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
<

Average
level of
social
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)
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)
Adults / Minors
Yearly expenditures
(million €)
Cost comparison
protection expenditures)
Unconditional basic
income (poverty
threshold)
973.20 / 194.64 105,907 112.37
Total cost N/A 140,147 148.70

(5) The modified proposal by Raventos et al.
Adults / Minors
Yearly expenditures
(million €)
Cost comparison
protection
expenditures)
Unconditional
basic income
600 / 150 66,091 70.13
Total cost N/A 114,241 120.21
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
Vivant
163 / 482
651 / 964
Defeyt
271 / 542
Raventos
et al. (SI)
146 / 731
Raventos
et al. (PT)
195 / 973
Raventos
et al.
Modified
150 / 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
Millioneuro
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
Average
level of
social
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 by
Raventos et al.
Cost savings
Modified basic income proposal by
Raventos 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.
ComplementSubstitute

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?
?
?

Credits concerning the presentation
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(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
(http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons
- Image of ‘Equity versus equality’ retrieved from https://fyi.uwex.edu/cfsi/files/2016/03/large-uncredited-
equity-v-equality-apple-tree.png
- Icon of a medical bag retrieved from http://www.iconarchive.com/show/windows-8-icons-by-
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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
• FOD Sociale Zekerheid. (2013). De sociale uitgaven in België. Kerncijfers 2012. Retrieved July 26, 2016, from
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

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

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.
Studies, 9 (1-2), 79-93.
Slide 33
• Van Parijs, P. (1995). Real freedom for all. Oxford: Clarendon Press.
Studies, 9 (1-2), 79-93.

Slide 35
Slide 36
Studies, 9 (1-2), 79-93.

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