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May 22, 2017

Problems with Guaranteed Income Experiment

Reuel S. Amdur

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Ontario is set to carry out a guaranteed income experiment with 4,000 people in the Hamilton area, Thunder Bay, and Lindsay. Half will be in the control group.

A single employable person will receive $16,989 a year, with someone that the government deems disabled getting an additional $6,000. 

While this gap can be subjected to criticism—it assumes that the government really knows who is disabled and that the additional $6,000 levels the playing field for the disabled—it also provides the possibility of a two-experimental group model. 

That depends on there being significant numbers of subjects in each of the two categories.  The control group will also be subject to the same possible constraint.

The ability to carry out this experiment in a way that could provide meaningful information depends on having sufficient numbers in each of the two categories to make meaningful comparisons possible. 

Simply lumping the two groups together limits the potential for obtaining meaningful information.  The other problem arises because the two groups are not comparable, one being defined on the basis of disability.

Another thing that may be missing is relating this study to others, past and present. 

For example, what is this experiment doing to answer any of the questions left unanswered in the Manitoba study, or is it simply ploughing the same ground?  And how does it fit in with the current projects in Finland and the Netherlands?

Hostility to the project comes from people who fear that they will be supporting work-shy “welfare bums”. 

Hugh Segal, the guru who helped to design the program, set the level for employable participants at three-fourths of a poverty line.  He was buying into this argument of the opponents.  A way of addressing the concern would be to have two experimental groups, one at 100% of the poverty line. 

The existence of the two levels of guarantee now in the experiment has some potential for getting meaningful findings at the end, but the program is nevertheless hampered by the fact that one of the two groups starts with the definition of being disabled.  And if the results for the two income levels are combined, the results face the real risk of being meaningless.

Why does the project begin with a paper outlining what we already know about guaranteed income experiments?

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