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Unemployed people derive significant psychological benefits from receiving a fixed amount of financial support from the state, according to a landmark experiment into basic income in Finland that highlights the disadvantages of the country’s existing means-tested system.

Initial results of the two-year study had already shown that its 2,000 participants were no more and no less likely to work than their counterparts receiving traditional unemployment benefit.

Thursday’s set of additional results from the social insurance institution Kela showed that those getting a basic income described their financial situation more positively than respondents in the control group. They also experienced less stress and fewer financial worries than the control group, Kela said in a statement.

Erratic Bureaucracy

The results illustrate how bureaucratic and erratic the existing system can be.

For instance, regular recipients of unemployment benefit complain that it’s nearly impossible to know how taking on part-time work will impact their financial situation at the end of the month. Under the current system, declining job offers or training can result in financial penalties. But some have discovered that indulging in a hobby can even lead to benefits being denied altogether.

The results published on Thursday are based on phone interviews conducted during the final months of 2018. Further results of the experiment are due next year.

Finland is the first country in the world to trial a basic income at national level. The government wanted to find out whether a basic income could simplify the social security system, eliminate excessive bureaucracy and remove incentive traps. Researchers at Kela also wanted to measure its impact on the participants’ physical and psychological well-being.

The Results So Far

Basic income recipients were no more and no less likely to be employed than members of the control groupBasic income recipients were happier with their lives and experienced less stressThey had more trust in other people and social institutions, and showed more faith in their ability to have influence over their own lives, in their personal finances and in their prospects of finding employment


(Updates throughout with additional details.)

Source:  Bloomberg | Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

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