A plan does not solve “Take Up” problems – even if everyone is eligible for the UBI, some people still don’t receive transfers, and those who don’t help reduce free riders.

Differential Costs of Take-Up and Self-Targeting A substantial fraction of households who are eligible for a government benefit program do not enroll in the program. Moffitt (2003) and Currie (2006a) summarize an extensive US-based literature studying the reasons for incomplete take-up, including the stigma of receiving benefits, incomplete information, and both the psychic and real costs of applying for programs. A universal basic income may reduce the take-up problem, because the government can in theory send the checks to everyone automatically. This is, of course, easier said than done. Currie (2006b) shows that take-up is incomplete even in programs with universal eligibility in the United States, and a developing country setting raises additional issues. For example, the government would need to have a list of every individual without duplications. Most developing countries do not have such lists, although India has been working over the past decade to issue a unique, unduplicated and biometrically authenticated identity number through the Aadhaar program to each of its more than 1 billion citizens. Even with such a list, a country would need a way of automatically delivering the transfer. In most developing country contexts, most people do not have an address, let alone a bank account, so the idea of “mailing a check to the address on file” would not work. This suggests that even if enrollment is in theory automatic, in practice some take-up decisions and enrollment actions will need to occur. However, having some type of costly take-up can also provide a benefit by helping in the targeting of a program. If the cost/benefit of taking up a program is higher for the rich than for the poor, the poor may be more likely to take up the program. This idea—that having an “ordeal” associated with receiving a program can improve the ability to screen among rich and poor—was developed by Nichols and Zeckhauser (1982), and further studied in the context of take-up decisions by Kleven and Kopczuk (2011). A key result is that one may want to offer a transfer program to all takers, but with the catch that signing up for the program entails a cost that is differentially costly for the rich.