures, etc.
• On the other hand, it supposedly made sure that everyone had the minimum necessities, no matter what.

Answer 5

Universal Basic Income is the idea that everyone receives some basic income so that poverty and inequality can be prevented, especially in cases of market failures and automation.

No. It is intended to prevent extreme poverty, as in "starving to death", but it's not intended to prevent "mild" poverty in the sense of "choices significantly reduced due to lack of funds", and it certainly is not intended to prevent inequality. Inequality would be reduced somewhat, since it would create a floor for income, but that reduces inequality only on the lower end of the range. It would still leave the separation between lower middle class, upper middle class, and upper class. The idea is that everyone would get enough for bare necessities, but if they want more, they have to work for it.

Although I like this idea, would it not be better to satisfy everyone's basic needs as opposed to offering them an income?

That is exactly the idea that UBI is intended to replace. Currently there are two major paradigms:

Capitalism without an net: The government takes a hands off approach. Everyone is free to live as they please. Proponents argue that this promotes efficiency, as people know what is best for them better than the government does.

Safety net administered by the government: The government engages in wealth distribution. It takes money from the rich, and spends it on programs for the poor. But instead of letting the poor decide how the money is spent, government bureaucrats decide what's best for them.

The first is criticized as heartless: those who aren't able to find financially remunerative employment are left out in the cold. The second is criticized as patronizing and inefficient: the government decides for the poor what they need, and if the poor have something they would enjoy spending the money on more, too bad. It means that allocation of resources will be based not on what people in general want, but on what government elites decide. It also means that resources will be diverted towards working around the restrictions: black market for food stamps, avoiding employment if it puts one above the threshold for a benefit, etc.

UBI is proposed as a third way that provides a safety net while letting recipients decide how the resources should be spent. Some people will be willing to live in cramped dorm rooms in exchange for a college education, while others would prefer to spend their money on a large house. With UBI, individuals will decide which gives them more utility, rather than the government making a one-size-fits all decision. It's "capitalist welfare": people get financial support, but the market decides how that support is allocated.

I mean, many countries already do that for healthcare and education, and it seems equally achievable for food (e.g. a limited free quota of food from designated general stores in your area for every person per month)

Just how specific will it be? Will it be a specific amount of potatoes, a specific amount of meat, etc.? Will it be even more specific: such-and-such amount of Russet potatoes, such-and-such of red potatoes, such-and-such of organic chicken thighs, etc.? Or will people be able to decide that they want chicken breasts rather than thighs? Will they be able to decide that they're willing to get non-organic chicken if they get more of it? Will they be able to decide that they want roast beef instead? How will you decide how much chicken rations someone has to give up to get a roast beef ration? Will you establish an exchange ratio? Maybe have some unit of measure, and give each ration a value in terms of that unit? There's a word for that: money. Either you're just handing out a specific basket (literal or figurative) of food, and everyone gets the exact same food (and wastes a lot of time establishing a black market trading each for the food that they prefer) or you have a complicated system of options that does what money does, except worse, or you just hand people money and let them buy whatever they want.

and housing

This one is even worse, because you can't give everyone exactly the same housing. Some housing is going to be valued more than others, and how do you decide who gets what?

It will directly target the problem. The problem is poverty.

Since poverty is lack of money, isn't directly targeting it giving people money?

We want to ensure a minimum standard of living.

If you decide the minimum standard of living is X, and you give everyone X, then everyone will have exactly X worth of value. If you give people enough money to buy X, then people can get more than X worth of value: if there's something that they value more than X, but costs the same, then they can buy that instead. So it's a choice between exactly X (your plan) or at least X (UBI).

Why not offer people those services and needs that ensure that standard of living, rather than just giving them a sum of money and hope they spend it wisely?

Why is the government a better judge of what is "wise" than the actual people that it's for?

Otherwise, we risk people misspending the money.

That raises the question of just what it means to "misspend" money. Is it spending it on something they will get less utility out of? If so, how do we decide how much utility someone is getting from something? Should the government be in the position of deciding for people how much value they are getting out of things?

It will be cheaper. This is obvious: by focusing on specific needs, you can streamline the delivery of those needs, and thereby achieve a cheaper and more efficient allocation of those ressources.

No, it's not "obvious". First of all, what does it even mean to be "cheaper"? Do you mean "I have a particular vision of exactly what everyone should have, and the amount of money it would take to give this to everyone is less than the amount of money we would have to give to everyone before everyone buys this"? Then yeah, it would be cheaper. But if you mean "Given some amount of UBI, we could spend less money and have people get the same amount of value by giving people specific stuff", then that is less obviously true, and again relies on there being an objective measure of "value". If you give everyone the same stuff, regardless of their preferences, you're going to be diverting resources to things people don't want.

It doesn't distort incentives. If only basic needs are covered for, if a person in the society wants to do something that goes beyond those needs (like eat at a fancy restaurant or buy a diamond ring), then they still have to work for it.

That's how UBI works. Other than really utopian versions, UBI proponents aren't proposing we give everyone enough money to eat at a fancy restaurant every night.

Answer 6

There are a few reasons why Universal Basic Income (UBI) is being talked about more and more and why simply giving "basic needs" is not viable. Firstly everyone's needs are somewhat different, this is why money was created - so that one need not have every set of skills necessary to barter for every other object and service they need.

Just for a need like food, a huge problem crops up. It would then be on the government to make sure that vegans get vegan food, kosher, halal, etc. When individuals could simply buy what they will.

Additionally, the fact that many in the United States are very much in debt, a dividend in the form of UBI would help give funds to those who maybe want to start a business, or form a co-op with others. You don't have to be in poverty to receive the dividend, and as such can use it for well, whatever you want.

Also the purpose is to help getting people to spend money on luxuries as well. The thinking, and evidence point to, that this money will make it's way back into the economy through people who otherwise wouldn't be spending money on luxuries.

Answer 7

There are many reasons why universal basic income is much better than what you propose which is essentially the idea of communism (I mean that without judgement).

By providing the means of exchange, i.e. money, you allow market forces to do what they do best, prioritize and allocate. People can go and buy what they think is worth their money at the prize that they think it is worth.

The other reason is organisational. Market economics turns out to be better at distributing ressources than central planning is. Allows small and large businesses to worry about which things to put on sale where and react to demand and changes in demand works surprisingly well in ensuring that things are available when needed where needed. It's not called "the invisible hand" for no reason.

Another effect is that regional differences are easier to compensate for. The income level can be adjusted for cheaper or more expensive regions (supporting consistency) or not (incentives for people to move to cheaper regions). To do that with one variable (money) is already tricky and highly political. Now try to do it with a hundred different goods.

Answer 8

The primary benefit of UBI is that the exchange is free of shame and control.

One of the problems of needs-based social security is that it takes the choice away from the people receiving the help. This is bad; somebody else is telling you what you need and what you should be using.

The needs based system is thus some form of oppression. Sure, many might find it bearable. Still no matter how well planned, there will always be some simple corner cases that slip through the cracks. In practice it's worse than that people in charge usually find ways to pass morality issues on those affected.

Also needs-based social security is what we have now and it's not exactly working out.

Answer 9

This is attempted in the case of college attendance in the USA. The amount of effort needed to gather and evaluate evidence of need is considerable. See https://studentaid.ed.gov/sa/fafsa to get a general idea. I'm not saying it can't be done. I am saying that for smaller purchases, the Gov't is never going to be able to do it. Private charities that don't have constraints such as a need to accept anyone in the country might be able to.

Additionally, this form of support still suffers from the problem of perverse incentives. People now have the incentive to spend effort documenting their need, rather than doing useful work and getting paid for it.

Answer 10

Another answer citing the German experience:

The federal states differ in how much aid to asylum claimants/refugees is handed out as money and how much is given in kind (food, clothing, etc.). Several states have been trying to increase the in-kind percentage as a means to discourage economic migrants. They found that the distribution of goods is much more expensive than managing cash payments (news report in German).

Answer 11

The most obvious difficulty I can see is the immediate separation of any market (food, clothing, housing, etc) into two tiers: basic and non-basic.

Food. How are your daily food needs identified? Let's take calories, and subdivide into, for instance, meat, starch, and vegetable/fruit.

A Basic Citizen (BC) comes into a store looking for meat. She will obviously pick, let's say, filet mignon over 75% hamburger. Or perhaps the skinless, boneless chicken breast over a half chicken.

A Non-Basic Citizen (NBC), one who is doing well economically, follows after and cannot buy top-tier items because the BCs have grabbed "the good stuff".

Why, then, would it make sense for the store to carry filet mignon or boneless/skinless chicken? Unless the store sets up a "Basic" and "Premium" set of designations, they will have to deal with a largely insatiable demand for the higher-quality foods. And it is not true that everybody can have an above-average lifestyle.

Clothing.

Nike releases a new type of running shoe which costs (due to its materials and construction) significantly more than others in the class. How do you prevent the BCs from grabbing the hot items, with the producer getting "basic item" prices?

Shelter.

How is this measured, square feet? How do you prevent an unemployed single mother with 7 kids from getting a penthouse apartment in a nice area? Should you?

While you can argue that BCs should have access to exactly the same goods and services as everybody else, there is no unitary "everybody else". There is a scale of goods quality available, and unless you restrict Basic access to the lower levels, there will be a very large perverse incentive to remaining at a Basic level.

With a guaranteed income, that income can be seamlessly increased by supplementing income via employment. Money is, after all, fungible. Goods are not. If Basic needs can be satisfied by high-quality goods, then it's hard to see why anyone will try to acquire goods other than through the Basic distribution mechanism.

Some, of course, will say that this is a good thing. It will enforce equality of basic needs on the entire society.

It will also discourage producers from producing the goods which are distributed under the Basic designation in any but the lowest quality. This quality, of course, will need to be specified and monitored by the government, and in the process Basic garments will be instantly identifiable as such, and the wearers likewise identifiable.

In the case of housing, there is no incentive for Basic users to maintain their properties, since if they do not and the structure becomes uninhabitable due to neglect, alternative housing must be supplied. In other words, the government becomes the country's slumlord. In northern climates, how do you provide sufficient heat for Basic citizens in winter? If a Basic tenant wants to keep their house at 80 degrees with a window open, thereby using enormous amounts of oil, do you prevent it, and if so, how?

This is, in a way, the needs version of the affordable housing standards issue: just how good does public housing need to be? In this case, why would a builder build a high-quality or luxury dwelling, when he'll have to take Basic prices? If the program is set up so that the government pays market prices for Basic housing, how does the market set that price? After all, everybody gets Basic housing, which means that there is no such thing as a market in the conventional sense. If the Basic price reflects quality and construction costs, how does the government determine those prices except by setting up a large bureaucracy, and how does such a bureaucracy respond to local conditions? The historical record for this sort of thing is not good.

Short-form: since goods, unlike money, are not fungible, a UBN program will produce perverse incentives and discourage production of all but the most "basic" level goods quality. This can be avoided to some degree by restricting UBN access to the lowest level of quality, but this is likely to have very bad social consequences.

Answer 12

This is a really bad idea. I will try to explain.

Needs are very difficult to define and measure. You can learn to live without most stuff except food and staying warm enough to survive. Similarly you can get used to so many luxuries you start feel like you need those luxuries. A computer 25 years ago was definitely luxury. Today without any computer / digital device and internet connection you would definitely be poor and not in good condition to get back into the economy.

If you disregard luxuries, the only really universal basic needs are food and some place and clothes safe and warm enough to sleep so that people don't starve or freeze to death.

But such a needs focused system... it really doesn't provide means to get back into the economy, which I think we need to demand of any system that is supposed to help those who have fallen out of the economy.

Answer 13

It doesn't distort incentives. If only basic needs are covered for, if a person in the society wants to do something that goes beyond those needs (like eat at a fancy restaurant or buy a diamond ring), then they still have to work for it.

That is kind of what a UBI is. Many UBIs provide enough money to afford the basic needs you want to have, not give you so much you can go eat at a fancy restaurant. Most practical UBI ideas, like the Negative Income Tax proposed by Nobel Prize winner Milton Friedman, would provide enough money for people to afford basic needs instead of enough to just constantly live in luxury.

why not assure everyone access to basic needs such as food, housing, healthcare, education, and social life-enhancing activities, by sponsoring those consumptions?

Because it is easier to give people the money to get their basic needs than have the government try to decide that. On a small and individualistic level, the government can be bad at determine the needs of individual people and attempts at that lead to issues like the 'poverty trap': an issue when the government decides a poor person is in a position that they 'no longer' need help, so they take away their benefits. This can lead to a person falling back into poverty without a social safety net because the government decided for a certain people that a person made enough money to not need basic benefits without checking if the individual is truly doing well. A study in Illinois found that this poverty trap could lead to a situation where "lost benefits and increased taxes outweigh any additional earnings, making it harder for beneficiaries to escape from poverty and reach the middle class". It also incentivizes people to stay in poverty instead of risking employment with a job that could lead to losing their meager benefits (benefits that might not meet their actual needs, but they have to live off of since the government determined that this was their 'need'). A UBN would basically lead to this problem, but a UBI can help alleviate it since a person can keep the money they made before leaving poverty instead of potentially losing their benefits.

It will be cheaper... because you can focus on providing specific certain things...

How is that cheaper? How is determining the specific things a person needs down to their basic caloric intake, medical needs, specific dietary restriction, etc., cheaper than just giving someone the money and letting them decide what they need? Having a group of government workers provide specific things will always be more expensive, especially since people's needs always change. If a government worker forgets to document this change, we will keep giving someone the wrong resources but if we give them money, they can purchase the correct resources for themselves. And documenting the change and going through the bureaucracy to implement would be very expensive either financially or time-wise. Giving you the money to make the change saves a lot of time for workers who would otherwise have to fill out many forms and contact many people every time there is a change in your basic needs. And again, the 'poverty trap' shows that the government might be bad at giving people certain things and determining if these things are still required or not. The government tried to access the needs of certain individuals for healthcare in 1992 with not very great results:

Some needs assessments have been more successful than others. Projects may fail for several reasons. , Development and importance of health needs assessment, NCBI

Depending on the method the government uses, it might fail to properly assess your needs, which can lead to people not having their needs met or an even more costly project that would cost a lot more than simply giving someone the money they need and letting them decide their own requirements.