OpenAI CEO Sam Altman’s decade-long endeavor to explore the effects of providing free money to individuals and the broader economy has yielded its first significant findings. OpenResearch, an Altman-funded research lab, discovered that distributing $1,000 per month for three years to some of the poorest Americans led to increased spending on essential needs such as food, housing, and transportation. However, the total of $36,000 did not substantially improve their physical health or long-term financial stability, according to the study released Monday.
The study and its initial findings
Described as the most comprehensive study on “unconditional cash,” OpenResearch’s initial results show that while the grants had benefits and were not squandered on items like drugs and alcohol, they did not solve major issues related to income inequality or the future impacts of AI and automation on jobs. Progressive groups in the U.S. and other countries have promoted unconditional cash schemes like universal basic income as a means to combat poverty, whereas conservative groups criticize these initiatives as undeserved handouts.
OpenResearch’s findings, published in two papers on Monday with a third expected next month, provide data that could support various viewpoints on the issue. Funded by organizations such as OpenAI and the U.S. government, OpenResearch distributed the $1,000 monthly payments from November 2020 to October 2023. This amount represented a 40 percent income increase for 1,000 participants aged 21 to 40, who initially lived in households earning about $30,000 annually across ten counties in Illinois and Texas. A control group of 2,000 people with similar backgrounds received $50 a month.
Impact on spending and behavior
Participants who received $1,000 monthly reported diverse benefits. A significant portion of the money was spent on basic needs, with an average increase of $22 per month given to others, such as family members or friends. Additionally, recipients sought more healthcare services, better stocked their homes with food, and some even considered or pursued entrepreneurial ventures. By the third year of payments, Black recipients were 9 percentage points more likely to start or assist in starting a business, and women were 5 percentage points more likely than those in the control group.
Participants also enjoyed more personal freedom, with many moving out on their own, especially those with the lowest initial incomes. The forthcoming paper estimates that approximately 81 cents of each dollar transferred was spent on essentials like housing, 22 cents on leisure, and -3 cents on increased borrowing due to car loans and mortgages.
Financial outcomes and work behavior
Despite these expenditures, increased debt reduced participants’ net worth over the three years. With little change in credit access, bankruptcies, and foreclosures, researchers concluded that the cash transfers did not enhance participants’ long-term financial positions. While recipients saved more money and initially felt better about their financial situations, they also reduced their work hours, relying on the free cash to make up the difference. For every dollar received, participants’ earnings (excluding the free money) dropped by at least 12 cents, and total household income fell by at least 21 cents.
“Cash offers flexibility and may increase agency to make employment decisions that align with recipients’ individual circumstances, goals, and values,” the researchers noted. Recipients might be “taking more time to find a job, choosing a lower-paying position that they find more meaningful, or simply taking a break.”
Implications for policy and future research
Critics of assistance programs often fear that such initiatives will lead people to withdraw from the workforce entirely and become increasingly dependent on support. OpenResearch found that the “total amount of work withdrawn from the market” was “fairly substantial” in its experiment. Additionally, researchers observed “no effect” from the cash on several measures of physical health and welfare, providing critics with ample material for their arguments.
However, the study’s authors emphasize that participants’ spending choices reflect their priorities. “Policymakers should take into account the fact that recipients have demonstrated—by their own choices—that time away from work is something they prize highly,” the authors wrote. OpenResearch has, if anything, underscored the old saying: Money can buy time.
