How People Really Spend $ 500 Universal Basic Income Monthly
How would you use the extra $ 500 each month? Would you spend it on waste, spend on bills, or increase your savings?
To determine the answer to this question, the researchers looked at the city of Stockton, California, where an experiment was conducted that offered a universal basic income to 125 residents. Members receive $ 500 per month on a debit card for 18 months with no strings attached.
A universal basic income is not a new concept, but it has garnered renewed attention in this early stage of the 2020 presidential election. Candidate Andrew Young is a UBI supporter and conducts his own self-funded tests. He calls his UBI payout the Freedom Dividend and plans to fund the larger UBI program, if chosen, with an additional sales tax.
The Stockton program, called the Stockton Demonstration of Economic Empowerment (SEED), is funded by a non-profit organization. It kicked off in February after inviting everyone in areas where the median annual income was at or below the city’s average ($ 46,033) to apply. A group of 125 recipients was randomly selected from the applications. There is also a control group that does not receive any money from the program, so researchers can compare their financial costs.
People Spend Their Universal Basic Income On … The Basics
So far, the participants have spent this extra money in a relatively austere manner. On average, people spend nearly 40% of their $ 500 UBI on food. They spend 24% on merchandise, including merchandise from stores like Walmart and dollar stores that sell groceries and essentials. About 11% went to utility bills and 9% to car repairs and fuel.
A spokesperson for the program told Sacramento Bee that less than 1% of the monitored money went to buy alcohol or tobacco.
So far, research shows that 40% of the money was withdrawn in cash. Many Stockton residents have struggled with predatory lending in the past or are skeptical that the program will last, according to CityLab , which may be a factor that could stimulate the desire to withdraw cash or transfer money to another account. Because of this, it is difficult to say what the money was spent on, but researchers are asking recipients to fill in the gaps, CBS News reported . The rest of the money went to things like medical expenses, insurance, transportation, education, recreation and even donations, CBS News notes.
According to Sacramento Bee , nearly half of UBI recipients say they “just manage to get by financially,” and one in five said they go into debt to take care of themselves and their families. “