Gulf states can fill the knowledge gap on universal basic income

Calls for a guaranteed salary independent of work status – known as a universal basic income – are accelerating in many countries following improvements in artificial intelligence, with luminaries such as Elon Musk and Sam Altman among the high-profile proponents.

As scholars work to assist policymakers in determining the desirability of such a policy, they should study the natural experiments that have been taking place in the Gulf states for decades. The time is right for GCC-based scholars to take the lead in this debate.

Historically, when central governments began to develop bureaucracies capable of taxing wealth, redistributing resources to those with limited means gradually became the state’s responsibility, complementing the decentralised efforts of religious institutions and private philanthropists. Today, almost everyone demands that the government ensure a minimum level of comfort and dignity for all of society’s members.

Traditionally, this has been achieved by using means-tested benefits for those, such as job seekers, the infirm, the elderly and so on, who can demonstrate that they are in need. However, advocates for a universal basic income have called for making such support unconditional.

One of the most important reasons for this is to reduce explicit and tacit fraud, as contingent income support creates an incentive for people to either falsify their status, or to possibly exert less effort on getting a job.

For example, a study of the 15 per cent rise in unemployment benefits that occurred in Finland in 2003 determined that it increased the average duration of unemployment by 12 per cent, due to the diminished incentive of securing a new job. Another related reason is the desire to minimise the perceived stigma of receiving benefits, helping people to maintain their sense of dignity.

Calls for universal basic income have lately grown due to the fear of AI-induced job losses: a Google trends analysis shows that it was almost never searched about on the web prior to 2016, but Covid-19 contributed to a sharp rise in interest.

Government redistribution systems are unlikely to keep up with the projected impact of AI, and so as a matter of bureaucratic efficiency, it might be preferable to switch to universal basic income in advance.

Critics usually cite two concerns. The first is the fear that a universal basic income large enough to make a difference will induce widespread laziness, whereby a significant number of recipients opt to stay at home and play video games or browse social media rather than applying themselves.

The second is that while universal basic income addresses the indignity of having to ask for a handout, it ignores the fact that many people tie their sense of self-worth with their job.

These valid concerns cannot be resolved by debates or logical deduction – there is a pressing need for empirical evidence. Researchers have begun broaching this issue through controlled experiments in which thousands of people randomly receive a large, unconditional income supplement for several years.

The huge cost of executing such studies has limited their ability to resolve the debate. For example, a July paper by University of Toronto economist Eva Vivalt and her colleagues – The Employment Effects of a Guaranteed Income: Experimental Evidence from Two US States – tracked the impact of a monthly income boost of $1,000 disbursed to 1,000 low-income households over the course of three years.

They found that these households suffered a net decrease in monthly income of approximately $500 as they scaled back their labor supply, with barely any positive effect on any other aspect of well-being, challenging the claims of universal basic income proponents. However, the valid criticism raised by many was that the unconditional stipend was simply too small to make a significant difference to people’s lives.

As the global debate continues, Gulf countries are uniquely positioned to contribute without the need to implement studies that cost tens of millions of dollars and take decades to assess accurately. In certain cases, forced early retirement in the Gulf public sector provides scholars with an opportunity to simulate a universal basic income.

Since the 1970s, some Gulf governments have been using public sector employment as a form of social insurance. They have been over-hiring compared to the operational needs of various state entities for a variety of reasons, among them a desire to ensure a dignified income for their citizens.

However, at various junctures, some governments have imposed early retirement on – and offered early retirement to – many of these public sector workers, transforming them into universal basic income simulants with incomes that far exceed anything that a large-scale experiment could hope to muster. Some can secure an alternative job, while others remain in retirement.

Talking to these people can provide scholars with valuable insights about the societal impact of a universal basic income. How much effort do they put into looking for new jobs? Does failure cause emotional distress? Is the distress due to peer pressure, a yearning for daily contact with a professional social circle, or a decline in social status?

While data from the Gulf cannot provide definitive answers to these important questions – in no small part because life in the Gulf has some idiosyncrasies and cultural norms that may not apply well to Colombia, Kenya, Thailand or the UK – it will surely bolster our understanding of the complex issue of a universal basic income.

The rate at which AI is advancing is breathtaking, and this may force societies into a decision regarding universal basic income before they have a sound understanding of its impact. It is up to Gulf-based researchers to spearhead this kind of analysis, and to make international scholars aware of the treasure trove of data available in our region. The irony for so many people who work in academia is that the lassitude induced by their own comfortable incomes may prevent them from exerting the requisite effort, but that’s a different study altogether.