A Basic Income Trilemma: Affordability, Adequacy, and the Advantages of Radically Simplified Welfare

Abstract

As basic income (BI) has ascended the policy agenda, so proposals have come under increasing scrutiny for their affordability and adequacy for meeting need. One common objection to BI has been that it is impossible to design a scheme that simultaneously conforms to these two criteria. In this article, I develop a conceptual framework for analysing the trade-offs that afflict BI policy design. I suggest that while the idea of a policy dilemma between affordability and adequacy does indeed afflict ‘full’ BI schemes, it is possible to design an affordable and adequate ‘partial’ BI scheme. However, this comes at the cost of (at least partly) forfeiting some key advantages that motivate interest in BI in the first place, since these only arise as a consequence of the elimination of means testing and related conditionality from the welfare system. Thus, BI proponents face a three-way trade-off in policy design between affordability, adequacy, and securing the full advantages of BI as a radical simplification of existing welfare policy. The trilemma is illustrated with reference to original microsimulation evidence for the UK, which demonstrates that at most two of the three criteria can be achieved in a single scheme.

Between universalism and targeting: Exploring policy pathways for an Australian Basic Income

“…Our approach sits between an NIT and UBI model, as the payment is reduced with income, but some payment would be received by a large majority of people including most net contributors. This discussion highlights the complexities of designing any real-world BI (see Martinelli, 2019;Standing, 2017). Putting dynamic effects to one side, Martinelli (2019) argues that 'BI advocates face an irreconcilable trilemma in policy design, between a) affordability/controlling cost, b) adequacy/meeting need, and c) securing the advantages of a radically simplified welfare system' (p. 3).…”

“…This discussion highlights the complexities of designing any real-world BI (see Martinelli, 2019;Standing, 2017). Putting dynamic effects to one side, Martinelli (2019) argues that 'BI advocates face an irreconcilable trilemma in policy design, between a) affordability/controlling cost, b) adequacy/meeting need, and c) securing the advantages of a radically simplified welfare system' (p. 3). The 'three horns' of Martinelli's (2019) trilemma underscore the difficult policy trade-offs that must be considered in relation to any BI proposal (p. 20).…”

“…Putting dynamic effects to one side, Martinelli (2019) argues that ‘BI advocates face an irreconcilable trilemma in policy design, between a) affordability/controlling cost, b) adequacy/meeting need, and c) securing the advantages of a radically simplified welfare system’ (p. 3). The ‘three horns’ of Martinelli’s (2019) trilemma underscore the difficult policy trade-offs that must be considered in relation to any BI proposal (p. 20). Here, we are concerned with identifying the nature and scale of these trade-offs, taking current policy settings as a starting point, to assess the possibilities and implications of moving towards universalism.…”

The Political Economy of Governance Capacity and Institutional Change: The Case of Basic Income Security Reform in European Welfare States

“…The UK can be considered as a relevant counterfactual: in Britain there has been a broadly negative reception of basic income within the policy establishment. The effect of deep political bias against unconditional working age welfare, along with deep fiscal constraints, entail highly conservative projections about basic income levels, funding, and prospects (Haagh 2019a; Martinelli, forthcoming).…”

A Bayesian Structural Time Series Analysis of the Effect of Basic Income on Crime: Evidence From the Alaska Permanent Fund

“…Under a partial basic income, the interaction with the tax and welfare system becomes particularly relevant and provides a link to the negative income tax experiments carried out between 1968 and 1982 in the United States and Canada (Hum & Simpson, 1993; Robins, 1985). Martinelli (2019) assesses the trade‐off between adequacy (meeting individuals’ needs) and affordability of partial schemes, with a particular focus on how the purported benefits of a basic income vary with its generosity.…”