By Abhijit V. Banerjee and Esther Duflo

The rise of artificial intelligence has made the conversation about a universal basic income (UBI) more urgent than ever. There are various predictions about what robots and automation and large language models will do to the availability of good jobs. But Elon Musk, Sam Altman and other tech moguls share the concern that a large fraction of jobs currently performed by humans will soon be turned over to machines. The idea behind a UBI is to give everyone a guaranteed income that is enough to live on.

One critical question is whether an inflow of unearned cash would cause people to become lazy and stop working altogether. Standard economic models predict a negative "income effect on labor supply," and policymakers across the world very publicly worry about it.

Behavioral economists have also flagged the concern that if people receive a guaranteed income, they will choose to spend it on leisure even when it is not in their long-term interest. By working today, they would accumulate useful experience and skills they could parlay into better jobs in the future. But it may be too tempting to take the time off now and forgo the opportunity for self-improvement.

In recent years, a number of countries have introduced conditional cash transfer $(CCT)$ programs, making it possible for economists to study the effects of simply giving people money. In 2010, 27 low- and middle-income countries had a CCT program; by 2016, the number had reached 64. These programs had no work requirement, although they had other requirements, such as sending children to school or requiring pregnant mothers to have their babies in a hospital.

CCT programs in low-income countries aren't directly comparable to UBI in a wealthy country like the U.S., but they can shed light on the question of whether an inflow of unearned cash causes people to become lazy. Our study of data from seven programs in six countries found no evidence that it does. People who receive a cash transfer are no less likely to work, and work just as many hours, as those who don't.

These surprising results were replicated in a 2024 paper from the National Bureau of Economic Research that looked at cash transfers in middle- and low-income countries. On average, transfers actually lead to increases in labor-force participation and days of work.

Why does the evidence contradict the standard economic models? The logic of standard economics is that if you are richer, you would want to consume more of everything you enjoy, including leisure. But being richer also opens up economic opportunities. You could use your extra money to buy a machine that makes you more productive and therefore encourages longer hours, or some fertilizer that takes time and effort to put in the ground.

Being a little less poor could also make you less despondent or panicked about money, and that can make you want to try a bit more. In a recent experiment in India, some workers were randomly paid early for work already done. The researchers found that this change alone -- not being paid extra, just having some cash in hand -- made the workers 7% more productive than those who were paid a few days later, and less prone to make errors.

In "graduation programs" pioneered by BRAC, a development NGO in Bangladesh, the poorest of the poor are given a productive asset -- a cow, a sewing machine or even honeybees -- and some initial economic, technical and emotional support, to help them "graduate" from poverty. In general, the beneficiaries of such programs around the world work the same amount, or more, than nonbeneficiaries.

In an experiment in Ghana, we offered people an opportunity to make cloth bags for pay as a side gig. Interestingly, poor people who had already benefited from a graduation program were at least as likely as others to take up our offer, despite being busier to start with. They also earned more money from bag-making activities, mainly because they took on more complex projects and made fewer errors.

All these studies tell an important and coherent story. There is a lot of involuntary unemployment or underemployment in rural areas in poor countries, and this unused capacity can be unlocked when resources are poured in. Social-transfer programs -- the handing out of cash to poor communities -- have the potential to have large multiplier effects.

From the point of view of supporters of a UBI in wealthy countries, this is encouraging. Not only don't people work less when they are guaranteed an income, they might actually put in more effort at work. And the fact that they have more money to spend leads to the creation of more jobs.

This suggests we don't need to worry so much about the typical economist's concern that a UBI would make people lazy. Instead, we need to start thinking about how to satisfy the human need for meaningful work in a future where more and more jobs are done by AI.

Abhijit V. Banerjee and Esther Duflo are professors of economics at MIT and co-recipients of the Nobel Prize in Economics in 2019. This essay is adapted from the new, revised edition of their book "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty," which will be published on Sept. 16 by PublicAffairs.

(END) Dow Jones Newswires

September 11, 2025 13:00 ET (17:00 GMT)

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