The Netherlands' Upcoming Money-for-Nothing Experiment

Next year, 250 residents in Utrecht and a few surrounding cities are slated to participate in a government program testing out a universal basic income.

Joris Louwes / Flickr

In medieval myth, Cockaigne was a land of plenty, where work was outlawed, houses were made of pie and sausages, rivers of wine flowed, and ready-roasted geese and grilled fish followed villagers around, eager to be eaten. To the poor of the Middle Ages, according to the Dutch historian Herman Pleij, Cockaigne was a well-known paradise, a fantastical escape from the harshness of everyday life.

Nowadays, the Dutch city of Utrecht is about to see if such a place, where citizens’ fundamental needs are met without any obligations to work, need not be pure fantasy. There, the local government is planning to conduct an experiment that would give 250 Dutch citizens currently receiving government benefits a guaranteed monthly income. A two-year test period is tentatively set to begin in January of next year, and some citizens of Utrecht and some nearby cities will receive a flat sum of €960 per month (about $1,100).

According to Loek Groot, an associate professor at the Utrecht University School of Economics who is working with the government on the project, the Netherlands’ current welfare system wastes too much money and doesn’t do enough to help its beneficiaries. (Others are quick to say the same of America’s.) Groot’s hope is to learn if a guaranteed income might be a more effective approach.

The Utrecht proposal—called “Weten Wat Werkt,” or “Know What Works”—includes six test groups, the members of which will receive slightly different stipends under slightly different conditions. In addition to the group that will receive €960 per month without any work obligations, there is a group that will be given that, plus an additional €150 at the end of the month if they provide volunteer services, such as doing maintenance work on schoolyards. And there is another that will have the same option to volunteer, but will get the money at the beginning of the month and have to return it if they don’t volunteer. “Human behavior is always unpredictable,” Groot says. “We want to know what motivates people, what people respond to.”

There are three other test groups. One is made up of welfare recipients who will keep receiving their benefits, but without their usual work obligations. Another is made up of welfare recipients who expressed interest in receiving the €960 stipend but will continue to receive only standard benefits. And then, lastly, there is a control group of welfare recipients who wanted to keep receiving their usual benefits.

The guaranteed universal income is an idea that philosophers, economists, and politicians have been kicking around in different forms for hundreds of years. Thomas Paine proposed a capital grant be paid to individuals in his 1797 pamphlet Agrarian Justice. And in 1853, the French philosopher François Huet made the case for no-strings-attached cash transfers to all young adults, to be funded by taxes on inheritances and gifts.

More recently, the Dutch historian and author Rutger Bregman has said he believes that the Netherlands’ welfare system is flawed, not least because it ties employment to well-being. As he writes in his book Utopia for Realists, “government assistance has become increasingly anchored in employment, with recipients required to apply for jobs, enroll in return-to-work programs, and do mandatory ‘volunteer’ work … the underlying message is clear: Free money makes people lazy.”

In fact, an experiment similar to Utrecht’s has already put that assumption to the test. Between 1974 and 1979, economists in Canada selected residents of two Manitoba towns to be sent monthly checks with no strings attached, for an experimental program. But the Canadian government’s interest in the program faded, and papers on it were eventually packed up into cardboard boxes. In 2009, the University of Manitoba economist Evelyn Forget dug up that data, and recently told Public Radio International that she found the number of hours worked in the two towns involved dropped only by 10 percent—mainly because of reductions in hours by mothers who wanted to stay home with their small children and young boys who had previously been encouraged by their families to leave school early and support themselves, but who could now finish high school.

And even if free money were proven to make people lazy, the productivity of a few might outweigh the inactivity of everyone else. That’s the belief of Sam Altman, the president of the incubator Y Combinator, which is now funding research on universal basic incomes. “Maybe 90 percent of people will go smoke pot and play video games,” Altman said on a recent episode of the podcast Freakonomics Radio. “But if 10 percent of the people go create new products and services and new wealth, that’s still a huge net win.”

Another common argument against instating a universal basic income is that, as Bregman explained in an interview with the news site, “poor people can’t handle money … After all, if they knew how to manage money, how could they be poor in the first place? We assume they must spend it on fast food and soda instead of on fresh fruit and books.” But as Sendhil Mullainathan and Eldar Shafir argue in their 2013 book Scarcity: Why Having Too Little Means So Much, it’s the very condition of not having enough money that can cause people to make poor financial decisions. If everyone received a basic income, Groot argues, they’d have a better chance of learning to manage their money more wisely.

A more compelling argument against instating a minimum income, though, has to do with how much it’d cost to run such a program. $10,000 a year is a standard figure tossed out for what a guaranteed income might look like in America, but this would, as an economist at the liberal-leaning Center on Budget and Policy Priorities notes, cost over $3 trillion a year—which is almost as much as is collected every year in federal taxes. It’s not clear where exactly all this money would come from.

Such calculations have done little to sway proponents of the idea. Senator Bernie Sanders has said that he is “absolutely sympathetic” to rolling out a basic income, and Finland is contemplating introducing it for 10,000 residents sometime next year. But the idea has not been restricted to the socialist-minded. In 1969, President Richard Nixon proposed the Family Assistance Plan. Although he refused to call it a guaranteed annual income, it essentially was: Under the plan, a family of four without any income would receive $1,600 (about $10,500 in today’s dollars) a year, but a household with some income would receive a gradually reduced amount until its income reached $3,920 (roughly $25,500 today). The bill passed in the House but died in the Senate.

Now, the idea is back. Earlier this month, Switzerland was the first country to hold a public referendum on a basic income proposal. The Swiss proposal would have granted a monthly income of 2,500 Swiss francs (about $2,600) to each adult in the country, and 625 francs to each child under 18. It failed by a large margin, with 77 percent of voters against it, but for proponents of Weten Wat Werkt—and of numerous similar experiments around the world—the idea of a universal basic income is far from dead.