It turns out people spend free money on rent

Bring up the idea of giving people money for nothing, and it’s difficult for some to shake the idea that they work hard while others spend government cheese on caviar bumps.

But increasingly, pilot programs across the US and elsewhere have found that recipients — even without limitations — will spend their funds on housing and basic needs.

First, some vocab

• Universal basic income (UBI) gives every citizen the same stipend, regardless of employment or income status.
• Guaranteed basic income (GBI) gives money only to certain groups, such as low-income families.

Many pilot programs today involve GBI, targeting low-income households.

Like in Austin, Texas…

… where 135 low-income households receive $1k in GBI each month for one year, ending in August 2023.

A new analysis from the Urban Institute found that recipients spent over half of the money on rent or housing costs, while the rest went to basic needs, bills, investing, and giving to others.

And they didn’t spend that time slacking off:

• Seven percent worked more, using the funds to cut their commutes.
• Nine percent worked less, using the extra time to learn new skills or to take on more caretaking duties.

Food insecurity decreased and mental health largely improved — though participants became anxious toward the end of the pilot.

Sounds promising, but what now?

Similar programs have had similar results, including in Baltimore, Denver, and Stockton, California, but adoption has been slow as opinions remain mixed.

• In 2020, the Pew Research Center found 54% of Americans were opposed to a federal UBI of ~$1k/month per adult citizen, regardless of employment status.
• A similar program in Harris County, Texas, is facing pushback from a senator who claims it’s unconstitutional.

But there is one thing that might accelerate these conversations: AI.

Economist Karl Widerquist told The Guardian that if AI begins taking away jobs, white-collar workers will move into the gig economy and lower-wage jobs. With less work all around, UBI could be a solution.