Benefits of Universal Basic Income for People with Mental Illness

Universal income: a guaranteed livable income could take poverty out of the picture

I don’t have the economics background to speak to the feasibility of universal basic income, so I won’t try; however, I did want to explore the potential benefits for people with mental illness.

What universal basic income is

While various implementations have been proposed, at its core, universal basic income (UBI) has several basic characteristics. It is:

  • universally given to all
  • permanent or long-term
  • payments occur at regular intervals
  • there are no conditions for payments (such as means testing)
  • payments are distributed to individuals

UBI recently gained media attention when it was proposed by Democratic presidential candidate Andrew Yang during the 2020 leadership race. He promised a $1000 per month “freedom dividend” as a benefit for all.

The idea isn’t new, though, and appeared in Sir Thomas More’s Utopia in the 16th century. Dr. Martin Luther King, Jr,. believed that a basic income was a necessity that would help to reduce poverty, regardless of race, religion or social class. In Dr. King’s last book before his assassination, he wrote:

“I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

Martin Luther King, Jr., Where Do We Go from Here: Chaos or Community?

One concern that’s sometimes raised about UBI is that the money would go towards vices such as alcohol and tobacco. However, the World Bank reviewed a number of studies and found that this was not the case.

The mental health perspective

Support for UBI from a mental health perspective comes from multiple perspectives, ranging from the Canadian Mental Health Association, Canada’s major mental health non-profit organization, to the anti-psychiatry-leaning site Mad in America.

UBI may help to prevent mental illness to some extent by influencing the social determinants of health. The stress associated with poverty is an important risk factor for mental illness, and guaranteeing people an income to meet basic needs would allow people to shift from a focus on surviving to finding ways to meet higher-level needs in Maslow’s hierarchy of human needs.

For people with mental illness who are able to work, having the safety net of UBI could be important if illness necessitated a period of time off since many workers don’t have much (if any) paid sick time. I used to work at a well-paying unionized job with pretty good sick-time benefits, but when I was hospitalized, I ran out of sick time and had to take unpaid leave.

UBI could also alleviate some of the worries about what might happen if the illness progresses to the point that working just isn’t possible. Applying for disability benefits can be a stressful process, particularly if an appeal is needed. My own application process definitely has certainly had a negative impact on my mental health.

Luckily, my application was approved, but my total monthly benefit is less than the average monthly benefit in the city where I live. If I hadn’t paid off the mortgage on my home while I was still working, I would have to a) move out of my city to somewhere that rent is cheaper, and b) rely on food banks to eat.

Work on a limited basis

For some people with mental illness, regular employment might be out of reach, but working on a casual basis could allow them to remain in the workforce longer. UBI could make that feasible from a financial perspective.

Currently, people who are on disability benefits typically have limited amounts of income they can earn before they’re cut off of disability entirely. This can act as a disincentive to work for people who may be able to work some of those time, but whose illnesses aren’t stable enough to risk going off of benefits. Even if I were to earn the amount that CPP allows me to earn in employment income in a year before they would decide I’m not actually disabled, I would still be living in poverty.

With universal basic income, that would no longer be an issue.

Moving forward

Universal basic income isn’t entirely untested. As an example, for years, Canada had Family Allowance, which was a monthly payment per child, regardless of the parents’ income.

When people live in poverty or are at risk of poverty, health suffers, including mental health. UBI could be a good way to alleviate suffering for many, including people with chronic mental illness. I hope that it’s something that governments have the courage to explore.

What are your thoughts on universal basic income?


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53 thoughts on “Benefits of Universal Basic Income for People with Mental Illness”

  1. What an interesting idea! My question is who funds such a project? Because currently there has to be someone providing the money to let this idea go forth…I suppose. It could be that I don’t fully understand it, I am fairly bad at finances in any case. Even so I like it, it seems that there would be no worry about someone ;being without any money and ought to (in an ideal world) take care of problems such as homelessness (from lack of money) and poverty (to a degree) because there would always be money in everyone’s pocket. The down side (as I see it) are that, at least in America, people would take advantage, although if it were for everyone, maybe that would cease to be a factor. IF one could spend it on anything or however they wanted to. Of course adjustments to the cost of living would have to be made too – $1000 is not a lot, not in these days of increasing cost for everything. Maybe we would be on the verge of a ‘Star Trek’ scenario. I presume that money would cease to be important, because everyone would have enough and be provided for. What a world that would be!

    1. Andrew Yang’s suggested amount was $1000, but I think the pure idea of universal basic income is an amount that’s enough to cover the basics of living. I didn’t really look into the details of where the money would come from, but it sounds like there are people who know their stuff economically who support it. I think the idea is it’s to some extent a redistribution of wealth. And I think part of the premise with government COVID relief is that adding liquidity helps to keep the economy moving. With UBI being universal, that’s a lot cheaper to administer than the current mishmash of different social programs.

        1. That low an amount seems like it would help low income earners, but it wouldn’t be enough to take advantage of bureaucracy savings in terms of existing welfare benefit programs.

    2. All the UBI does is place a floor on poverty: money, especially for luxury goods, will always be important, but the market then will actually be stronger because there is more spending power in the economy.
      That is a major argument many are putting forward for it.

  2. Hadn’t heard of this. Thanks for info.

    In the US, when government money enters a marketplace, costs skyrocket. Example: higher education. Since federal government offers financial aid, textbook costs have risen astronomically. Even used books can be more than $100/ea. Tuition has also skyrocketed, but only the richest people pay the sticker price. Tuition is discounted the less money the family makes. Not so with textbook prices.

    So would basic goods and services experience upward inflationary pressures if UBI were implemented? If so, that would render the free money worth less (buying power decreases, as happens with federal subsidies of college education).

    Just a thought. We are no economist.

    1. I wonder if it’s perhaps the way the US government enters the market that’s the issue. Higher education is partly subsidized by the government in Canada, and government runs the student loans, but costs here are wayyyyyyy lower than in the US.

    2. My question to Scott Santens in this regard (I did study economic policy, but not finance as a specialist, which he, a UBI advocate, has) came back with a reply that I’ve seen from other heterodox economists: price inflation is not a likely outcome. I forget the exact reasoning, because some Austrian school economists disagree. But what I do recall is that food, clothing, etc are different from luxury goods, in that the demand is not elastic: it does not change with the amount of money in circulation, hence prices of basic consumer goods would not increase. A basic income would never be enough to increase the cost of luxury goods, since people gaining only the UBI, like writers, have no spare money to spend on luxury goods.

      1. To go off on a bit of a tangent, buying power has been one of the arguments in Canada for a national pharmacare system, as it would likely bring down drug prices, which are already lower than US prices.

        1. Yup, buying power is crucial in a market economy, due to the multiplier effect (a dollar has more ‘value’ the more times it is used to make transactions), so dollars need to go into hands that will spend rather than hoard them. This was one of the big issues during the Great Depression, and about which John Maynard Keynes wrote fairly extensively (1936).

            1. Oh, his writing is very interesting! Especially chapters 25/26 of his Revolution (I forget the whole title): he writes with a sarcastic wit even better than the typical British humor, so I actually enjoyed reading his major work (Theory of interest, inflation and employment…). I can find my notes, if that helps?

            2. Excellent! I’m looking forward to your thoughts on it (and I’ll check to see if I reviewed it properly, or if my notes are just pell-mell up there, or not at all)!

            3. I found one of my reviews of the book from some years after I suppose I posted my notes elsewhere. I do seem to recall posting my notes because I thought that would save someone from having to read the entire book.
              Can’t seem to find them at the moment, but I remember page numbers, etc.

  3. UBI has seemed interesting to me for a while. Milton Freedman, who was usually very anti-state intervention, was in favour of it instead of the complex benefits system most Western countries have which put the pressure on the needy to apply for their own benefits. He wanted it administered as a negative income tax, so if you don’t pay tax, the government pays YOU tax, and everyone else gets it as a tax credit.

      1. Right and at least in the US, we weren’t founded on a “good, fair, and equitable system.” It was set up for the rich white man, which makes for a lot of trouble for everyone else (which constitutes the majority).

  4. I wonder if this could be a little like PIP (personal independence payment) in the UK. There are two components to being eligible I think it is mobility and daily activities of living and there is a basic payment and enhanced payment rate. You can continue to work full-time and make a claim or I believe claim along side other disability benefits. The aim is to help with the higher cost of living with a disability.

    I feel that being able to work without this affecting the payment is empowering and it allows a person to try at a pace that suits them. I think needing to be assessed and meet a points criteria can cause difficulties especially and can feel invalidating if you are refused. You are not sick enough. So how would a criteria based assessment work? Our PIP refusal rates are high with many having to appeal and this seems to cause a lot of added stress.

    The amount of payment here would not be enough to live on alone but it is not expected that it is the sole income.

    1. My understanding is that universal basic income is a replacement for the existing patchwork of benefit schemes, and the amount would be sufficient to live on. With schemes like PIP making it so hard for people who are applying and not necessarily getting approved, and then loads of bureaucracy being needed to administer it, universal basic income would do away with all of that mess, because everyone would get it.

      1. Ahh sorry for some reason I read it as everyone with mental health needs would get it. I remembered reading about Finland trialling this and I saw that Germany are doing a 3 year trial with a more liveable amount of over a thousand Euros.

        It would be great to replace the current benefits system which is complicated and difficult to navigate.

        1. I’m guessing the cost of administering benefits that people have to apply and qualify for is fairly high. It brings to mind Canada’s approach to COVID emergency benefits. The government was able to get money to people quickly and efficiently because they took the approach of just approving essentially anyone who applied; they decided it worked best to just do that and then worry later about tracking down people who didn’t actually qualify.

  5. Our benefits system was mind-blowingly confusing so they’ve brought in what’s called Universal Credit. But it’s not the same thing you’re talking about. It’s just a one-stop-shop for all benefits – apart from PIP, which is run separately. I had to appeal the first time as the guy who sent the refusal letter wrote “I don’t think you are depressed or anxious.” I wrote back that he should come and sit with me at 3 in the morning when I’m exhausted, hearing voices, anxious and want to jump from my twelfth floor window. Or come round one day unannounced and see me in my pjs, with ratty hair, sitting on the floor in tears because I’ve had yet another a panic attack or just woken from night terrors!

    I got the PIP for ten years now! Don’t get me wrong, of course they have to assess people because for many years there was so much benefit fraud. And I know many people who’ve abused the system.

  6. Exactly, exactly, and exactly. Thank you, Ashley.
    There have been UBI experiments in many places, like California, India, Finland, and other smaller pilots. All found that people spent the money on basic necessities, and small businesses. The vast majority of recipients worked, and all reported lower stress levels, and showed better medical outcomes.

  7. I really wish I had UBI… state financial aid isn’t accessible to me as I’ve savings but no income for this prolonged period of time since I burned out is hampering my recovery.

  8. I’m not strong in Economics myself, but my guess is that UBI would solve a lot more problems than it could conceivably create.

    I found myself stinging at the suggestion that the money would go toward vices such as “cigarettes and alcohol.” From my perspective, that amounts to little more than classism and meritocracy. People who have never been poor have a way of attributing people’s poverty to moral shortcoming of some kind. UBI could conceivably alleviate that dynamic.

    On a personal note, I’m on Social Security Retirement Income, and if I didn’t get that monthly allotment I am certain I would be sleeping in a gutter somewhere. UBI might have a similarly stabilizing effect. People who have goals, dreams, aspirations need somewhere to start to make them happen. And Zero is not usually a strong starting point.

      1. That’s a very decent article. I guess I have a bit of a problem with why that would seem “surprising” in the first place. They said that the 50 people did NOT have drug or alcohol problems or serious mental health issues; they were homeless (for crying out loud) why would they NOT have used the money prudently in order to get a roof over their heads? While it may be a “beautiful” surprise, it baffles me that anyone was even surprised.

        Also, I have known people on the streets who DID have costly drug problems, and who received considerably less money than $7500 – in one case, $1800 and in another case, about $2500 — and DESPITE their issues with substances, they STILL managed to get off the streets on that money.

        I understand that the surprise element emerges from social stigma, and from preconceptions about the homeless experience. At the same time, it depresses me that anyone would be surprised that money given to homeless people was used wisely. Homeless people are, after all, people. Some people use money wisely and some don’t, whether homeless or not. But I guarantee you, it took a lot less than $1000 for ME to get off the streets when the time come. But who believed in me enough to help, and how long did I have to wait?

        I really don’t know if homeless rights activism will ever take off. The two major fallacies still prevail: (1) That homeless people are simply human, and not a separate caste or category on account of their homelessness, and (2) that their “problem” is something OTHER than the homeless condition.

        But I’m in a bad mood and somewhat disgruntled, so don’t mind me. Thanks for letting me rant. I’m grateful that they gave 50 homeless people a chance.

        1. Nothing wrong with ranting. There’s a whole lot of ignorance out there, and one study certainly isn’t going to change public opinion, but if it nudges policy-makers a little bit in the right direction so that 50 people becomes more than 50 people, that’s something.

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