In 2020, as the COVID-19 pandemic strained the financial well-being of millions, a groundbreaking experiment took root in Illinois and Texas. The experiment, a study on basic income backed by OpenAI founder Sam Altman, was spearheaded by the OpenResearch pilot program. It enrolled 3,000 participants, all living at or below 300% of the federal poverty line. One thousand of these individuals began receiving $1,000 every month, no strings attached, as part of a real-world test of Universal Basic Income (UBI). The remaining 2,000 participants served as a control group, receiving $50 per month.
Representing a mix of rural, suburban, and urban communities, the participants, with average household incomes under $29,000, provided a diverse sample to study UBI’s potential impacts. Over the next three years, researchers meticulously tracked their experiences across numerous aspects of their lives, from employment and education to health and financial well-being.
The findings, released in 2024, offered a nuanced and compelling look at the potential of UBI to reshape the American social safety net. Researchers documented a range of impacts, both expected and unexpected, as the monthly payments rippled through the lives of the participants.
The Power of Financial Agency
One of the most immediate and significant impacts of the cash transfers was a marked increase in recipients’ sense of financial agency. Freed from the constant pressure of making ends meet, participants reported feeling more in control of their finances. The study revealed that recipients were 12% more likely to plan for large expenses and 5% more likely to report having a budget, demonstrating a newfound ability to think beyond immediate needs and engage in proactive financial planning.
For many, the monthly payments provided a critical entry point into the world of budgeting and financial planning. Jeremiah, who had always lived paycheck to paycheck, described the transformative impact of having a financial cushion: “When I first [saw] the thousand come, it changed my whole perspective… I’m gonna take this as a sign that I need to get more, I need to lock in.” This newfound ability to budget and plan wasn’t just about dollars and cents; it represented a shift in mindset, empowering recipients to envision a more secure future.
The study also delved into how recipients used the cash, revealing telling spending patterns. Not surprisingly, food emerged as a top expenditure, with recipients increasing their monthly food budgets by an average of $67. Transportation costs also saw a significant uptick, with recipients spending an additional $50 per month, suggesting they were better able to afford car repairs, gas, or public transportation – crucial for accessing jobs, education, and healthcare.
Importantly, the study directly addressed the common concern that UBI would lead to complacency and discourage work. The findings painted a different picture. Recipients, in fact, were 6 percentage points more likely to be actively searching for jobs compared to the control group. This suggests that, rather than disincentivizing work, the financial buffer provided by UBI may have empowered recipients to be more selective in their job searches, pursuing opportunities that were a better fit for their skills and aspirations. Lisa, who strategically used the cash to take a lower-paying job with higher growth potential and ultimately secured multiple promotions, exemplifies this trend.
Strengthening Social Bonds
The positive impacts of the cash transfers extended beyond individual recipients, rippling outward to strengthen social safety nets within families and communities. The study revealed a heartwarming trend: recipients significantly increased the financial support they provided to family and friends, spending an average of $22 more each month. This increase was especially pronounced among those who had the lowest incomes at the start of the study, demonstrating how UBI can bolster the financial resilience of entire communities.
Zelda, who had previously relied on loans from relatives, described the empowering shift: “Instead of us borrowing money, my mother-in-law and my sister-in-law borrowed money from us… I’m like, ‘Don’t worry about it, I totally understand. I’ve been there not so long ago, I get it.’” This increased capacity to support loved ones not only highlights the power of UBI to foster a greater sense of financial security but also points to its potential to strengthen social bonds and build community resilience.
A Roof Overhead and Room to Breathe
The OpenResearch study revealed another crucial impact of the monthly payments: recipients were more likely to move, and those moves often led to improvements in their living situations. The data showed that recipients were 10% more likely to move to a different housing unit and 11% more likely to move to a new neighborhood compared to the control group. Additionally, they were 4.2 percentage points more likely to report paying for housing, suggesting the cash assistance may have enabled some to move out of precarious or shared living arrangements.
For some, this meant finally being able to afford their own place. Sarah, who had been living in a crowded and stressful household with her in-laws, used the cash to move into a townhome with her two daughters. “It allowed us to move,” she explained. “If we hadn’t had the money, between my income and my husband’s we would not have been accepted where we are now.” The data also revealed that 7% of Texas recipients and 8.3% of Illinois recipients moved out of state by year three, indicating a greater degree of mobility than national averages.
The increased mobility facilitated by the cash transfers underscores how financial security can translate into greater housing stability and, for some, an escape from precarious or unhealthy living situations.
UBI’s Impact on Entrepreneurship
One of the most striking findings of the OpenResearch study was the significant increase in entrepreneurial activity among recipients. The cash transfers appeared to act as a catalyst, empowering individuals to explore new possibilities and take concrete steps toward launching their own ventures.
Across the board, recipients were 3 percentage points more likely to have purchased materials for a business in the first year of the program, demonstrating a tangible shift in behavior. By the third year of the program, 36% of recipients reported having started or helped start a business, compared to 31% of their counterparts in the control group. This represents a 5 percentage point increase, showcasing a notable difference in entrepreneurial activity between the two groups.
The study also revealed that recipients were more likely to express an interest in entrepreneurship and to possess an entrepreneurial mindset. They were 3 percentage points more likely to report having an idea for a business compared to the control group. This effect grew over time, reaching a 5 percentage point difference—an 8% increase—by the third year. Additionally, researchers found that recipients demonstrated a greater willingness to take financial risks, a key characteristic of successful entrepreneurs.
While the study didn’t track the long-term success of these new ventures, the surge in entrepreneurial interest and activity suggests that UBI has the potential to unlock economic potential and create new pathways to financial stability, allowing individuals to leverage their skills and passions to create their own opportunities.
A Nuanced Landscape
The OpenResearch study painted a complex picture of UBI’s impact on work and well-being. While recipients experienced positive changes in their relationships with work, the long-term effects on health presented a more nuanced story.
One key finding was that the cash transfers did not lead to widespread reductions in work hours. While some individuals, like Bethany, chose to reduce their work hours to focus on caregiving or pursue education, the overall impact on employment was minimal. In fact, the study found that recipients were 6 percentage points more likely to be actively searching for jobs compared to the control group. This suggests that, rather than disincentivizing work, the financial buffer provided by UBI may have empowered recipients to be more selective in their job searches, pursuing opportunities that were a better fit for their skills and aspirations. Lisa, who strategically used the cash to take a lower-paying job with higher growth potential and ultimately secured multiple promotions, exemplifies this trend.
Furthermore, the study analyzed how recipients allocated their time, revealing subtle but significant shifts. Freed from the relentless pressure to make ends meet, recipients spent an average of 20 minutes more per month on their finances. They also reported dedicating more time to driving (likely due to increased flexibility for errands and appointments), social leisure (spending time with loved ones), and home production (having more time for tasks like cooking and home improvement). These findings suggest that UBI can provide a greater sense of control over one’s time, fostering a healthier work-life balance and reducing stress.
While the study didn’t find conclusive evidence of long-term improvements in physical health, it did reveal initial positive impacts on mental well-being and food security. Recipients reported feeling less stressed and anxious, and they initially experienced greater food security. However, these positive impacts appeared to fade somewhat over time, suggesting that while cash assistance can provide a critical buffer, addressing deep-rooted health and economic disparities likely requires a multifaceted approach that goes beyond simply providing cash.
Charting the Future of UBI
The OpenResearch pilot program, while limited in scope and duration, offers a compelling glimpse into the potential of UBI to reshape the American social safety net. While the study doesn’t provide definitive answers about the feasibility or impact of a nationwide UBI program, its findings provide a wealth of valuable data and insights to inform future discussions and policy decisions.
The study’s most significant contribution lies in its demonstration of UBI’s power to foster financial agency, support entrepreneurship, and improve overall well-being. The monthly payments, far from discouraging work, empowered recipients to be more selective in their job searches, pursue education and training opportunities, and even launch their own businesses.
Moving forward, the challenge lies in translating these promising findings into effective and sustainable policies. Further research is needed to explore different UBI models, funding mechanisms, and implementation strategies. Crucially, policymakers must consider the complex interplay between UBI and existing social programs, ensuring that any future initiatives complement and enhance, rather than replace, existing safety nets.
The OpenResearch pilot program serves as a powerful reminder that innovative solutions to poverty and inequality are within reach. By embracing a data-driven approach, engaging in open and honest dialogue, and prioritizing the well-being of all citizens, we can build a more equitable and prosperous future for America.
