The effort that OpenAI CEO Sam Altman has been working on for a decade to understand how the distribution of free money affects recipients and the broader economy yielded its first big results Monday. OpenResearch found that when it gave some of the poorest Americans $1,000 a month for three years with no strings attached, they put much of the money toward basic needs like food, housing and transportation. But the $36,000 amount wasn’t enough to significantly improve their physical well-being or long-term financial health, the researchers concluded.
Initial results from what OpenResearch, a research lab funded by Altman, describes as the most comprehensive study of “unconditional money” show that while the grants had their benefits and were not squandered on drugs and alcohol, they were hardly a panacea for addressing some of the biggest concerns about income inequality and the prospect of AI and other automation technologies taking jobs.
Some progressive organizations in the United States and elsewhere have advocated combating poverty through forms of unconditional cash, such as universal basic income. Conservative groups have largely criticized the projects as handouts to undeserving people who refuse to work. In two articles published on monday and a third to be published next month, OpenResearch staff and their university collaborators offer data that could help inform the full spectrum of opinion.
OpenResearch, which has also secured funding from organizations including OpenAI and the U.S. government, handed out the unconditional $1,000 transfers from November 2020 through October 2023. The money provided a 40 percent income boost to a diverse group of 1,000 people ages 21 to 40 who started out in households earning about $30,000 annually across 10 counties in Illinois and Texas. As a control group, 2,000 similar people received $50 a month. Participants answered surveys, shared credit reports and had blood tests.
The benefits perceived by those receiving $1,000 a month varied across life stages. Their biggest increase in spending came from giving an average of $22 more a month to others, such as helping needy relatives or giving gifts to friends. People began seeking more health care, such as dental braces, and stocking their refrigerators and pantries better.
Some began considering or starting new businesses. By the third year of the payments, “black recipients were 9 percentage points more likely to report starting or helping to start a business than control group participants, and women were 5 percentage points more likely,” according to one study.
Participants also became more independent, especially those on the lowest incomes, and enjoyed themselves more. The forthcoming paper, which OpenResearch shared a preprint of with WIRED, roughly estimates that 81 cents of every dollar transferred went to increased spending on items like housing, 22 cents went to leisure, and -3 cents to increased borrowing, as recipients took on more car loans and mortgages.
The increased 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 transfer did not improve participants’ financial position over the long term.” Participants saved more money and initially felt better about their financial situation. But they also slightly cut back on work and let the free money fill the gap. For every dollar received from OpenResearch, participants’ income, excluding the free money, fell by at least 12 cents, and total household income fell by at least 21 cents.
“Cash provides flexibility and may increase the ability to make work decisions that fit recipients’ individual circumstances, goals, and values,” the researchers wrote. They may “take longer to find a job, accept a lower-paying position that is more meaningful to them, or simply take a break.”
However, what critics of welfare programmes fear is that, rather than investing in the future, people will end up abandoning work altogether and becoming increasingly dependent on assistance. OpenResearch found in its experiment that “the total amount of work taken out of the market” was “quite substantial”.
Added to this are the findings of the researchers: “without effect” Critics may have plenty to complain about about the money spent on various measures of physical health and well-being, but the authors of the studies say it is important not to forget that participants demonstrated by their spending what they valued most. “Policy makers should take into account the fact that beneficiaries have demonstrated, by their own decisions, that time away from work is something they value highly,” the authors wrote. If anything, OpenResearch has shown that the adage is true: money can buy time.
