Advanced Search
MyIDEAS: Login

Transfers in Cash and In Kind: Theory Meets the Data

Contents:

Author Info

  • Janet Currie
  • Firouz Gahvari

Abstract

We review theoretical explanations for in-kind transfers in light of the limited empirical evidence. After reviewing the traditional paternalistic arguments, we consider explanations based on imperfect information and self-targeting. We then discuss the large literature on in-kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the "Samaritan's Dilemma", pecuniary effects, credit constraints, asymmetric information amongst agents, and political economy considerations. Our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in-kind transfer programs, but that some of the other arguments may apply to specific cases. Political economy considerations must also be part of the story.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w13557.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13557.

as in new window
Length:
Date of creation: Oct 2007
Date of revision:
Publication status: published as Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-83, June.
Handle: RePEc:nbr:nberwo:13557

Note: PE POL
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Cremer, Helmuth & Gahvari, Firouz, 2002. " Nonlinear Pricing, Redistribution, and Optimal Tax Policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 139-61.
  2. Raquel Fernandez & Richard Rogerson, 1994. "On the political economy of education subsidies," Staff Report 185, Federal Reserve Bank of Minneapolis.
  3. Baily, Martin Neil, 1978. "Some aspects of optimal unemployment insurance," Journal of Public Economics, Elsevier, vol. 10(3), pages 379-402, December.
  4. Aaron S. Yelowitz, 1996. "Did Recent Medicaid Reforms Cause the Caseload Explosion in the Food Stamp Program?," UCLA Economics Working Papers 756, UCLA Department of Economics.
  5. Marianne Bertrand & Erzo F.P. Luttmer & Sendhil Mullainathan, 1999. "Network Effects and Welfare Cultures," JCPR Working Papers 62, Northwestern University/University of Chicago Joint Center for Poverty Research.
  6. Besley, T. & Coate, S., 1989. "Public Provision Of Private Goods And The Redistribution Of Income," Papers 36, Princeton, Woodrow Wilson School - Discussion Paper.
  7. Narayana Kocherlakota, 2004. "Zero Expected Wealth Taxes: A Mirrlees Approach to Dynamic Optimal Taxation," Levine's Bibliography 122247000000000729, UCLA Department of Economics.
  8. Alistair Munro, 1990. "Self-Selection and Optimal In-Kind Transfers," Working Papers Series 90/3, University of Stirling, Division of Economics.
  9. Philippe De Donder & Jean Hindriks, 1998. "The political economy of targeting," Public Choice, Springer, vol. 95(1), pages 177-200, April.
  10. Mikhail Golosov & Aleh Tsyvinski, 2006. "Designing Optimal Disability Insurance: A Case for Asset Testing," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 257-279, April.
  11. Martin Feldstein, 2005. "Rethinking Social Insurance," American Economic Review, American Economic Association, vol. 95(1), pages 1-24, March.
  12. O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  13. Todd Sinai & Joel Waldfogel, 2002. "Do Low-Income Housing Subsidies Increase Housing Consumption?," NBER Working Papers 8709, National Bureau of Economic Research, Inc.
  14. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz & Lisa Sanbonmatsu, 2004. "Moving To Opportunity And Tranquility: Neighborhood Effects On Adult Economic Self-Sufficiency And Health From A Randomized Housing Voucher Experiment," Working Papers 247, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  15. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
  16. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-64, June.
  17. Beth Osborne Daponte & Seth Sanders & Lowell Taylor, 1999. "Why Do Low-Income Households not Use Food Stamps? Evidence from an Experiment," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 612-628.
  18. Gouveia, Miguel, 1997. " Majority Rule and the Public Provision of a Private Good," Public Choice, Springer, vol. 93(3-4), pages 221-44, December.
  19. Paul A. Hagstrom, 1996. "The Food Stamp Participation and Labor Supply of Married Couples: An Empirical Analysis of Joint Decisions," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 383-403.
  20. Jonah B. Gelbach, 2002. "Public Schooling for Young Children and Maternal Labor Supply," American Economic Review, American Economic Association, vol. 92(1), pages 307-322, March.
  21. Hugo Benitez-Silva & Moshe Buchinsky & John Rust, 2005. "How Large are the Classification Errors in the Social Security Disability Award Process?," Department of Economics Working Papers 05-02, Stony Brook University, Department of Economics.
  22. Chris Giles & Paul Johnson & Julian McCrae, 1997. "Housing benefit and financial returns to employment for tenants in the social sector," Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 49-72, February.
  23. Browning, Edgar K, 1981. "A Theory of Paternalistic In-Kind Transfers," Economic Inquiry, Western Economic Association International, vol. 19(4), pages 579-97, October.
  24. Sonstelie, Jon, 1982. "The Welfare Cost of Free Public Schools," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 794-808, August.
  25. Guesnerie, Roger & Roberts, Kevin, 1984. "Effective Policy Tools and Quantity Controls," Econometrica, Econometric Society, vol. 52(1), pages 59-86, January.
  26. Allen N. Berger & Richard J. Rosen & Gregory F. Udell, 2001. "The effect of market size structure on competition: the case of small business lending," Working Paper Series WP-01-10, Federal Reserve Bank of Chicago.
  27. Janet Currie & Aaron Yelowitz, 1997. "Are Public Housing Projects Good for Kids?," NBER Working Papers 6305, National Bureau of Economic Research, Inc.
  28. Coate, Stephen & Johnson, Stephen & Zeckhauser, Richard, 1994. "Pecuniary redistribution through in-kind programs," Journal of Public Economics, Elsevier, vol. 55(1), pages 19-40, September.
  29. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," NBER Working Papers 7580, National Bureau of Economic Research, Inc.
  30. Hoff, Karla & Lyon, Andrew B., 1995. "Non-leaky buckets: Optimal redistributive taxation and agency costs," Journal of Public Economics, Elsevier, vol. 58(3), pages 365-390, November.
  31. David Card & Carlos Dobkin & Nicole Maestas, 2004. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization and Health: Evidence from Medicare," Working Papers 197, RAND Corporation Publications Department.
  32. Allen N. Berger & Marco A. Espinosa-Vega & W. Scott Frame & Nathan H. Miller, 2004. "Debt maturity, risk, and asymmetric information," Working Paper 2004-32, Federal Reserve Bank of Atlanta.
  33. Pazner, Elisha A, 1972. "Merit Wants and the Theory of Taxation," Public Finance = Finances publiques, , vol. 27(4), pages 460-72.
  34. Blomquist, Suren & Christiansen, Vidar, 1995. " Public Provision of Private Goods as a Redistributive Device in an Optimum Income Tax Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 547-67, December.
  35. Roland Bénabou, 1996. "Inequality and Growth," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 11-92 National Bureau of Economic Research, Inc.
  36. Boadway, R. & Marchand, M., 1990. "The use of public expenditures for distributive purposes," CORE Discussion Papers 1990066, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  37. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post--secondary Schooling," Economic Journal, Royal Economic Society, vol. 112(482), pages 705-734, October.
  38. Edgar O. Olsen, 2003. "Housing Programs for Low-Income Households," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 365-442 National Bureau of Economic Research, Inc.
  39. Pinto, Santiago M., 2004. "Assistance to poor households when income is not observed: targeted in-kind and in-cash transfers," Journal of Urban Economics, Elsevier, vol. 56(3), pages 536-553, November.
  40. Coate, Stephen, 1989. "Cash versus direct food relief," Journal of Development Economics, Elsevier, vol. 30(2), pages 199-224, April.
  41. Helmuth Cremer & Pierre Pestieau, 1996. "Redistributive taxation and social insurance," International Tax and Public Finance, Springer, vol. 3(3), pages 281-295, July.
  42. Guesnerie,Roger, 1998. "A Contribution to the Pure Theory of Taxation," Cambridge Books, Cambridge University Press, number 9780521629560, October.
  43. Hilary W. Hoynes & Diane Schanzenbach, 2007. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," NBER Working Papers 13025, National Bureau of Economic Research, Inc.
  44. Amy Finkelstein, 2007. "The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 1-37, 02.
  45. Neil Bruce & Michael Waldman, 1988. "Transfers in Kind: Why They Can Be Efficient and Non-Paternalistic," UCLA Economics Working Papers 532, UCLA Department of Economics.
  46. Jonathan Gruber & Kosali Simon, 2007. "Crowd-Out Ten Years Later: Have Recent Public Insurance Expansions Crowded Out Private Health Insurance?," NBER Working Papers 12858, National Bureau of Economic Research, Inc.
  47. Katsura, Harold M. & Romanik, Clare T., 2002. "Ensuring access to essential services : demand-side housing subsidies," Social Protection Discussion Papers 25536, The World Bank.
  48. Cremer, Helmuth & Gahvari, Firouz, 1995. "Uncertainty, Optimal Taxation and the Direct versus Indirect Tax Controversy," Economic Journal, Royal Economic Society, vol. 105(432), pages 1165-79, September.
  49. Cremer, Helmuth & Gahvari, Firouz, 1998. "On Optimal Taxation of Housing," Journal of Urban Economics, Elsevier, vol. 43(3), pages 315-335, May.
  50. P. A. Diamond & J. A. Mirrlees, 1977. "A Model of Social Insurance With Variable Retirement," Working papers 210, Massachusetts Institute of Technology (MIT), Department of Economics.
  51. Michael P. Murray, 1978. "A Reinterpretation of the Traditional Income-Leisure Model, with Application to In Kind Subsidy Programs," Working Papers 307, Queen's University, Department of Economics.
  52. Diamond, Peter, 1992. "Organizing the Health Insurance Market," Econometrica, Econometric Society, vol. 60(6), pages 1233-54, November.
  53. Currie, J. & Thomas, D., 1995. "Does Head Start make a Difference?," Papers 95-10, RAND - Reprint Series.
  54. Diane Whitmore, 2002. "What Are Food Stamps Worth?," Working Papers 847, Princeton University, Department of Economics, Industrial Relations Section..
  55. M. Keane & R. Moffitt, . "A structural model of multiple welfare program participation and labor supply," Institute for Research on Poverty Discussion Papers 1080-96, University of Wisconsin Institute for Research on Poverty.
  56. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  57. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
  58. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  59. Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-77, October.
  60. Toumanoff, Peter, 1986. "Exclusion Costs and the In-Kind Transfer," Kyklos, Wiley Blackwell, vol. 39(3), pages 443-47.
  61. Behrman, Jere R. & Hoddinott, John, 2001. "An evaluation of the impact of PROGRESA on pre-school child height," FCND discussion papers 104, International Food Policy Research Institute (IFPRI).
  62. Browning, Edgar K, 1975. "The Externality Argument for In-Kind Transfers: Some Critical Remarks," Kyklos, Wiley Blackwell, vol. 28(3), pages 526-44.
  63. François Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2002. "Ex-ante Evaluation of Conditional Cash Transfer Programs: The Case of Bolsa Escola," William Davidson Institute Working Papers Series 516, William Davidson Institute at the University of Michigan.
  64. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
  65. Kelman, Steven, 1986. "A Case for In-Kind Transfers," Economics and Philosophy, Cambridge University Press, vol. 2(01), pages 55-73, April.
  66. Dan Usher, 1976. "The Welfare Economics of the Socialization of Commodities," Working Papers 218, Queen's University, Department of Economics.
  67. Janet Currie & Aaron S. Yelowitz, 1999. "Health Insurance and Less Skilled Workers," JCPR Working Papers 63, Northwestern University/University of Chicago Joint Center for Poverty Research.
  68. Cremer, Helmuth & Gahvari, Firouz, 1997. "In-kind transfers, self-selection and optimal tax policy," European Economic Review, Elsevier, vol. 41(1), pages 97-114, January.
  69. Robin Boadway & Manuel Leite-Monteiro & Maurice Marchand & Pierre Pestieau, 2006. "Social Insurance and Redistribution with Moral Hazard and Adverse Selection," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 279-298, 07.
  70. Lawrence Katz & Jeffrey R. Kling & B. Jeffrey Liebman & Lisa Sanbonmatsu, 2004. "Moving to Opportunity and Tranquility: Neighborhood Effects on Adult Economic Self-Sufficiency and Health From a Randomized Housing Voucher Experiment," Working Papers 860, Princeton University, Department of Economics, Industrial Relations Section..
  71. Rebecca M. Blank & Patricia Ruggles, 1993. "When Do Women Use AFDC & Food Stamps? The Dynamics of Eligibility vs. Participation," NBER Working Papers 4429, National Bureau of Economic Research, Inc.
  72. repec:fth:prinin:468 is not listed on IDEAS
  73. Gelbach Jonah B. & Pritchett Lant, 2002. "Is More for the Poor Less for the Poor? The Politics of Means-Tested Targeting," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-28, July.
  74. Joseph E. Stiglitz, 1987. "Pareto Efficient and Optimal Taxation and the New New Welfare Economics," NBER Working Papers 2189, National Bureau of Economic Research, Inc.
  75. Amacher, Ryan C & Sandler, Todd, 1977. "The Externality Argument for In-Kind Transfers: A Defense," Kyklos, Wiley Blackwell, vol. 30(2), pages 293-96.
  76. Janet Currie, 2003. "U.S. Food and Nutrition Programs," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 199-290 National Bureau of Economic Research, Inc.
  77. Anna Aizer & Janet Currie, 2002. "Networks or Neighborhoods? Correlations in the Use of Publicly-Funded Maternity Care in California," NBER Working Papers 9209, National Bureau of Economic Research, Inc.
  78. Firouz Gahvari & Enlinson Mattos, 2007. "Conditional Cash Transfers, Public Provision of Private Goods, and Income Redistribution," American Economic Review, American Economic Association, vol. 97(1), pages 491-502, March.
  79. Thurow, Lester C, 1974. "Cash Versus In-Kind Transfers," American Economic Review, American Economic Association, vol. 64(2), pages 190-95, May.
  80. Hylland, Aanund & Zeckhauser, Richard, 1979. " Distributional Objectives Should Affect Taxes but not Program Choice or Design," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 264-84.
  81. Pagano, Marco & Jappelli, Tullio, 1993. " Information Sharing in Credit Markets," Journal of Finance, American Finance Association, vol. 48(5), pages 1693-1718, December.
  82. Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-77, May.
  83. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
  84. Olsen, Edgar O, 1980. "Pareto-Desirable Redistribution in Kind: Comment," American Economic Review, American Economic Association, vol. 70(5), pages 1028-31, December.
  85. Leonardo Gasparini & Santiago Pinto, 2005. "Equality of Opportunity and Optimal Cash and In-Kind Policies," CEDLAS, Working Papers 0022, CEDLAS, Universidad Nacional de La Plata.
  86. Reeder, William J., 1985. "The benefits and costs of the section 8 existing housing program," Journal of Public Economics, Elsevier, vol. 26(3), pages 349-377, April.
  87. Sorge, Marco & Zhang, Chendi, 2007. "Credit information quality and corporate debt maturity : theory and evidence," Policy Research Working Paper Series 4239, The World Bank.
  88. Ortiz-Molina, H. & Penas, M.F., 2004. "Lending to Small Businesses: The Role of Loan Maturity in Adressing Information Problems," Discussion Paper 2004-99, Tilburg University, Center for Economic Research.
  89. Casey B. Mulligan & Tomas J. Philipson, 2000. "Merit Motives and Government Intervention: Public Finance in Reverse," NBER Working Papers 7698, National Bureau of Economic Research, Inc.
  90. Mikhail Golosov & Aleh Tsyvinski & Ivan Werning, 2007. "New Dynamic Public Finance: A User's Guide," NBER Chapters, in: NBER Macroeconomics Annual 2006, Volume 21, pages 317-388 National Bureau of Economic Research, Inc.
  91. Alderman, Harold, 2002. "Subsidies as a social safety net: effectiveness and challenges," Social Protection Discussion Papers 25299, The World Bank.
  92. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-96, December.
  93. Bearse, P. & Glomm, G. & Janeba, E., 2000. "Why poor countries rely mostly on redistribution in-kind," Journal of Public Economics, Elsevier, vol. 75(3), pages 463-481, March.
  94. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
  95. A. S. Yelowitz, . "The Medicaid notch, labor supply, and welfare participation: Evidence from eligibility expansions," Institute for Research on Poverty Discussion Papers 1084-96, University of Wisconsin Institute for Research on Poverty.
  96. Anderberg, Dan, 2001. " Social Insurance with In-Kind Provision of Private Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 41-61, March.
  97. Cremer, Helmuth & Gahvari, Firouz & Ladoux, Norbert, 1998. "Externalities and optimal taxation," Journal of Public Economics, Elsevier, vol. 70(3), pages 343-364, December.
  98. Schroyen, Fred, 2005. "An alternative way to model merit good arguments," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 957-966, June.
  99. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
  100. Slesnick, Daniel T, 1996. "Consumption and Poverty: How Effective Are In-Kind Transfers?," Economic Journal, Royal Economic Society, vol. 106(439), pages 1527-45, November.
  101. Brennan, Geoffrey & Walsh, Cliff, 1977. "Pareto-Desirable Redistribution in Kind: An Impossibility Theorem," American Economic Review, American Economic Association, vol. 67(5), pages 987-90, December.
  102. Browning, Edgar K, 1977. "The Externality Argument for In-Kind Transfers: Still Unsupported," Kyklos, Wiley Blackwell, vol. 30(2), pages 297-99.
  103. Besley, Timothy, 1988. "A simple model for merit good arguments," Journal of Public Economics, Elsevier, vol. 35(3), pages 371-383, April.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Transfers: cash or in-kind?
    by Economic Logician in Economic Logic on 2008-12-22 18:03:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Economic Logic blog

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:13557. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.