Consumption Patterns under a Universal Basic Income

Abstract In this paper, we challenge one of the criticisms against the idea of a universal basic income (UBI), namely, that people will waste the support on high-end consumption. We rely on the literature from various disciplines from which we developed high- and low-UBI scenarios for respondents to decide what they would do if the state were to provide an unconditional stipend. We analyzed the multiple-choice responses, using an ordered probit, and the written explanations of the respondents’ choices, using content analysis. The results suggest that while a higher UBI would increase consumption, it would likely be done responsibly. People with low incomes showed restraint in all categories. The qualitative analysis captures some of the complexities of people’s socioeconomic circumstances that support the notion of responsible consumption. The policy implication is that a UBI could be introduced at a low level and gradually increased to a level that maximizes societal benefits.