SEATTLE — One of the best economic means devices for incentivizing good health may just be giving people free money. A new study has found that universal incomes are good for health, as people who receive them diversify their diets and spend less on harmful substances.
A free money transfer can also be thought of as a “Universal Income.” In a recent World Bank study conducted in several countries, researchers observed a negative correlation between free cash and buying alcohol and tobacco.
While only studied across ten different nations, universal incomes could emerge as effective means for governments to improve the health of its citizens and eliminate poverty.
The concept of universal incomes has become more popular in the past few years for a number of reasons, automation being the most glaring.
Many jobs can be carried out more cheaply and effectively using technology instead of people. Examples are already everywhere, from assembly lines to self-checkouts and big box stores.
Large-scale automation will lead to high levels of structural unemployment and could hinder entire economies dependent on consumer spending. As a fix, many economists have suggested the universal income, a monthly cheque for the average citizen courtesy of the government.
Several smaller nations have already begun experimenting with different allowance and are finding that universal incomes are good for health.
India experimented with unconditional handouts in 20 different villages. Researchers in charge of disbursements found that individuals spent more on food high in protein, children spent more time in school and received higher grades and individuals were able to establish savings. Some who had saved used the disbursements to start their own businesses.
In Nicaragua and Honduras, researchers found that in addition to helping to make ends meet, unrestricted cash transfers actually led to a decrease in spending on alcohol and tobacco.
Researchers were baffled to find that alcohol and tobacco don’t act like normal goods, such as a broader diet in the Indian experiment. Conventional wisdom says that as income increases, so too does the consumption of goods.
The World Bank study calls this behavior the result of the “labeling effect.” Upon disbursement, the universal income came with recommendations on how to spend it instead of threatening consequences for misuse. Researchers told recipients what it was for, for examples “This money is for groceries and your children.” As a result, the recipients were more likely to spend the money on that thing.
This finding was consistent across ten different countries, all with different universal incomes. While the evidence isn’t concrete and deserves further investigation, the implication is promising and a good sign that universal incomes are good for health.
– Thomas James Anania