Recently, there have been increasing calls for dialogue on a universal basic income (UBI) from political parties, think tanks (including the Royal Society for the Encouragement of Arts, Manufactures, and Commerce (RSA)), civic activists, trade unions, and leading entrepreneurs such as Tesla chief executive Elon Musk. These calls are a response to growing income insecurity, some sense that welfare systems may be failing, and as a preparation for the potential effects of automation and artificial intelligence on employment prospects in industries that might be better served by machines.3 UBI-style pilots are planned in Finland, the Netherlands, and Canada as a potential answer to these questions and concerns.4

While the Dauphin study included just the poorest residents of one small city, if we assume that it indicates a causal link between extra cash and better health then three effects could have been in play. Firstly, the cash sum itself would have reduced economic inequality directly. Secondly, the unconditional nature of the payment could have reduced income insecurity. Thirdly, there is a positive social multiplier whereby positive behaviours associated with greater financial security tend to reinforce one another—for example, more teenagers staying on in school because they see their peers doing likewise. Taken together, these effects could mean that financial insecurity is a key vector through which inequality worsens health outcomes for the least advantaged. It is certainly a serviceable hypothesis.

Dauphin was not an isolated study. A little known, unintentional, basic income pilot took place in North Carolina during the 1990s. …
The results were again striking. Children whose families received the payments showed significantly better emotional and behavioural health by age 16 relative to their non-tribal peers, who did not receive payments. Parents also reported that the drug and alcohol intake of their partners decreased after the payments began.5These reported changes among adults were uncontrolled observations, but the researchers noted no other major policy changes during the study.

Mullainathan and Shafir describe a process of cognitive “bandwidth scarcity” whereby scarcity of resources impedes sound decision making with clear potential for negative health outcomes.6 The Canadian and North Carolina case studies suggest that bandwidth scarcity could be confronted through an unconditional universal basic income. Complex systems of tax credits and social security, such as currently used in the UK, send confusing signals, not least through poorly understood and sometimes arbitrary conditions and welfare sanctions that create new hardships for recipients.

A universal basic income: the answer to poverty, insecurity, and health inequality?
http://www.bmj.com/content/355/bmj.i6473