The Bottom Line in a Basic Income Experiment

Abstract

A basic income (BI) experiment (or a pilot project or an implementation trial) is worth doing if it focuses on the right question. Some of the problems with the U.S. negative income tax (NIT) experiments of the 1970s stemmed from a focus on the wrong question—focusing on the side effects rather the effects of the policy in question. A European BI experiment should focus on the question of policy effectiveness. The question of policy effectiveness should be formulated follows: What policy (basic income, the current system, or any other alternatives to be tested) produces the greatest increase in welfare for the poor (or the greatest decrease in poverty) per Euro of cost (both in terms of tax cost and efficiency loss)? Effectiveness is not the only important concern, but it is perhaps the most important question that an implementation trail can enlighten.