Excellent. I come at UBI from a slightly different place than a number of other folks. I'm a development economist by training. Development economics is the study of how countries grow, why people are poor, and what we can do about those two things. I picked an interesting time to be in graduate school. I was in graduate school in the early 2000s, and there was a bit of a revolution happening in development. What we as development economists started to do is something that everyone in Silicon Valley takes for granted, which is A/B testing. We tested two things against each other and asked the most simple question: what works, and where is there evidence?
What we found was that a lot of what we were doing and had been doing in development was a whole lot less effective than we had hoped and imagined. Things like training programs, microfinance, didn't live up to a lot of what we thought. On the other hand, the simplest thing - giving poor people capital - and something that everybody thought was crazy and silly - worked remarkably well. It turned out poor people didn't all go out and get drunk, they didn't stop working with the money. In fact, people invested it. Incomes went up, education attendance went up, health outcomes went up. That was the state of development in the early 2000s. I had a front row seat; I got to sit in a lot of really good seminars and see some of the papers coming out of Mexico and Brazil on cash transfers, so I did what any academic grad student that didn't want to go into academics did, which was to start to think about what we did with this information.
So we went out and looked for places to give capital grants or cash transfers to the extreme poor. We talked to all the usual suspects - big NGOs, donor agencies - and said, "What do we do? I want to give money to a poor person, can I just give it to you and you transfer it?"
And they said no. There are a lot of reasons we can go into why, but what came out of that was we decided to found GiveDirectly. We started working on it in 2008, we launched in 2011. What GiveDirectly was was an opportunity for the public to give directly and provide capital grants to the extreme poor. For every dollar you give, depending on the country, we give out 90 cents to the recipient. As Garrett said, we've raised about $138 million since launching in 2011, and that's a testament to the public funding it. We're really just the service provider of getting cash to the poor. While this has been happening with GiveDirectly, a lot of governments have been shifting their social programs to cash, which is what we're talking about today. There are now about 130 different cash programs in low and middle income countries, I think it's something like 40 out of 48 African countries have a social safety net program that involves a core cash component. Kenya, which is where we started to work, has multiple cash transfer programs, so this is nothing new.
While there's a big debate happening in the media and cash is still crazy and everybody is going out and getting drunk, the emerging market governments have shifted. Developed country governments have also been doing cash. Social security is a form of cash transfer. Now, while we know a lot about cash - it's been called the most thoroughly researched intervention by Diffid, which is a UK development agency - we don't know a lot about how to do cash. Do we give a little bit of money to a lot of people? Do we give a lot of money to a small number of people? Do we give it monthly? Annually? All these questions around how we actually do a cash program are largely unanswered. So we do what we did for a long time and use our gut and tell anecdotes and stories.
One specific form of cash, universal basic income, has become pretty popular over the last 24 months, which has been a revival of sorts, because it was popular about 40 years ago. Universal basic income is universal. Everybody within some group gets it. It's basic, so it's enough to live on, it's not a huge capital investment, and it's not a tiny bit, and it's an income, so it's over a long period of time. This is not a cash infusion, this is over a long time. As it turns out, we've never actually done that globally, so we decided last year to launch a universal basic income. It is the largest crowdfunded social experiment ever, it'll be about 30,000 households in Kenya, which will be about $30 million dollars. We've raised about $24 million of that. We'll test it, and we'll ask the same questions we've asked before: what do they spend it on? Where do they spend their time? But we're also going to ask how it compares to giving people money for two years, because we know a lot about how people spend it when we give it over a short period. So let's make that direct comparison. We're also going to compare it to giving people a lot of money one time, up front. We're going to answer those questions.
There is a debate: is universal basic income affordable? I think it is a good debate to have, but you need to get much more specific than debating it globally. It depends on what country you're talking about. Scandinavian have a much bigger tax base relative than the US does. In Kenya, we're providing a basic income for 70 cents a day. That is the food security line. That is enough money to get people above a caloric minimum to survive. You couldn't do that in the US for 70 cents a day. The money goes quite far in Kenya. The last thought, which is simply meant to be provocative: it was an exercise that Brookings did which asked, "How much money would it take to get everybody in the world above the poverty line?" Let's say I live on 60 cents a day, the poverty line is a dollar. It would take 40 cents to get over it. So, how much would it take globally? The answer is in the $70-80 billion ballpark. That's not a lot of money. It turns out we spend about $130 billion a year on foreign direct assistance. $80 billion is smaller than that, and we can probably go bigger. So, at least as a first step, we have to ask the question of if we transferred capital directly, if we found more efficient ways to do it, which we now have with things like mobile money and mobile payments, could we actually end extreme poverty today? I'll leave that as the question to discuss basic income.