Should a Basic Income be inadequate rather than household-based?

At what level would the individual and unconditional basic income be pitched. If it is at the level of the guaranteed income currently enjoyed by each member of a couple, the amount is bound to fall far short of what is needed by someone who has no option but to live alone. If it is at the level currently awarded to a single person, the cost implications, in some countries at any rate, are phenomenal. This is again not just a matter of budgetary cost. There is an irreducible distributive cost in the sense of a dramatic shift of purchasing power from one-adult to bi- or multi-adult households. And there is also an irreducible economic cost, owing mainly to a substantial increase in the marginal rates required in order to fund the outlays for this enhanced basic income. There is therefore, in the short term at any rate, a dilemma between giving a fully individualised but inadequate basic income and giving a sufficient but household-modulated one (see Brittan & Webb 1991, Brittan 1995). Note, however, that this dilemma is not to be confused with a dilemma between making some households unacceptably poor (with too low an individual basic income) and subjecting all households for an indefinite period to a control of their living arrangements (with an adequate, but household-dependent basic income). Even under short-term cost constraints, the latter dilemma does not hold, for it is possible to conceive of a strictly individual but inadequate «partial» basic income for all, combined with a much shrunk residual means-tested household-tested social assistance for the reduced number of those who, despite the floor provided by the household’s basic income(s), do not earn enough to reach the income threshold as from which means-tested assistance is switched off. [Fig. 7] Providing it is not conceived as an immediate full substitute for existing social assistance, such a partial basic income thus provides an attractive way of handling both of the real cost problems – those stemming from incentives for low earners and individualisation – which a full basic income would raise (see e.g. Gilain & Van Parijs 1995 for a microsimulation of the distributive impact of such a partial basic income in the case of Belgium).