BMA: Universal income – the answer to poverty, insecurity & health inequality?

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By: Leong Sze Hian

I refer to the editorial article “A universal basic income: the answer to poverty, insecurity, and health inequality?” (British Medical Journal, Dec 12).

It states that “For four years in the mid-1970s an unusual experiment took place in the small Canadian town of Dauphin. Statistically significant benefits for those who took part included fewer physician contacts related to mental health and fewer hospital admissions for “accident and injury.”

Mental health diagnoses in Dauphin also fell. Once the experiment ended, these public health benefits evaporated.1 What was the treatment being tested? It was what has become known as a basic income—a regular, unconditional payment made to each and every citizen.

This ground breaking experiment, an early randomised trial in the social policy sphere, ran out of money before full statistical analysis after a loss of political interest.

The link between inequality and poor health outcomes is long established.2 The actual mechanisms behind that link are less understood.

The data from the Dauphin study, re-examined by a team from the University of Manitoba in the 2000s, suggest there might be an association between income insecurity(no minimum wage in Singapore – as low as $5 an hour!) and poorer health.1

All adults in Dauphin earning below $13 800 (£11 000; €13 000) were eligible for thegrant of $4800 a year (kind of like Workfare in Singapore). The researchers compared Dauphin with other similar towns and looked for relative improvements in outcomes using public health and schooling data from the time.

Recently, there have been increasing calls for dialogue on a universal basic income (UBI) from political parties (Workers Party, etc) , think tanks (including the Royal Society for the Encouragement of Arts, Manufactures, and Commerce (RSA)), civic activists (civil society and activists in Singapore), trade unions, and leading entrepreneurs such as Tesla chief executive Elon Musk.

These calls are a response to growing income insecurity, some sense that welfare systems may be failing (ComCare gave $130 million to 87,000 beneficiaries – an average of $4.09 per day per beneficiary!) , and as a preparation for the potential effects of automation and artificial intelligence on employment prospects (Singapore has arguably the most liberal foreign labour policies in the world!) in industries that might be better served by machines.3 UBI-style pilots are planned in Finland, the Netherlands, and Canada as a potential answer to these questions and concerns.4

While the Dauphin study included just the poorest residents of one small city, if we assume that it indicates a causal link between extra cash (a study on income and expenditure in Singapore indicated that about 30 per cent of resident households had higher expenditure than income) and better health then three effects could have been in play.

Firstly, the cash sum itself would have reduced economic inequality directly. Secondly, the unconditional nature of the payment could have reduced income insecurity. Thirdly, there is a positive social multiplier whereby positive behaviours associated with greater financial security tend to reinforce one another—for example, more teenagers staying on in school because they see their peers doing likewise.

Taken together, these effects could mean that financial insecurity is a key vector through which inequality (Singapore has the 2nd highest Gini amongst developed and developing countries on the world!) worsens health outcomes for the least advantaged. It is certainly a serviceable hypothesis.

With hawker centre cleaners getting a median basic wage of only $1,000 a month in June 2015, despite it being announced in 2012 that the target was to hit $1,200 in 2015 – and now pushing back the $1,200 target to 2019 – perhaps it is high time that we consider implementing a minimum wage of say $7 an hour in Singapore.