Silicon Valley billionaires and anti-poverty activists don’t have a lot in common, but in recent years they’ve joined forces around a shared enthusiasm: programs that guarantee a basic income.
Tech entrepreneurs like Sam Altman, chief executive of OpenAI, have promoted direct cash transfers to low-income Americans as a way to cushion them from what the entrepreneurs anticipate could be widespread job losses caused by artificial intelligence. Some local politicians and community leaders, concerned about growing wealth inequality, have also put their faith in these stipends, known as unconditional cash or, in their most ambitious form, a universal basic income.
Dozens of small pilot projects testing unconditional cash transfers have popped up in communities around the country, from Alaska to Stockton, Calif. Andrew Yang, an entrepreneur, put the idea of $1,000 monthly payments for all adults at the center of his 2020 presidential campaign. The idea of cash transfers gained broader popularity during the pandemic, as the federal government introduced stimulus checks and child tax credits, and child poverty declined.
While some pilot projects have shown encouraging results, they have been small scale. That changed this summer, when a research project involving several thousand people, backed by Mr. Altman and called OpenResearch, released findings from what is so far the country’s largest experiment with unconditional cash transfers.
If proponents of unconditional cash hoped the findings of the OpenResearch study would prove its benefits once and for all, their hopes were at least partly dashed. People gained flexibility to spend on basic needs, but the cash didn’t transform their net worth or their mental or physical health. Some researchers and guaranteed income proponents argue that the study shows that cash transfers are only a small piece of the larger puzzle of how to improve the financial well-being of low-income people.
“Cash transfers probably do less to improve people’s lives than the proponents of them thought that they would,” said Sarah Miller, an author of the study and economist at the University of Michigan’s Ross School of Business. “The flip side is that they probably don’t have the harmful effects that detractors were concerned about.”
The OpenResearch pilot enrolled 3,000 people in Texas and Illinois with annual incomes, on average, of under $30,000. One-third of them received $1,000 a month over three years, while the rest received $50 a month, serving as the control group.
Some worries about direct cash transfers were allayed: Most recipients spent the money not on drugs and alcohol but on basic needs. They increased monthly spending by $310 on average, with top categories being food ($67), rent ($52) and transportation ($50). They also spent $22 more each month, on average, helping others. And the money allowed people to attend to costly needs: Recipients of $1,000 were 10 percent more likely than the control group to have seen a dentist at least once in the past year.
But most of the $1,000 recipients did not see their net worth rise, because the cash infusion was often offset by greater debt, from vehicle loans and mortgages. And while the recipients of the large amount reported less stress in the first year of the study, that benefit had faded by the second year. There were no persistent improvements in measures of health like blood pressure, cholesterol or obesity.
“It’s a nuanced story,” said Elizabeth Rhodes, a political scientist and social worker who serves as the research director of OpenResearch, which led the pilot. “We know that cash is important. It allows people to meet specific needs. But it’s not a utopian solver of all problems.”
Mr. Altman launched his efforts to study cash transfers with a set of questions, writing that he was “fairly confident” guaranteed income would be introduced at some point nationally, in some form, as technology eliminates jobs.
“Do people sit around and play video games, or do they create new things?” he wrote in a blog post. “Are people happy and fulfilled? Do people, without the fear of not being able to eat, accomplish far more and benefit society far more?”
The research provided some tentative answers. Cash recipients showed more interest in entrepreneurialism and schooling. But they didn’t work more. The cash recipients worked an average of 1.3 fewer hours weekly than the control group, amounting to eight days a year.
Cash recipients did benefit from more control over their time. Some devoted additional time to their children, the researchers said, noting that the decrease in working hours was more pronounced for single parents. It was also more pronounced for people under the age of 30, who were also more likely to be enrolled in school. The cash recipients were 14 percent more likely than the control group to have pursued education or job training in the third year of the program.
The full effects of the cash transfers on the recipients might not be clear for years. The OpenResearch team will release more analyses in the coming years, including on the effects of the cash transfers on the children of recipients, and on political beliefs, housing and well-being.
“The cost-effectiveness of the program will likely be largely determined by the effects on children,” said Eva Vivalt, an economist at the University of Toronto and an author of the study. “So there is a sense in which the jury is still out.”
Leaders of guaranteed income initiatives say the OpenResearch findings show the limits of cash transfers, but do not negate their benefits. Sukhi Samra, the director of a network called Mayors for a Guaranteed Income, said cash transfers provided people with stability and flexibility, but were not a way to build long-term wealth.
“Guaranteed income cannot exist in a vortex,” said Ms. Samra, whose network has supported some 70 pilots in American cities and counties. “It has to be implemented alongside other robust policies, whether that be affordable housing or making child care accessible.”
Aiming cash transfers at specific populations can also help improve their effectiveness, some proponents argue. The Bridge Project, for example, is an effort to give $1,000 monthly to pregnant people through the first 1,000 days of a baby’s life. One recipient of those transfers, Justine Diaz, 36, said she spent the money largely on diapers and milk.
Participants in the OpenResearch experiment have not shared their identities publicly. But in other experiments with guaranteed income, people who have experienced direct cash transfers underscore the benefits of the freedom of being able to spend on any random needs that arise.
Jacinta Bunnell, 52, an artist in New York, enrolled in a pandemic-era guaranteed income program for artists starting in 2022, part of an initiative called Creatives Rebuild New York, backed by the Mellon and Ford Foundations. Ms. Bunnell said she had received $1,000 monthly from the program for 18 months. She spent a chunk of it on doctors’ visits as she tried to diagnose an autoimmune disorder.
“For that 18 months, this stress was washed away,” she said. “I felt like there was an umbrella over my head protecting me from an imminent storm.”