We still know too little about cash transfers. One solution is to build an evidence base by studying the Alaska Permanent Fund Dividend program that has been in place since 1982. With this case, we have 35 years' worth of data to investigate and cash transfer amounts that, on average, exceed the value of Food Stamps to a family of four. What’s more, because the amount of the transfer varies year-to-year and is determined at the state level, it mimics the random assignment in a randomized control trial. It is exogenous to the individual Alaskan’s behavior and the local economy. The Alaskan population is large and diverse, and the state has high-quality data like vital registries, tax data, and crime registries.
The Alaska Permanent Fund Dividend serves as a natural experiment.
Lessons from this natural experiment complement the smaller, randomized control trials of cash transfers, such as the Stockton Economic Empowerment Demonstration and the Y Combinator research basic income experiment, which are currently underway or planned.
Learn more about our current research.
What is Universal Basic Income?
Universal Basic Income (UBI) is a policy whereby the government gives an unconditional, periodic payment to eligible residents. It is sometimes referred to as “guaranteed minimum income” or “income guarantee.” Typically, UBI proposals and policy ideas include consistent monthly payments – enough money for an individual or family to live on for an entire year. The universal nature of UBI means they are unconditional, and recipients do not need to qualify under an income threshold.
Is Alaska’s Permanent Fund Dividend a Universal Basic Income?
No, there are important differences between a PFD and a UBI.
Alaska’s Permanent Fund Dividend is not a “basic income” in the sense that it is generally not enough money for an individual or family to live on for an entire year. The amount of the dividend is paid out annually rather than monthly, and the size varies from year to year. It is also not funded by taxes but rather from the returns on the state’s invested oil revenues. The general consensus in Alaska is that this policy is not a UBI, and some people instead view it as an ownership share of their state’s natural resources.
What can Alaska’s PFD tell us about Universal Basic Income?
Alaska’s PFD is one of the only long-standing examples of a universal cash transfer. Studying the program allows us to better understand how consistent and non-means-tested cash impacts individuals' and families' lives. In particular, the year-to-year variation provides the opportunity for us to analyze how outcomes differ based on the magnitude of the dividend. Considering it is not means tested, we can identify how the effects of the cash vary by income group and other demographics.
Learn more about current research at the Cash Transfer Lab..