Money for nothing: Germany starts basic income experiment | Business | Economy and finance news from a German perspective | DW | 26.08.2020

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Money for nothing: Germany starts basic income experiment

Starting Tuesday, a select group of people in Germany will begin receiving €1,200 a month, no questions asked. The experiment will test the feasibility of a universal basic income.

The study, the first of three parts of the Pilotproject Grundeinkommen (Basic Income Pilot Project), will provide 122 participants with €1,200 ($1,420) a month for a period of three years.

Participants did not have to prove a financial need and can work as much or little as they like throughout the experiment.

"They don't have to do anything for it except fill in seven online questionnaires during those three years," says a description of the experiment on the project's website.

Interest in taking part was overwhelming. When the application process began last August,  more than 1.5 million people had volunteered within a week.

Organizers then narrowed it down to 1,500 participants. Of those, a randomly selected 122 people will receive the monthly allowance. The remaining participants will serve as a control group. Instead of the stipend, they will merely be compensated for completing the questionnaires.  At the end of the study, researchers will compare the two groups.

The money comes from about 150,000 donors and is tax-free for all recipients. In the end, every participant will get €43,200, adding up to a total of €5.2 million for the project. All of this has been initiated by a Berlin-based public charity.

Basic income just a pipe dream?

Officials from the Mein Grundeinkommen(My Basic Income) charity are convinced that an unconditional income for all citizens would solve many current problems. The assumption is that people get more creative and become freer and happier if they don't constantly face the pressure to earn enough money to get by.

Whether this lives up to reality will be explored scientifically during the project. "We'll analyze what people are doing during a period of guaranteed material security," project chief Jürgen Schupp from the German Institute for Economic Research (DIW) told DW.

Among the questions he'll look into are: Will subjects spend all the money or will they save a certain amount? Will they stop working altogether or work less? Will they donate money to others?

The experiment will give his team all the answers it needs, Schupp said. Even changes in people's stress levels can be identified with the help of hair samples, he argues.

Ideological barriers

The debate about an unconditional basic income has been going on for years, and it has often been marked by people's ideological bias. The core question is what people do when they don't have to do anything. Opponents think it's the idea of left-leaning daydreamers who want to laze about at the expense of the whole community.

By contrast, supporters view such an income as a tool to solve current and future problems. Education, nursing and helping neighbors would gain higher social status they argue. On top of that, models could be developed for a time when more and more jobs would be slashed because of ongoing digitalization and automation.

Does money make you more courageous?

Schupp hopes to gain insights into aspects that opponents of a basic income emphasize a lot: innovation and entrepreneurship. "Maybe the recipients of such an income are willing to take more courageous decisions to become self-employed or try another career," he said.

"We want to know," reads a slogan of the pilot project. The charity's Michael Bohmeyer concedes that he's a bit nervous about the findings. "It may well be that the pilot project will not confirm the impact that we expect it to have," he says in a video on the project's website.

Michael Bohmeyer of the German basic income charity

Bohmeyer says he's nervous about what results the three-year experiment will yield

What remains to be seen, though, is whether the public debate about unconditional basic income will continue with fewer ideological blinkers in three years' time, when the results of the study will be published. There are already critics who claim that the very idea of such an experiment lacks any sound footing.

They argue that three years aren't enough to come to any reliable conclusions as to how people would behave if they had the security of a basic income for the rest of their lives.

Political parties keep a low profile

Add to this the many questions that the project cannot answer anyway: How will consumer prices develop? Would ill or needy people have less money at their disposal than now? And to what extent would taxes have to go up to finance such an income?

"Our study will certainly not be able to answer all the questions surrounding basic income," Schupp said. But he's looking forward to getting an answer to what he believes is the core issue: How does money influence people's behavior? "That's a gripping scientific question, and there are no serious studies to date looking into this," he said.

There have already been attempts to find out more about the impact of unconditional basic income. The results of a labor-market-focused experiment in Finland turned out to be ambiguous. A similar and even bigger, publicly financed trial in Canada was halted after a short period because of the cost.

So far, there's been a lack of political support for basic income schemes in Germany. None of the big parties has come out in favor of them. 

Watch video 03:14

Basic income for all?

This article was originally published on August 31, 2020, and has been updated to reflect new developments.