These research studies show that even though there may be costs
to these programs, long-term societal benefits, such as from health
and education outcomes, may justify the costs. It is important to
keep in mind that the subjects in all three research studies were
low-income wage-earners. The 1970s experiments also took place
during a period of stagflation—high unemployment and high
inflation—and so the outcomes observed may not be as directly
representative of today’s economic environment or of a UBI program.
There has been a resurgence of interest in UBI, attributable to
the concern for widespread labor redundancies due to technologies.
New experiments are underway, this time with support also from
tech and venture capital communities. They include short-term
studies in Finland, Ontario, India, and the Netherlands; Kenya
is undertaking an experiment with a much longer duration.[ 14]
There does not appear to be a practical way to deliver a sat-
isfactory proof of concept for UBI; however, these and other
experiments underway may give insights that can be helpful.
Even so, a well-designed UBI program supplemented by
education incentives may be better suited for situations of high
unemployment—at least in early phases of increasing unemployment—if the costs are expected to be reasonable. In an extreme
scenario of high long-term unemployment, though, it is questionable
whether UBI or other safety-net programs could help. Indeed, in
such a scenario, the whole idea of money as a reward for “labor”
may need to be reconsidered.
It is important to note that the discussion on UBI is not intended
to make a case for deficit spending. Uncontrolled deficit spending
will inevitably destroy the national currency. Attention still needs
to be paid to a country’s finances, as always, within national and
internationally accepted parameters such as relative debt-to-GDP
benchmarks, responsible budgets, and so forth.
It is important to keep in mind that the work automation and
the climate change phenomena are unfolding in the same time
horizon; and in evaluating one, the potential spill-over from the
other to amplify (or moderate) the severity of outcomes should
not be ignored.
The Role of the Actuary
Why is UBI important for actuaries? From a strictly professional
perspective, UBI is perhaps only of tangential interest to actuaries.
It is mostly in the context of consideration of a risk scenario that
the concept is pertinent.
A large part of the renewed interest in UBI centers around
concerns of widespread unemployment from new, powerful
technologies. There are at least three reasons why this outlook
would be of interest to actuaries:
1. As risk professionals, technological sophistication and its economic fallout is an emerging societal risk that may have a profound impact on the economy; actuaries can help bring a better
understanding of this risk;
2. The topic is of public concern; media attention to it as well as the
changes entering the economy and workplaces are generating
questions from an anxious public; and
3. It will likely affect us—whether in our work or in other ways.
Our employers are probably looking at the business merits and
impact on industry’s products of the emerging technologies. As
an example, consider what new actuarial issues would need to be
addressed in developing a “bitcoins universal life” policy, or how
the so-called insurtech innovations will impact us.[ 15]
While our profession is small, and even as we remain well
placed in our traditional areas of practice, the profession may
want to consider whether we have the skills to contribute to this
dialogue and on other relevant societal issues—and if so, whether
SHIRAZ JETHA, MAAA, FSA, CERA, is an actuary in Olympia,
Washington. He can be reached at firstname.lastname@example.org. The
author is grateful to Paul H. Grace, FFA, for his support and peer
review of this article.
[ 1] The Future of Employment: How
Susceptible Are Jobs to
Computerisation?; Carl B. Frey and
Michael A. Osborne; Oxford Martin
Programme on Technology and
Employment; Sept. 17, 2013.
[ 2] The Speed of Disruption and Impact on
Business—The Fourth Industrial
Revolution Has Begun; Charlie
Kingdollar; Gen Re Research; April
[ 3] “Will automation take away all our
jobs?”; TEDxCambridge; September
[ 4] “The robot that takes your job should
pay taxes, says Bill Gates”; Quartz; Feb.
[ 5] In an October 2012 speech at the
Bargeldsymposium of the Deutsche
Bundesbank, “The Role of Money in a
Market Economy,” Peter Praet, a
member of the executive board of
European Central Bank, presents a
hypothetical evolutionary, first to
commodity-based and then onto fiat
money systems. Accessed from www.
html/ sp121010.en.html on May 23, 2017.
[ 6] “The Future of Money”; Neha Narula;
TED@BCG Paris; May 2016. Accessed
the_future_of_money/transcript on May
[ 7] “Where Did the Federal Reserve Get All
that Money?”; Stephanie Kelton; New
Economic Perspectives; March 30, 2012.
[ 8] Quarterly Report on Federal Reserve
Balance Sheet Developments; Table 1;
Board of Governors of the Federal
Reserve System; May 2017.
[ 9] See, for example, https://en.wikipedia.
[ 10] “Bitcoin: What is it?”; Khan Academy.
[ 11] Job Satisfaction: 2014 Edition; The
Conference Board; June 2014.
[ 12] Stephen J. Dubner, “Is the World Ready
for a Guaranteed Basic Income?”
Freakonomics Radio, April 13, 2016.
[ 13] EI TC and Child Tax Credit Promote
Work, Reduce Poverty, and Support
Children’s Development, Research Finds;
Center on Budget and Policy Priorities;
Oct. 1, 2015.
[ 14] “The Future of Not Working”; The New
York Times Magazine; Feb. 23, 2017.
[ 15] Digital disruption in insurance: Cutting
through the noise; McKinsey; March