How Would You Spend a Universal Basic Income? We Asked Participants Around the World—and Their Answers Might Surprise You

October 16, 2019, 11:00 PM UTC

Giuseppe Pacella is a 32-year-old laborer from the southern Italian region of Basilicata, the high arch of Italy’s boot-shaped peninsula where the economy has underperformed the national average for years.

Back in 2016, Pacella had a six-week contract at a Fiat Chrysler plant an hour bus-ride from his home. Then, two years ago, he worked for three weeks selling mobile phones in town. But despite assiduously applying for jobs and regularly keeping his profile on the government labor databases up-to-date, he’s been unable to find steady work.

Pacella’s father died last year, and his mother takes in occasional work as a tailor. That makes Pacella the family’s main breadwinner thanks to the 422 euro (around $465) he gets every month from the Italian government in the form of a “citizen’s income” payment . 

“If it were up to me, I wouldn’t ask for this money,” Pacella told Fortune. “I don’t want to be paid for doing nothing; I want to work. I’d take a job that paid the same as the citizen’s income just to have a job. But who is hiring?”

For years, universal basic income (UBI) programs have captured the attention of economists and politicians the world over as a possible lever to reduce income inequality, and, more recently, to provide financial support to vast segments of society under threat by a wave of automation-driven job loss. Critics call it nothing more than an expensive freebie.

Even as the debate rages over the merits of giving people, as Pacella says, money for nothing, 2019 could go down as the year of UBI. Initiatives, big and small, have been introduced this year—from the high-safety-net countries of Europe, to California, to ten randomly selected Americans who won a raffle organized by the campaign for presidential candidate Andrew Yang.

Italy’s version, known in Italian as “reddito di cittadinanza,” launched earlier this year. The idea first surfaced six years ago with the stated goal of helping Italians to “find an appropriate job, in line with [his or her] education and professional competence … to beat back modern slavery that obligates many to accept any work, under-paid, dangerous, without the possibility of growth.” 

But instead of giving people the freedom to wait it out for the right job to come available, it has often become an income-substitute in a slow-growing economy in which nearly one in three young people are unemployed (more than double the European Union average) and many of the country’s best and brightest leave for opportunities abroad.

Italy—the first country in the world to put in place some kind of permanent national minimum income plan—is collecting information on how the money is used, though it hasn’t made that public yet. 

At least anecdotally, Pacella’s story is a common one. Beneficiaries appear not to be using the money for frivolous ends, but neither are they using the payout for skills-training to put them in better position for a more stable job.

Antonella, 27, a part-time barista in Rome, is another example. (She asked that Fortune identify her only by her first name because she’s concerned her family might learn she doesn’t work full time). She told Fortune she couldn’t afford car insurance without the 169 euro ($186) she gets from the plan.

Giorgio Ricci, a 24-year-old former medical student in the northern port city of Genoa, said in an interview that his family could be forced to sell their home if not for the 511 euro ($563) he gets from the program, which allows him to stay home and take care of his infirmed father, a widower.

Stories like these are repeated up and down the country. 

The Italian plan includes many restrictions. A beneficiary’s income is automatically topped up to €780—considered the poverty line in Italy—via a special government-issued prepaid debit card. In Italy, if you work, and earn less than that, you get the difference between your wage and €780 ($860). You get the full €780 if you are unemployed or retired with no pension.

Eligibility must be renewed every 18 months, and the money can only be used for basics like rent, utilities, food, and school. A beneficiary cannot use it to buy liquor (wine is okay) or pay their Netflix or Spotify subscription, for example.

According to Karl Widerquist, an economist and co-founder of the U.S. Basic Income Guarantee Network, those spending limits prevent the Italian plan from being a true basic income plan.

“The risk is that a plan, like the one in Italy, can become a poverty trap,” Widerquist told Fortune. He said for a universal basic income plan to work everyone has to receive the money, and that they have to be free to spend it as they wish.

Recent pilot programs in Stockton, California and in Finland are closer to the mark, but the response to the big question—what did recipients spend the money on?—isn’t much different from what you’d hear in Italy. 

The Stockton program got underway in February: 125 people are receiving $500 a month for 18 months. Early data shows recipients are spending the bulk of the money they have on food and basic necessities. Others are using it to pay down debt.

Finland’s two year program in which 2,000 people received 560 euro ($620) a month, ended last December. A full report on the outcomes will be released next year. Preliminary results said the program had no impact on the employment levels of the test group, though it is notable that those who received the assistance reported having fewer stress- and health-related problems.

Widerquist said pilot programs so far have been too small or too limited to act as true test cases. A proper universal basic income plan, he added, would not even involve the kind of data collection that shows how the stipend is being used.

At least on paper, Yang’s plan, should he make it to the White House in 2021, to give all Americans aged 18 and over $1,000 a month, would be the first legitimate universal basic income plan on the planet.

“At first glance, keeping track of spending habits might make sense, but it’s a slippery slope,” Widerquist said. “We already have cost-of-living information. Why do we need more data, unless it’s designed to cajole people into spending the money in some specific way? And once that’s the case, it’s not a universal basic income plan.”

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Rome City Skyline
Italy is the first, flawed test case for a perminent, national basic income plan.
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