A universal basic income study published in November found that paying low-income Americans an average of $492 a month led to a net increase of just $92 in monthly income, and a significant average decrease in non-grant income compared to control groups.

“When the value of cash transfers is included in total household income, treatment households experienced a net increase in monthly income of $92 at the endline survey,” said the study.

The Massachusetts-based National Bureau of Economic Research (NBER) conducted a study from 2021 to 2023 designed to explore the potential effects of a taxpayer-funded universal basic income, or UBI.

Researchers selected 695 low-income households in Compton, California, to receive payments averaging $492 per month and compared the recipients to a control group of 1,402 households.

Some of the households identified as eligible did not accept the transfers, bringing the average down to $450, when including 28 non-compliant households.

Recipients received transfers of $300 per month for households with no dependents, while households with two or more received $600 per month.

While full-time workers participating in the study generally continued to work as before, participation in the labor market by part-time workers dropped by a significant 13 percent.

“Receiving guaranteed income had no impact on the labor supply of full-time workers, but part-time workers (at baseline) had lower labor market participation by 13 percentage points,” said researchers.

In line with the drop in work-force participation, researchers found an average $333 monthly income reduction in non-grant funds compared to the control group.

“Income (excluding the transfer) was reduced by $333 per month on average
relative to control households, and expenditures were reduced by $302 per month,” said the study.

That drop in pre-grant income negated a large part of the grant, leaving recipients with an average income increase of only $92 from monthly payments that averaged nearly $500.

Researchers also found that, despite the grant, recipients’ expenditures were, on average, $302 per month less than those of the control group.

The NBER claims that the reduction in expenditure by recipients indicates they intended to save the money or use it to reduce their household debt.

“When the value of cash transfers is included in total household income, treatment households experienced a net increase in monthly income of $92 at the endline survey,” said the organization.

Recipients, on average, had a $2,190 reduction in non-housing-related debt, although researchers clarified that this figure is not statistically significant.

Strangely, researchers found “a decrease in direct reports of tobacco expenditures; and an increase in tobacco use.”

Researchers found no significant impact on other secondary outcomes, such as alcohol expenditure and consumption, domestic violence, or volunteer work.

The results may, however, be heavily influenced by the timing of the study, which began during the height of the COVID-19 pandemic lockdowns. These lockdowns were particularly severe in California, where the study took place.

Researchers also pointed out the importance of noting that the study had only a 50 percent response rate.

Some Democrats, such as unsuccessful 2020 Democratic presidential candidate Andrew Yang, have strongly advocated for a taxpayer-funded universal basic income.