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San Francisco studying basic income program—will it work?

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Basic income experiment will be one of many

A night San Francisco skyline seen from the docks. the_tahoe_guy

San Francisco may soon be taking a page from Oprah and just start giving cash away.

Of course, the experimental basic income program presently in the works at the city’s Office of Financial Empowerment (a branch of the Office of the Treasury) is a little more nuanced than that.

According to Hoodline, the city wants to rethink and possibly redesign the way it distributes welfare, with a $5 million pilot program. This comes by way of OFE director Sean Kline, at a forum this week discussing the storied but rarely tested concept of guaranteed basic income.

[...] “Kline explained, the OFE is considering a study that will examine how children develop in families that receive a basic income, compared to those that receive similarly valued social services and those that receive no government aid at all.

Direct cash as a benefit is ‘one of the most-researched things in the world,’ Kline said. He noted that evidence has consistently shown that when it comes to families, direct cash transfers don't lead to people buying drugs or alcohol, but are spent to support the family’s well-being.”

There’s no word yet on how many people would be involved, what the payments would be, or how long the pilot might run. But Kline says that the focus would be on families raising children.

[Update: Amanda Fried, policy and legislative manager at the OFE, told Curbed SF that at this stage the city is very interested in a basic income pilot and is studying its feasibility, but that they’re only at the earliest stages of assessing the idea.

“It’s local government’s role to see if this would work, but it’s complicated and expensive,” Fried said. So apparently it’s an idea they’re taking seriously, but nothing to quite bet on just yet.]

San Francisco would hardly be the first city to launch such an experiment. In fact, Oakland is in the middle of a similar venture right now, giving away monthly sums up to $2,000, although there it’s a product of Y Combinator rather than the city itself.

A basic income is an idea that goes back centuries in one form or another—Thomas Paine pushed for revolutionary countries to adopt it back in 1797. But would it actually work?

Well, the New Yorker writes that when a Canadian town tried it for a few years in the 1970s, the results verged on spectacular:

“Hospitalization rates fell. More teenagers stayed in school. And researchers who looked at [the minimum incomes’s] impact on work rates discovered that they had barely dropped at all. The program had worked about as well as anyone could have hoped.”

It’s hard to draw conclusions from an isolated case, however.

Conservative economist Milton Friedman toyed with the idea for Americans in the 1950s. He decided that it wasn’t practical at the time, but promoted a variety of similar concepts that eventually morphed into the Earned Income Tax Credit, which is still successful today. But it’s not a great example of the principle in action.

Finland is in the midst of a similar experiment right now, giving away a modest sum (less than $600 in US currency) to 2,000 people. Politicians in Switzerland, France, and Canada have all floated variations on the concept.

San Francisco’s OFE tells Curbed SF it will meet with Finland officials later this year to confer on the matter, but no specific date has been set.

In short, there are not many examples of anyone actually doing it on a large scale, and many are still in progress. If the city wants to know how well this old idea works, it may just have to see for itself.