Saturday, 21 September 2013

Citizen's income in practice

From Le Monde Diplomatique, via Moneyweek, we get a report of a practical demonstration of the benefits of a basic, un-means-tested income for everyone:

A new pilot study at Panthbadodiya could significantly change living conditions for the poor, and India’s approach to fighting poverty. The village is taking part in the Madhya Pradesh Unconditional Cash Transfer Initiative, a project run by the Self Employed Women’s Association (Sewa; a trade union that has defended the rights of women with low incomes in India for 40 years), with subsidies from Unicef (United Nations Children’s Fund) India.

The research director, Sarath Dewala, explained: “The experiment involves giving individuals a small sum of money, at regular intervals, as a supplement to all other forms of income, and observing what happens to their families if this sum is given unconditionally.”

There were no conditions regarding wages, employment, caste, gender or age, and the recipients could use the money as they saw fit. Besides social security benefits, adults received 200 rupees ($3.65) a month, and mothers were given 100 rupees for each child. Four of the villages had had help from Sewa for some years, with the organisation of support groups, savings cooperatives, bank loans, training in financial management and support during visits to local officials. Twelve non-participant villages served as controls for comparative study.

The idea of giving money to the poor without asking for anything in return startled some. “They told us the men would use the money to get drunk, and the women to buy jewellery and saris,” said Dewala. “But it’s a middle-class prejudice that the poor don’t know how to use money sensibly. The study showed that a regular income allows people to act responsibly. They know their priorities.

Studies at the beginning, mid-point and end of the project confirmed that, in villages receiving payments, people spent more on eggs, meat and fish, and on healthcare. Children’s school marks improved in 68% of families, and the time they spent at school nearly tripled. Saving also tripled, and twice as many people were able to start a new business.

Well, that's one prejudice disproved. Now we have to get over the "Giving money to the undeserving" one.


Sobers said...

I think the problem with a CI isn't that the majority would be against giving cash to the 'undeserving poor' but that 'the undeserving poor' might be a bit put out that it would be considerably less than they get now.

Lola said...

I think it is important to get full acceptability for CI is to stress its universality and two, to fund it from LVT and, crucially, to chop pretty well other taxes.

I know that that is a big ask.

Mark Wadsworth said...

They did this somewhere in Africa and they do it in Alaska as well. And Child Benefit used to be universal and I never heard anybody say that higher earners (who now no longer get it, in practice) spent it all on booze and saris.

S, yes, that is a fair summary. A CI would go to the "undeserving poor" as well as the "undeserving rich", and it would be "unaffordable".

Hence and why it is cleverer to do smoke and mirrors and call it "personal allowance" etc.

Derek said...

It was Namibia. Here's the project website.

Mind you, they don't need to keep doing studies. There have been quite a few done already, going back to the 1970s, and they all seem to show that CI is a good thing.

I get the impression that in some cases asking for a study is just a delaying tactic by politicians, to give the impression that "something is being done.

Bayard said...

Yeah, like setting up a commission of enquiry.

Mark Wadsworth said...

D, thanks for link. Of course they don't need to go on doing studies, CI just "works" on whatever level.