Alaska’s Universal Basic Income Has Not Made The State Lazier

Alaskans received $2,072 in PFD checks in 2015.Screengrab/Anchorage Daily News/YouTube

Since 1982, all Alaska residents receive checks from the Alaska Permanent Fund regardless if they’re employed or not.

One of the few places the concept of universal basic income has been applied is right here in the United States. Alaska has been paying each of its citizens - children included - a portion of oil revenues since the early 1980s, and it turns out that giving people free money does not beget laziness.

The Alaska Permanent Fund is a state-owned investment fund established using oil revenues. It has, since 1982, paid out an annual dividend to every man, woman, and child living in Alaska. In 2015, with oil prices high, the dividend totaled $2,072 per person, or $8,288 for a family of four. By 2017, it had been cut down to $1,100 due to money being diverted to other purposes; in cheaper gas years, it can dip into the $800 to $900 range.

Clearly the amount given to Alaska residents is less than the concept of 'basic income' would require, but the payment generally has worked to eliminate the most extreme poverty in the state.

And unlike the theory put forth by conservatives - that giving people cash will squash their desire to work and deaden their souls - researchers have found virtually no effect on employment within Alaska.

[E]conomists Damon Jones of UChicago and Ioana Marinescu of UPenn decided to figure out if Alaska’s cash payments were discouraging Alaskans from working. Their conclusion: not really. They find that “the dividend had no effect on employment” overall.

In other words: Alaska has figured out a way to use its oil wealth to give all its residents cash for free and wipe out extreme poverty — and it doesn’t appear to be harming its economy in the process.

One area they did find a change was in part time employment, though the increase was small. Vox notes two possibilities for the difference:

People could be shifting out of full-time work and into part-time work because the dividend checks gave them money, enabling them to work shorter hours.

People who weren’t working before the cash payment are driven to start working because of it, perhaps because it helps pay for transportation, child care, and other fixed costs of employment.

Though the results of this analysis are encouraging, Alaska uses revenue from oil production to finance its universal income - a move that would be difficult, if not impossible, to make nationwide.

Realistically, a similar policy at the national level would probably be funded the way the rest of the federal government is, with a mixture of income, payroll, and corporate taxes. Those are perfectly fine taxes, but standard economic theory predicts that raising them will, on the margin, discourage work, which might result in different effects on employment than Alaska’s policy has had.

But a similar policy financed by hyper-efficient taxes — like ones on land value, carbon emissions, alcohol, cigarettes, gasoline, and sugar — would likely do what Alaska’s policy does: reduce poverty, boost average incomes, and not harm the economy in the process.