Finland's Social Insurance Institution, or Kela, announced on Monday the launch of an experiment designed to test the potential effects of a universal basic income (UBI). Given that the program is in its earliest stages, however, it is far from "universal": 2,000 participants who were randomly selected from the country's working-age (25 to 58), unemployed population will receive a basic income of €560 ($581) per month through the end of 2018.

Universal basic income is an old idea – Thomas Paine discussed it in the 18th century – but it has received renewed attention in recent years as automation threatens to replace professional drivers with Lidar systems, waiters with tablets and, further down the line, professionals such as doctors and lawyers with algorithms. Fears that unemployment could surge once human beings are a prohibitively expensive source of labor have led governments to mull providing a lump sum to citizens regardless of need or employment status. (See also, IBM's Watson Turns Its Eye to Medical Diagnostics.)

The rationale behind Finland's scheme is slightly different, however. Instead of acting as a way to provide for those rendered jobless by technology, it is testing whether basic income could simplify the welfare system and reduce the perverse incentives it creates not to work. A longstanding criticism of social welfare schemes is that they punish the unemployed for seeking work, since part-time jobs have the potential to cut into benefits and reduce overall income. The program's initial participants are all jobless, and changes in employment status will not affect the size of payouts; Kela hopes that it will therefore be able to measure the effect on employment of removing incentives to stay idle.

The agency also hopes that the basic income will prove to be a cheaper, simpler alternative to existing welfare schemes: "The basic income also helps to reduce bureaucracy as the recipients do not have to report the number of hours they work or to fill in various forms," Marjukka Turunen, the head of Kela's legal affairs unit, said in a press release. (See also, Musk Says Universal Basic Income Is Inevitable.)

Kela's research team recommends expanding the pilot program to include people with small incomes in 2018. It has considered providing basic income to those under 25 as well. According to an analysis conducted by the Economist in June, Finland could convert its current non-health transfer payments into a universal single-rate payment equivalent to $10,500 per person per year. The corresponding figure for the U.S. is $6,300. (See also, Is a Universal Basic Income Practical?)

Basic Income Elsewhere

Basic incomes schemes have been piloted at the local level in various places, but the idea has yet to prove its effectiveness at the national level. Possible exceptions include oil-rich Gulf states: some of these have provided generous handouts to citizens, who tend to make up a relatively small percentage of their migrant-heavy populations. These schemes are coming under increased strain as oil prices have fallen, however. (See also, Why Saudi Arabia Just Issued $10 Billion in Bonds.)

Switzerland rejected a referendum in June that would have implemented a universal basic income of an unspecified amount (2,500 Swiss francs, or around $2,440 per adult per month, was a commonly cited figure). According to Basic Income Earth Network, which campaigns for the issue, Iran became the first country to issue a basic income in 2010, when it replaced fuel and food subsidies with a universal cash payment of around $40 per person per month. The program proved expensive and has been significantly scaled back. Brazil's Bolsa Família program, introduced in 2004, provides cash transfers of varying amounts to poor families representing around a quarter of the population. 

The idea of universal basic income is beginning to gain traction in the U.S., where Paine's other ideas have enjoyed a long period of acceptance. It has been championed by incubator Y Combinator and other Silicon Valley leaders – ironically, or appropriately, the sector that is doing the most to bring the issue to a head through innovations that threaten to automate away millions of jobs.

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