Mincome - A UBI Case Study

Universal Basic Income

In 1974, Canada implemented a guaranteed annual income trial aptly named "Mincome". This trial was held in the rural areas of Manitoba, the city of Winnipeg, and the city of Dauphin. The program ran for five years and guaranteed certain lower-income residents an annual income with no strings attached. The stated goal of the program was to assess the social impact of a guaranteed annual income and study whether there were any disincentives to work and how great those disincentives would be. 

Certain low-income residents of Winnipeg and rural Manitoba were randomly allocated to seven different treatment groups and one control group. The amount that each treatment group received varied depending on the group, and the benefits of each group were reduced by either 35, 50, or 75 cents for every dollar they earned from a job. The residents of Dauphin were given one type of treatment, and their treatment was reduced by 50 cents for each dollar they earned from a job. Any resident of Dauphin could apply for the trial.  

Each eligible resident was given up to 60% of Canada's low income cut off, with each specific case varying depending on how much they earned from working. The goal though was to bring low-income individuals and families up to a certain annual amount each year. The annual amount was then divided and given out on a monthly basis to residents. The experiment was funded through a joint contract of the provincial government of Manitoba and the federal government. The feds guaranteed 75% of the budget with Manitoba covering the remaining amount. 

Mincome was promptly shut down in 1979. The researchers weren't even able to release the final results of the program due to budget constraints. The liberal government led by Pierre Trudeau was replaced by the conservative Sterling Lyon and his government. The feds turned to other problems they deemed more pressing than solving poverty; thus, the results sat gaining dust for many years. 

In the 1980s, University of Manitoba economists, Derek Hum and Wayne Simpson, released a series of papers analyzing some of the results of Mincome. They found that the disincentives to work were minimal. There was close to a 1% decrease in labor hours for men, a 3% decrease for women, and a 5% decrease for unmarried women. Some critics say that these numbers may be artificially low due to the subjects knowing the trial would be temporary. 

That being said, this marginal decrease in labor hours seemed to be offset by other societal benefits. Economist, Evelyn Forget, wrote a paper in 2009 further analyzing the effects of Mincome, specifically focusing on the city of Dauphin. She found, of the residents who worked less, most were new mothers, who wanted to spend more time with their newborns and teenagers, who elected to stay in school longer. The teenagers felt less pressured to support their families. Because of this, graduation rates rose.

She also found that residents had more leeway in choosing what type of work they wanted to do and were in a stronger position to leverage better pay. 

Finally, she found, using census data, that hospital visits dropped by 8.5% during that time period in Dauphin and the amount of psychiatric consultations and hospitalizations fell as well. 

From these results, Universal Guaranteed Income seems to have been a net positive resulting in a more robust and healthy community in Dauphin and Manitoba. There's no question that this idea needs to be tested further. Also, implementing this idea on a widespread scale would have its own challenges, but if Mincome shows us anything, it's that UBI has potential and could lead to a host of societal benefits.