Altman explains how donating money affects beneficiaries and the overall economy | Festina Lente - Your leading source of AI news | Turtles AI

 Unconditional cash distribution: early results from Sam Altman’s project

Key points:
1. Short-term benefits: increased spending on basic needs and health care.
2. Limited impacts on long-term welfare and overall financial situation.
3. Modest reductions in employment and working hours, with increased debt.
4. Spending choices reflect individual priorities, but do not resolve economic inequality.

 Early results of the no-conditions money distribution project

A research project funded by Sam Altman, CEO of OpenAI, has begun to unravel the effects of unconditional cash distribution on a sample of U.S. citizens. After providing 1,000 people in the poorest segments of the population with a $1,000 monthly check for three years, OpenResearch has published the first results of this social experiment.

 Objectives and methodology of the project

The project, conducted by OpenResearch with funding also from the U.S. government, examined the effects of a 40 percent income increase for a heterogeneous group of one thousand people. The participants, aged between 21 and 40, came from households with an average annual income of $30,000 and resided in ten counties between Illinois and Texas. In contrast, a control group of 2 thousand people with similar characteristics received only $50 per month. Participants answered surveys, shared financial documents, and underwent blood tests.

 Expenses and perceived benefits

The project beneficiaries used most of the money for basic needs such as food, housing and transportation. A significant increase in spending was noted in donations to others, with an average of $22 per month going to help relatives or friends. In addition, there was an increase in access to health care, including orthodontic appliances and specialized medical visits. Some participants considered starting a startup, and African American beneficiaries showed a higher likelihood of starting a business than the control group.

 Economic and employment impacts

Despite the positive short-term effects, the project showed limitations in improving participants’ long-term well-being. Beneficiaries took on more debt for car purchases and mortgages, eroding their personal wealth. The increase in debt, along with factors such as business bankruptcies and foreclosures, led researchers to conclude that cash transfers did not significantly improve participants’ long-term financial situation.

On the employment front, employment rates and hours increased for both recipients and the control group, but the increases were greater for the latter. For every dollar received, total household income dropped by at least 21 cents, indicating that recipients reduced work slightly by using project money to make up the difference.

 Preliminary conclusions

OpenResearch researchers pointed out that although money provides flexibility and can increase the ability to make career decisions in line with individual goals, unconditional cash transfers are not a definitive solution to economic inequality. The research highlighted the importance of better understanding both the potential and limitations of such initiatives, providing new data for the political and economic debate on universal basic income.