Economic Progress

Free money? Why eBay's founder is investing in a basic income experiment

Swiss Franc and Euro banknotes of several values lie on a table in a Swiss bank in Bern November 25, 2014. The "Save our Swiss gold" proposal, spearheaded by the right-wing Swiss People's Party (SVP), aims to ban the central bank from offloading its reserves and oblige it to hold at least 20 percent of its assets in gold. The referendum is scheduled for November 30. The SVP argues it would secure a stable Swiss franc.  Picture taken November 25, 2014.  REUTERS/Ruben Sprich (SWITZERLAND  - Tags: POLITICS BUSINESS)

eBay founder Pierre Omidyar is partaking in a basic income experiment. Image: REUTERS/Ruben Sprich

Chris Weller
Ideas Reporter, Business Insider
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Omidyar Network, the philanthropic investment arm started by eBay founder Pierre Omidyar, has invested $493,000 into an experiment giving people in Kenya free money.

The experiment, put on by the charity GiveDirectly, tests an up-and-coming solution to poverty known as basic income. People under basic income receive a set amount of money on a regular basis to cover expenses like rent, food, and clothing.

GiveDirectly is running a small pilot in just a few Kenyan villages at present, but once the full experiment launches in a few months it will be the largest basic income experiment in history. More than 26,000 people will receive free money in some form, whether it's for a period of 12 years, just a couple, or in a lump sum or spread out.

Not much long-term research on basic income exists, but the studies that have been performed suggest only good comes from helping poor people meet their financial needs.

People's stress goes down, while self-sufficiency goes up. People have started businesses, sent kids to school, and made vital home repairs on basic income. Some research even says drug and alcohol use declines as people have fewer reasons to be stressed.

"Omidyar Network's foundational belief that empowering people frees them to better themselves, their families, and their communities has great evidence in the growing literature around the benefits of cash transfers," manager Tracy Williams and partner Mike Kubzansky wrote in the blog post announcing Omidyar's investment.

GiveDirectly has raised $23.7 million of its targeted $30 million. A spokesperson from the charity says the new investment does not change the timeline of the overall experiment.

Omidyar, for its part, has expressed optimism that once it begins it'll produce many fruitful insights "unlike those of any past study and provide evidence-based arguments to shed light on the discussions around the future of work and poverty alleviation policies."

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