The key takeaway from Finland's universal basic income experiment is that countries need to learn from each other

Before any new drug is introduced there are randomised trials to see whether it is safe, whether it improves the condition of the patients, whether there are side effects, and so on. Why not apply the same to social policies?

The experiment has ended. Finland tried a pilot scheme for a universal basic income for its unemployed people – they got a monthly payment from the state whether or not they got a job instead of the usual unemployment benefit, which would end once they found work.

So what happened? We got the results last week, and they carry lessons for other countries – perhaps especially for the US – seeking to find ways of reforming their welfare systems.

In a nutshell, giving people a universal income did not help them get into jobs, but they did feel somewhat happier than those in the control group.

The general reaction to this is that the experiment has been somewhat disappointing. You would expect people to be more willing to take on a job if they knew that they would still keep their state benefit, but this has not happened. And the difference in happiness, while statistically significant, is not that huge.

But I take away a rather different lesson. It is that the idea of doing randomised trials is a really sensible way of evaluating social policies. If this technique were more widely applied, it would be possible to fine-tune welfare support systems so that they gave taxpayers better value for their money, and recipients a higher quality of benefits. The universal basic income is an idea that has generated a lot of global interest. For example, the opposition party in India wants to do something similar. But this is the first proper national randomised trial on a national basis anywhere in the world to see whether it works.

Before any new drug is introduced, there are randomised trials to see whether it is safe, whether it improves the condition of the patients, or there are side effects, and so on. Why not apply the same to social policies?

The pioneer for applying randomised trials to social policy is Esther Duflo, the French-born economist who works at the Massachusetts Institute of Technology. She is wonderful. However she has focussed mainly on developing countries. It seems to me she could be equally useful nearer home, for US social policy needs a thorough overhaul – but one driven by evidence of what works best, rather than the political headlining stuff of the moment.

Look at the pitch of the left-leaning prominent Democrats. Elizabeth Warren has called for a wealth tax to fund an expansion of welfare spending. Alexandria Ocasio-Cortez wants a top rate of income tax of up to 70 per cent. And presidential candidate Andrew Yang wants a monthly income of $1,000 for everyone.

The trouble is that these plans – the wealth tax, the high marginal rate of income tax, and the universal monthly income – are all framed without proper reference to the experience of other countries. Of course you cannot transplant a programme from one country and expect it to bring the same results. Our cultures and economies are all different. But I would expect Senator Warren to have looked at how wealth taxes performed in Europe and Canada before proposing one for the US. (The answer is not very well.)

Ocasio-Cortez should be aware that the European and UK experience suggests that the top rate of income tax to maximise the revenue seems to be somewhere between 40 per cent and 50 per cent. The Institute for Fiscal Studies has done a lot of work on this. Back in the 1950s and 1960s top tax rates were 70 per cent or higher in much of the developed world, including the US and UK. But governments found that when they cut top rates to 50 per cent or below, tax revenues from the wealthy went up, not down.

As for a universal income programme, well, Finland’s experience shows that while it may bring some benefits, it is not a magic bullet for nudging unemployed people into work.

My point here is that countries need to learn from each other. There are aspects of government policy where the US has a lot to teach the UK and Europe – encouraging more business startups, for example. Equally there are areas where Europe has more experience than the US. Social policy is one.

Finland has done a randomised trial of a particular welfare policy. We should learn from this. And governments throughout the developed world should carry out more such studies about other social policies before they launch some politically-attractive new initiative – and find it doesn’t work.