Ppt: The financial feasibility of basic income in Belgium

A preliminary assessment of the financial feasibility of basic income

in Belgium

Master’s thesis

Emily Van de Walle

Overview

1. Basic

income

3. Conclusion

2. Financial feasibility

1

Basic income “A basic income is an income unconditionally granted to all

on an individual basis, without means test or work requirement” (BIEN, n.d. a).

Conventional minimum

income schemes

Conditionality

Dependent on the household situation

With means test or work requirement

Basic income

Unconditionality

Individuality

Without means test or work requirement

Opposing characteristics

Financial feasibility Research questions

(1) Cost of basic income (2) Financing basic income

2

Research questions

How much would a scheme of basic income cost? 1

2 How much are the cost savings that are realized by basic income replacing social benefits?

?

Belgium, 2010

Cost of basic income Addressing the first research question

“How much would a scheme of basic income cost?”

2.1

Basic income proposals

Characteristics shared by every

basic income proposal

Unconditionality

Individuality

Without means test or work requirement

Diverging specifications

Level of basic income

Target audience of basic income

Complementary or substitutionary to the

social protection system

…

Case-by-case

assessment

Basic income placed between 2 extremes

Basic-income-purely

-as-a-complement

High-cost benchmark

Basic-income-to

-substitute-everything

Low-cost benchmark

Cost estimations

3 (5) basic income proposals with levels revised for Belgium, 2010

Static cost estimation (ceteris paribus assumption)

Basic income

(1) The B.U.B. proposal = Basic-income-to-substitute-everything

Basic income to every adult

Complete abolishment of the social protection system

(1) The B.U.B. proposal

Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(BI scheme as % of present social protection

expenditures)

Social integration

income (2010)

730.63 / 0 75,627 80.24

Breakeven (2010)

910.52 / 0 94,247 100

Equality v.s. equity

Healthy

Disabled

Healthy Disabled

Basic-income-to -substitute-everything

Social protection system

Trade-off between financial feasibility & social desirability

Social desirability

Financial feasibility

Moving away from ‘basic-income-to-substitute-everything’

(2) The Vivant proposal

(3) The proposal by Defeyt

(4) The proposal by Raventos, Arcarons, and Torrens Moving closer to ‘basic-income-purely-as-a-complement’

Diversified basic income scheme Social integration income (SI) and poverty threshold (PT)

Social benefits partially retained & health care entirely retained

Minor

Adult

Social benefits

(4) The proposal by Raventos et al.

Social benefits

“1. Basic income replaces any existing public cash benefit of a lesser quantity.

2. When the public cash benefit is of a greater amount, the basic income must be topped up to an equal quantity.”

(Arcarons, Raventos Panella & Torrens Mèlich, 2014, p. 80)


Complete replacement

Comparing the level of social benefits to the level of basic income

Average level of social

benefit

Level of basic

income <



benefit

Partial replacement


Level of basic

income >

Table E1: Regular recurring social benefits, comparison on a monthly basis, in euro, Belgium, 2010

Social benefits (SB) Average monthly benefit

SI 730.63

(146.13*)

PT 972.20

(194.64*)

Family benefits* 150.82 O* / X X* / X Benefits for primal incapacity 1071.80 O O Benefits for invalidity 1140.89 O O Benefits for disability 910.75 O X Benefits for temporary incapacity to work due to an occupational disease

1429.58 O O

Full-time early retirement pension

1100.33 O O

Part-time early retirement pension

371.79 X X

Early retirement pensions for seafarers

958.33 O X

Tide-over benefits for seafarers 1547.91 O O Compensated unemployment benefits

1078.76 O O

Temporary unemployment benefits

1725 O O

Bankruptcy insurance for the self-employed

968.38 O X

Social integration income 540.18 X X Social assistance (financial aid) 1059.21 O O Retirement pensions 1248.56 O O Income guarantee for the elderly 348.90 X X Survivor’s pensions 1005.51 O O


Yearly cost per beneficiary (SB+BI) = (Monthly level of retained social benefit * Months of social benefit)

+ (Monthly level of basic income * Months of basic income)


Social integration income (2010) Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(As % of present social protection expenditures)

Unconditional basic income (social

integration income)

730.63 / 146.13

79,509

84.36

Social benefits N/A 20,537 21.79 Health care N/A 22,827 24.22 Total cost N/A 122,873 130.37


Poverty threshold (2010) Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(As % of present social protection expenditures)

Unconditional basic income (poverty

threshold)

973.20 / 194.64

105,907

112.37


Trade-off between financial feasibility & social desirability

Social desirability

Financial feasibility

(5) The modified proposal by Raventos et al.

Scheme Monthly cash grant (€)

Adults / Minors

Yearly expenditures

(million €)

Cost comparison

(As % of present social protection

expenditures) Unconditional basic income

600 / 150 66,091 70.13


Financial feasibility ↑

Overview of the basic income proposals (in million euro, Belgium, 2010)

B.U.B. (SI)0 / 731

B.U.B. (PT)0 / 973

Vivant163 / 482651 / 964

Defeyt271 / 542

Raventoset al. (SI)146 / 731

Raventoset al. (PT)195 / 973

Raventoset al.

Modified150 / 600

SPS

Health care 0 0 22,827 22,827 22,827 22,827

Social benefits 0 0 0 30,000 20,537 11,414 25,323

UBI Adults 75,627 100,735 72,454 56,109 75,627 100,735 62,105

UBI Minors 0 0 4,322 7,202 3,883 5,172 3,986

In % of SPS 94,247

0

20000

40000

60000

80000

100000

120000

140000

160000

Mill

ion

eu

ro

UBI Minors UBI Adults Social benefits Health care

80.24% 106.88% 105.68% 99% 130.37% 148.70% 120.21% 100%

75,627

100,735 99,603 93,311

122,872

140,147

114,241

94,247

Financing basic income Addressing the second research question

“How much are the cost savings that are realized by basic income replacing social benefits?”

2.2

Financing basic income

€

Cost savings Tax reforms

(1) Cost savings

€

Basic income

Modified basic income proposal by Raventos et al.

Health care completely retained & social benefits partially retained

Health care

Social benefits

The proposal by Raventos et al.

Complete replacement Average level of social benefit < Level of basic income

Partial replacement Average level of social benefit > Level of basic income



benefit

Level of basic

income

Modified basic income proposal by Raventos et al. In million euro, Belgium, 2010

€

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

Modified basic income proposal byRaventos et al.

Cost savings

Modified basic income proposal byRaventos et al.

Cost savings

UBI Minors 3,986

UBI Adults 62,105

Social benefits 30,304

Remaining cost gap 35,787

(2) Financing the remaining cost gap

€

Extra government revenues generated by tax reforms

(1) Sustainability

(2) Behavioral effects

(3) Implications on inequality, progressivity, and redistribution…

Conclusion

3

The finishing line

Conclusion

“How much would a scheme of basic income cost?”

Basic income

Dependent on the specific characteristics of each basic income proposal.

Complement Substitute

Conclusion “How much are the cost savings that are realized

by basic income replacing social benefits?”

Dependent on the specific characteristics of each basic income proposal.

Basic income

Criterion by Raventos et al. : Significant in magnitude

OF BASIC INCOME STEP

FINANCIAL THE FEASIBIBLITY NEXT

Thank you for your attention. Any questions or remarks?

?

?

Bibliography & Credits

Credits concerning the presentation

◈ Presentation template and icons by SlidesCarnival ◈ Photographs by Benedikt Geyer ◈ Other images obtained from: - Icon of a hand holding money retrieved from http://image.flaticon.com/icons/png/512/49/49232.png - Map of Europe by Allstrak [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL

(http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons - Map of Belgium by PavelD [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0

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Bibliography per slide

Main Dataset • FOD Sociale Zekerheid. (2011). De sociale zekerheid in een oogopslag. Kerncijfers 2010. Retrieved July 26, 2016, from

http://socialsecurity.belgium.be/sites/default/files/kerncijfers-2010-nl.pdf • FOD Sociale Zekerheid. (2012). De sociale zekerheid in een oogopslag. Kerncijfers 2011. Retrieved July 26, 2016, from

http://socialsecurity.belgium.be/sites/default/files/kerncijfers-2011-nl.pdf • FOD Sociale Zekerheid. (2013). De sociale uitgaven in België. Kerncijfers 2012. Retrieved July 26, 2016, from

http://socialsecurity.belgium.be/sites/default/files/kerncijfers-2012-nl.pdf Slide 3 • BIEN. (n.d. a). About basic income. Retrieved June 21, 2016, from http://www.basicincome.org/basic-income/ Slide 4 • Peña-Miguel, N., De la Peña Esteban, J.I.,& Fernandez-Sainz, A. (2014). A first approach to the cost of a basic social

benefit. Basic Income Studies, 9(1-2), 95-118. Doi: 10.1515/bis-2014-0008 Slide 8, Slide 9 • Melzochová, J., & Špecián, P. (2015). An Estimate of the Basic Income Costs: Case of Czech Republic. Procedia

Economics and Finance, 30, 550 – 557. doi: 10.1016/S2212-5671(15)01267-8

Bibliography per slide Slide 11,12, 27 • B.U.B. (2016). Belgische Unie – Union Belge – Programma 2016. Retrieved July 20, 2016, from

http://www.unionbelge.be/wp-content/uploads/2016/05/PROGRAMMA-PROGRAMME-2016.pdf Slide 13 • Odekon, M. (Ed.) (2015). The SAGE Encyclopedia of World Poverty (2nd ed.). California: SAGE Publications. • Van Parijs, P. (2004). Introductory chapter: A basic income for all: A brief defence to secure real freedom, grant

everyone a subsistence income. In L.F.M. Groot (Ed.), Basic Income, Unemployment and Compensatory Justice. (p. 11-23). Dordrecht: Kluwer Academic Publishers.

Slide 15, 27 • Defeyt, P. (2016). Un revenue de base pour chacun, plus d’autonomie pour tous. Retrieved August 11, 2016, from

https://www.financialforum.be/sites/financialforum.be/files/media/1700b.pdf • Vivant. (n.d.). Het Vivant Programma. Retrieved July 21, 2016, from http://www.Vivant.org/files/programma.pdf Slide 16,17,18,19, 23, 24, 26, 27, 31, 32 • Arcarons, J., Raventos Pañella, D., & Torrens Mèlich, L. (2014). Feasibility of financing a basic income. Basic Income

Studies, 9 (1-2), 79-93. • Raventos, D. (2007). Basic Income: The Material Conditions of Freedom. London: Ann Arbor, MI: Pluto Press. Retrieved

August 02, 2016, from http://uberty.org/wp-content/uploads/2015/10/Daniel_Raventos_Basic_Income.pdf

http://www.vivant.org/files/programma.pdf

http://www.vivant.org/files/programma.pdf

Bibliography per slide Slide 29 • Monnier, J.M., & Vercellone, C. (2014). The Foundations and Funding of Basic Income as Primary Income. Basic

Income Studies, 9 (1-2), 59-77.

Slide 30 • Monnier, J.M., & Vercellone, C. (2014). The Foundations and Funding of Basic Income as Primary Income. Basic

Income Studies, 9 (1-2), 59-77. • Melzochová, J., & Špecián, P. (2015). An Estimate of the Basic Income Costs: Case of Czech Republic. Procedia

Economics and Finance, 30, 550 – 557. doi: 10.1016/S2212-5671(15)01267-8 • Arcarons, J., Raventos Pañella, D., & Torrens Mèlich, L. (2014). Feasibility of financing a basic income. Basic Income



Slide 33 • Van Parijs, P. (1995). Real freedom for all. Oxford: Clarendon Press. • Arcarons, J., Raventos Pañella, D., & Torrens Mèlich, L. (2014). Feasibility of financing a basic income. Basic Income



Bibliography per slide Slide 35 • Melzochová, J., & Špecián, P. (2015). An Estimate of the Basic Income Costs: Case of Czech Republic. Procedia

Economics and Finance, 30, 550 – 557. doi: 10.1016/S2212-5671(15)01267-8

Slide 36 • Arcarons, J., Raventos Pañella, D., & Torrens Mèlich, L. (2014). Feasibility of financing a basic income. Basic Income



Ppt: The financial feasibility of basic income in Belgium

Economy & Finance

Transcript of Ppt: The financial feasibility of basic income in Belgium