UBI liberates individuals from deprivation – fuels societal positive feedback loop of trust key to societal functioning – Finland proves

[Tera, Jukka Maksimainen, James Manyika, and Navjot Singh, “An experiment to inform universal basic income,” McKinsey and Company, September 15, 2020, https://www.mckinsey.com/industries/social-sector/our-insights/an-experiment-to-inform-universal-basic-income, accessed June 25, 2023, GDS-LL]

Positive feedback loops

The basic income also appears to have had an effect on the dynamic cause-and-effect loops that trap some people in deprivation while others thrive on multiple dimensions. In other words, a relatively small positive intervention seems to have generated multiple mutually reinforcing positive effects. These dynamics could completely change the typical calculus of cost–benefit analyses. The Finnish study finds that the basic income unlocked at least two virtuous cycles: one that operates at the level of individuals (and their families) and another at the level of society.

At the individual level, a monthly, guaranteed, and entirely unconditional cash sum had a liberating effect on many recipients.6 Better feelings of health, happiness, cognitive abilities, and financial security seem to have instilled a sense of confidence that encouraged the recipients to branch out and to seek more expansive opportunities: unpaid work, training, or employment. These activities, in turn, fueled more positive feelings. The recipients’ trust in their own abilities and their positive outlook seem to have acted as self-fulfilling prophecies. In contrast, research has found that people experiencing scarcity and uncertainty tend to suffer from reduced bandwidth, shortened time horizons, and feelings of inadequacy or helplessness.7

At a societal level, Finland’s basic-income experiment promoted another interesting virtuous cycle, around trust. Trust in others and institutions is a fundamental building block of well-functioning societies. When researchers look for determinants of both well-being and economic prosperity, trust regularly crops up as a key variable. Indeed, Finland is a case in point: it ranks at the top of global measures of happiness8 and also boasts the second-highest rating on trust in other people, after Norway (Exhibit 3).