Breaking down misconceptions on unconditional cash programs

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Economics is not just for experts—it shapes everyday life. That was a key message from Ioana Marinescu and Amy Castro during an event in Penn’s Politics of Well-Being series.

Marinescu and Castro, both associate professors in the School of Social Policy & Practice (SP2), challenged the idea that economics is intimidating and focused on their research. Marinescu spoke about existing universal basic income (UBI) programs and Castro discussed her work studying the impacts of guaranteed income pilots—and broke down some myths around these programs. The event was co-sponsored by SP2 and the Andrea Mitchell Center for the Study of Democracy.

UBI, explained Marinescu, is an unconditional cash transfer to residents within a certain jurisdiction. Castro noted that guaranteed income is similar, but unlike UBI, it is a cash payment for a set period of time and targeted to specific groups, such as single parents or pregnant people. A person in a guaranteed income pilot, for example, might receive $500 per month for one to three years.

These ideas seek to address many social problems—such as food insecurity, housing instability, and lack of health care—that can be traced to insufficient cash. It is also important to understand the impacts of UBI and guaranteed income programs because artificial intelligence and automation will bring profound labor shifts.

“We need to be thinking now about how we shore up vulnerable populations to weather that shift,” said Castro. She said in a rapidly changing world, “we have the chance to reimagine what these systems look like.”

Castro is the director of Penn’s Center for Guaranteed Income Research (CGIR), which has grown to evaluate 40 guaranteed income pilots since its establishment in 2020. These pilots involve 20,000 people across the country, with monthly payments ranging from $300 to $1,000. Castro said one of her guiding research questions is: To what degree does unconditional cash give people more choices and expand their agency?

The field of research on guaranteed income programs has existed for less than a decade and studies are ongoing, Castro said, so there is a lot that researchers still don’t know, such as how employers will respond if initiatives are scaled up. Marinescu noted there are also policy arguments happening over redistribution policies like cash benefits versus pre-distribution policies like raising the minimum wage. She doesn’t see this as an either/or option but a question of the right mix.

Castro noted that unconditional cash programs have been around since the birth of the United States and that in the 1960s and ’70s, both the Black Panthers and Nixon administration supported the concept. Democratic Rep. Bonnie Watson Coleman and former Republican Sen. Mitt Romney both proposed legislation around unconditional cash. “There’s far more support for policies like this than detractors, and our polling research has started to bear that out,” said Castro.

Getting an extra $500 per month, said Castro, is not going to make someone quit their job. Rather, she has seen a pattern of people using cash to catch up on unpaid bills and get their feet under them during the first six months and then shift toward goal setting. In some cases, she said, guaranteed income serves as a bridge from underemployment to full-time employment because it allows people to take time off work to complete training or apply for jobs.

Alaskans who get an unconditional $1,000 to $2,000 per year through the Permanent Fund Dividend did not see a decrease in employment, Marinescu said. She noted that at the scale that UBI has been enacted to date, there also doesn’t seem to be a concern that these programs raise inflation.