Why is this Dutch city giving residents free money?

Starting this fall, the Dutch city of Utrecht will begin an ambitious yearlong experiment: giving monthly checks to numerous people already on welfare, no strings attached.

The concept is known as a basic income.

It affords citizens a standard amount of money to cover expenses, ranging from major health costs to quick trips to the grocery store, on top of their other sources of revenue.

Richard Nixon gave a similar idea a try in the 1960s. A decade later, Canada conducted its own experiment. And in 2016, Switzerland is slated to hold a referendum on implementing basic income.

Basic income has yet to emerge in full force partly because of logistics and partly because of fear of abuse. But that fear may be misguided, at least in the Netherlands, according to those conducting the experiment.

“The current rules in welfare are bureaucratic and, in a way, based on mistrust,” says Jacqueline Hartogs, spokeswoman for Victor Everhardt, Utrecht alderman for work and income.

Welfare recipients in Utrecht lose their benefits if they can’t find a job, signaling that mistrust, Hartogs tells Business Insider.

“In our scientific experiment,” she says, “we will approach people with less or no rules, to see whether they still make an effort.”

Researchers from the city council and University of Utrecht will separate at least 250 welfare recipients into five groups: a control group operating under the current laws, three groups with fewer rules, and an unconditional income group that receives money no matter what.

If the system pans out favorably, it could be the first concrete example that basic income works.

Whether it expands outside Europe, however, is another matter, says Almaz Zelleke, a New York University political scientist and basic income expert.

The small size of cities like Utrecht could underpin the success of basic income (the city’s population: 311,367).

The Netherlands is also somewhat anomalous among European countries, as it boasts the highest percentage of part-time workers.

“So perhaps there is a greater openness to the idea of providing a floor of income security on which citizens can build higher incomes with part-time work,” Zelleke says.

At least going by the statistics, Utrecht’s model of trust doesn’t seem to translate across the pond.

A 2012 poll showed 83% of Americans believe people should be required to work to receive welfare. Otherwise, we’re apt to use the dreaded H-word: handout.

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Chris Weller joined Business Insider in 2015 as an Ideas Reporter.

Image: A teller counts euro banknotes. REUTERS/John Kolesidis.