OpenAI CEO Sam Altman’s decade-long effort to understand how giving away free money affects recipients and the broader economy yielded its first substantial results Monday. OpenResearch found that when it gave the poorest Americans $1,000 a month for three years with no strings attached, they spent most of the money on basic necessities like food, shelter and transportation. But the $36,000 wasn’t enough to significantly improve their physical well-being or long-term financial health, researchers said.
The preliminary results of the Altman-funded OpenResearch study, described as the most comprehensive study on “unconditional cash” to date, show that while the subsidies had their merits and were not wasted on drugs and alcohol, they are hardly a panacea for some of the world’s biggest problems, including income inequality and the prospect of artificial intelligence and other automation technologies taking people’s jobs.
Some progressive organizations in the U.S. and elsewhere have advocated for fighting poverty through forms of unconditional cash, such as a universal basic income. Conservative groups have largely criticized these projects as handouts to undeserving people who refuse to work. In two articles published on Monday and the third, coming out next month, is data that the OpenResearch team and its university collaborators will share that can support us understand the full spectrum of views.
OpenResearch, which has also raised funding from organizations like OpenAI and the U.S. government, gave out unconditional $1,000 in cash from November 2020 to October 2023. The money provided a 40 percent enhance in income to a diverse group of 1,000 people ages 21 to 40 who started in households earning about $30,000 a year in 10 counties in Illinois and Texas. A control group of 2,000 people with similar characteristics received $50 a month. Participants answered surveys, provided credit reports and underwent blood tests.
The perceived benefits for those receiving $1,000 a month varied across different aspects of their lives. Their biggest jump in spending was giving an average of $22 more a month to others, such as helping relatives in need or giving gifts to friends. People began seeking more health care, such as braces, and better-stocked refrigerators and pantries.
Some began considering or pursuing startups. By the third year of payments, “black recipients were 9 percentage points more likely to report starting or helping to start a business than control participants, and women were 5 percentage points more likely,” according to one study.
Participants also moved out on their own, especially those who started out on the lowest incomes and partied more. A forthcoming paper, a draft of which was shared with WIRED OpenResearch, estimates that 81 cents of every dollar donated went toward higher expenses for things like housing, 22 cents toward entertainment, and negative 3 cents toward increased debt as recipients took out more car loans and mortgages.
The enhance in debt caused participants’ net worth to fall over three years. Combined with miniature changes in access to credit, bankruptcies and foreclosures, the researchers concluded that “the transfer did not improve participants’ long-term financial health.” People did put more money into savings and initially felt better about their financial situation. But they also cut back slightly on work and let the free cash fill the gap. For every $1 they received from OpenResearch, participants’ earnings excluding the free money fell by at least 12 cents, and their total household income fell by at least 21 cents.
“Money offers flexibility and can increase the ability to make employment decisions that are consistent with recipients’ individual circumstances, goals, and values,” the researchers wrote. They may “need more time to find a job, take a lower-paying position that they find more meaningful, or simply take a break.”
But critics of aid programs fear that instead of investing in the future, people will end up leaving work altogether and becoming even more dependent on support. OpenResearch found that the “total amount of work taken out of the market” was “quite significant” in its experiment.
Let’s add to what researchers have discovered “no effect” cash for several measures of physical health and well-being, critics may have plenty to complain about. But the study authors say it’s essential not to forget that participants showed through their spending what they valued most. “Policymakers should take into account that recipients showed — through their own choices — that time away from work was something they valued,” the authors write. If OpenResearch has proven anything, it’s the proverb: Money can buy time.