OpenAI CEO Sam Altman’s decade-long effort to understand how handing out free cash affects recipients and the economy as a whole saw its first major win on Monday. Open Research gave the poorest Americans $1,000 a month for three years, no strings attached, and found that they spent much of the money on basic needs like food, housing, and transportation. But the $36,000 amount wasn’t enough to significantly improve their physical health or long-term financial well-being, the researchers concluded.
Early findings from what Open Research, a research institute funded by Altman, calls the most comprehensive study of “unconditional cash,” found that while the grants had benefits and weren’t used for things like drugs or alcohol, they were no panacea for addressing some of the biggest concerns about income inequality and the potential for AI and other automation technologies to take over jobs.
Some progressive groups in the United States and elsewhere advocate fighting poverty through unconditional cash transfers like a universal basic income. Conservative groups have largely panned such projects as handouts to undeserving people who refuse to work. In two papers published Monday and a third to be published next month, Open Research staff and university collaborators provide data that helps support the different views.
Open Research, also funded by organizations such as Open AI and the US government, provided $1,000 unconditionally between November 2020 and October 2023. The cash increased the income of a diverse group of 1,000 people between the ages of 21 and 40, from households earning around $30,000 a year, by 40%, living in 10 counties each in Illinois and Texas. As a control group, 2,000 people with similar characteristics received $50 a month. Participants completed surveys, shared their credit reports, and took blood tests.
The benefits felt by people who received $1,000 per month varied across different aspects of their lives. The biggest increase in spending was giving to others, on average $22 more per month, by helping relatives in need and giving gifts to friends. People began to seek out health care such as orthodontic treatment and to stock up on refrigerators and food pantries.
Some even considered or began starting their own businesses: One study found that by the third year after receiving the grant, “black recipients were 9 percentage points more likely than control participants to report having started or helped start a business, and women were 5 percentage points more likely.”
Participants, especially those who started off on the lowest incomes, enjoyed a better time living on their own.A forthcoming paper, a draft version of which OpenResearch shared with WIRED, estimates that about 81 cents of every dollar transferred went to increased spending on things like housing, 22 cents on leisure, and negative 3 cents on increased borrowing through recipients’ increased auto and mortgage loans.
The increase in debt reduced participants’ net worth over the three years. Combined with little change in access to credit, bankruptcies, and foreclosures, the researchers concluded that “the transition did not improve participants’ long-term financial situation.” People did put more money into savings and initially felt better about their financial situation. But they also worked a bit less and made up the gap with free cash. For every dollar they received from OpenResearch, participants’ income, excluding free money, fell by at least 12 cents, and their household income fell by at least 21 cents.
“Cash may provide flexibility and increase recipients’ agency in making employment decisions that fit their personal circumstances, goals, and values,” the researchers wrote. Recipients might “take more time to find a job, take a more meaningful lower-wage job, or simply take time off.”
But critics of the program fear that rather than investing in their future, people will eventually give up working altogether and become increasingly dependent on assistance. Open Research found that “the total amount of work taken out of the market” in the experiment was “substantial.”
Add in the fact that the researchers concluded that the cash had “no effect” on some measures of physical health and well-being, and critics may be incensed. But the study authors say it’s important to remember that participants indicated what they valued most with their spending. “Policymakers should take into account the fact that recipients, by their own choice, indicated that time off work was something they highly valued,” the authors write. If there’s one thing OpenResearch has proven true, it’s the adage that “money buys time.”
