THE TOWN WITH NO

POVERTY

What happens when you give an

entire town a guaranteed annual

income?

I am indebted to Charles Burchill and Oke Ekuma for programming assistance, to CIHR for financial support (MOP 77533),

and to MB Health and Healthy Living for data access. No official endorsement by MB Health and Healthy Living

is intended or implied.

MINCOME (1974 – 1978)

• In 1974, the governments of Canada and

Manitoba implemented a large field

experiment to assess the impact of a

Guaranteed Income

• One of 5 North American GAI experiments

• Part of a general reform of social safety

net

Payouts were modest

• Set up as a refundable tax credit (negative

income tax)

• Someone with no income would receive

60% of the LICO – about what they would

receive from social assistance

• An additional $1 from other sources would

reduce their benefit by 50 cents

Payouts were modest

• People who had previously been receiving

income assistance would see little change

in terms of the money they received, but

they had fewer “rules” to accommodate

• The working poor would see substantial

increases in their incomes

MINCOME

• 2 experimental sites

– A dispersed sample in Winnipeg

– A saturation site in Dauphin, MB

• The Dauphin site was the only saturation

site in any of the 5 experiments: every

family was eligible to participate

MINCOME

• Was designed to find out what effects a

Guaranteed Annual Income would have on

the labour market

Labour market results on

Winnipeg sample:

• Researchers who examined the Winnipeg

sample found that people who received a GAI

worked fewer hours

BUT

Labour market results on

Winnipeg sample:

• Little reduction among adults working full-time

jobs

• Significant effects for:

– Married women returned to work less quickly after

childbirth

– Adolescent children entered the workforce later and

reduced their hours of work significantly

Health and Social Effects?

• Research funding for analysis ran out midway

through the experiment

– Families were paid

– Research concentrated on labour market

• Social issues were not a primary research

question

– Data collected (by questionnaire)

– No database constructed for social issues

– No significant analysis of social issues

Health and Social Effects?

• 1800 boxes of “data”:

– paper copies of administrative records,

– questionnaires,

– reports of embedded anthropologists and

sociologists who lived in the communities

– Interviews with subjects on social and family

interactions, labour market activity, decision-

making etc.

• Limitations on our ability to contact

participants

Is there another way to get at

the impact in Dauphin?

No analysis on Dauphin sample

had ever been conducted

The project ran from 1974 to

1978

EDUCATION?

Grade 12 Enrolment as % Previous Year Grade 11

Enrolment

0.0

20.0

40.0

60.0

80.0

100.0

120.0

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

Dauphin

Winnipeg

Non-Winnipeg

MCHP Information-Rich Environment:

Using Administrative Data

Population

Registry

Hospital

Home Care

Pharmaceuticals

Cost Vital

Statistics

Provider

Nursing

Home

Physician

Family

Services Education

OUR CHALLENGE

• Many things have happened since 1974

• How do we know that any changes we find

are the result of MINCOME?

SOLUTION

• We need to find a group of people who

were similar to those who lived in Dauphin

but who did not participate in the

experiment

• Then we can compare how they did with

how the Dauphin folks did

First:

• We matched on geography

• We only considered people who lived in

towns similar to Dauphin

DAUPHIN

Then we matched on other

characteristics:

• Individual: age, sex

• Family: number of children, single parent

female led

• Community: rural/small town

We compared everyone who lived

in Dauphin to 3 other similar

people:

• Excellent matches on all the matching variables

• We also looked at the 1971 census to make sure that they were not different in other ways (religion, ethnicity, employment variables, etc.)

We found:

• Significant differences in:

– % farmland planted in canola

– Ethnicity (Dauphin is more “Ukrainian”) –

about 31% versus 10%

• Does ethnicity matter?

OUR RESULTS….

WERE THEY HEALTHIER?

• No direct measure

– We examined contacts with the healthcare

system

In 1973

Dauphin residents experienced:

19.23 more hospitalizations

per 1,000 population

+/- 2.096

(95% confidence level)

By the second half of 1978

• The differential fell to zero

• Hospitalization rates for Dauphin residents

fell 8.5% relative to the controls

• In 1978, Canada spent $ 7.4 billion on

hospitals

• In 2010, Canada spent $50.4 billion

HOSPITALIZATIONS

1974 1978

Comparison

group

Dauphin

Rates

Let’s look closer….

HOSPITALIZATIONS: accidents

and injuries

1974 1978

Comparison

group

Dauphin rates

HOSPITALIZATIONS:

mental health diagnoses

1974 1978

Comparison

group

Dauphin

rates

Contacts with family doctors:

same pattern

• Significant reduction in number of visits by

Dauphinites relative to controls

• Mental health issues seemed to be the most

significant reason for the decline

Were there other effects?

We looked at:

• Birth outcomes

• Birth rates

• Divorce rates

Why might birth outcomes be

affected by poverty?

Birth Outcomes

• Low Birthweight, At-risk birthweight, Small for gestational age births, perinatal death

– No effect found

• Why? – Small numbers

– Universal health insurance in Manitoba (unlike US)

– Rural area (poverty does not manifest as food insecurity)

Birth and Divorce rates are affected

by many factors

Birth rates did not increase.

• Fertility fell all across North America

during the 1970s, especially in rural areas

The birth control pill had just become legal and

available

• Measured in a variety of ways, fertility fell

further and faster among Dauphin women

than among controls

Divorce Rates

• In one US experiment researchers found

an increase in the divorce rate

• The guaranteed income was labeled “an

attack on the American family”

• No effect was found in Dauphin

CHILDREN MAY HAVE BEEN

MOST AFFECTED

• Stayed in high school longer

• Had first child later

• Had fewer children over a lifetime

But how did the families

perceive MINCOME to have

affected their lives?

These results are based on

interviews conducted by Lindor

Reynolds for the Free Press

Amy Richardson

(83)

Richardson family

1970s

Amy Richardson (83):

• She ran the Dauphin Beauty Parlor from

her home

• Her husband retired at 53 because of

health problems

• 6 children

• Used the extra money for luxuries like

school books

• “It was to bring your income up to where it

should be. It was enough to add some

cream to the coffee. Everybody was the

same so there was no shame.”

Hugh and Doreen Henderson

Hugh and Doreen Henderson

• Lived in the country: raised chickens and

grew their own food

• He was a school janitor

• She stayed home with the 2 children

Hugh:

• “If a kid wants an education, and he’s

willing to pay for it, I think the government

should help. If we’d have had more

money, I’d have loved to pay for university

for my kids.”

Doreen:

• “Give them enough money to raise their

kids. People work hard, and it’s still not

enough. This isn’t welfare. This is making

sure kids have enough to eat.”

• “They should have kept it. It made a real

difference.”

Rick Zaplitny (58)

Rick Zaplitny

• Was a chartered accountant and his

income was too high to qualify for

MINCOME support

• “We always felt the problem with the

welfare system is it was punitive. You

made money, and they took it away from

you.”

• “It seemed to us that MINCOME was for

people who were on that line. They

weren’t deadbeats. They needed a bit of a

boost.”

• “I’d be in favour of it [now]. Helping

someone have a decent living wage is

hard to argue with.”

Are these results still

applicable in the 21st century?

• Potential savings in other social programs

associated with poverty

– Education and special education, criminal

justice, health, family violence

• Potential savings in bureaucratic

duplication

– GAI is simple to run as a refundable tax credit

through the income tax

• Social workers can be reallocated away

from spending time trying to find ways to

get people money and towards actually

helping people who need help with

addictions or family issues

MOST IMPORTANT

• A GAI empowers families to make their

own decisions – and their own mistakes

• A GAI does not infantilize people and

encourage dependency

New interest around the world

LOW AND MEDIUM-INCOME COUNTRIES

• “Unconditional cash transfer schemes”

supported by World Bank as a means of

addressing poverty in developing world

– Incredible Success

– Largest effects on health and education of

girls

New interest around the world

HIGH INCOME COUNTRIES

• Calls from advocates in Ireland, France,

Germany, Switzerland, Italy, Korea,

Japan, UK

• “Experiments” being contemplated and

proposed by BBC (!!), Canadian health

researchers and individuals

Is this scheme worth

considering seriously in high-

income nations?

QUESTIONS?