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Testing Paternalism: Cash vs. In-kind Transfer in Rural Mexico

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  • Jesse Cunha

    ()
    (Stanford University)

Abstract

Welfare programs are often implemented in-kind to promote outcomes that might not be realized under cash transfers. I use a randomized controlled trial of the Mexican government's Food Assistance Program ('PAL') to test whether this form of paternalism is necessary, comparing precisely measured consumption and health outcomes under both in-kind food and cash transfers. Importantly, I fnd that households do not indulge in the consumption of vices when handed cash. Furthermore, there is little evidence that the in-kind food transfer induced more food to be consumed than did an equal-valued cash transfer. This result is partly explained by the fact that the in-kind transfer was infra-marginal in terms of total food. However, the PAL in-kind basket contained 10 individual items, and these transfers indeed altered the types of food consumed for some households. While this distorting effect of in-kind transfers is paternalism's motivation, I fnd that households receiving cash consumed equally nutritious foods. Finally, there were few differences in child nutritional intakes, and no diferences in child height, weight, sickness, or anemia prevalence. While other justifcations for in-kind transfers may certainly apply, there is minimal evidence supporting the paternalistic one in this context.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 09-021.

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Date of creation: Apr 2010
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Handle: RePEc:sip:dpaper:09-021

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Keywords: In-kind transfers; Paternalism; Food expenditure; PAL;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Cash is the null
    by Eric Crampton in Offsetting Behaviour on 2014-04-03 21:35:00
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Cited by:
  1. Baird, Sarah & Mcintosh, Craig & Ozler, Berk, 2010. "Cash or condition ? evidence from a cash transfer experiment," Policy Research Working Paper Series 5259, The World Bank.
  2. Richard Akresh & Damien de Walque & Harounan Kazianga, 2013. "Cash Transfers and Child Schooling: Evidence from a Randomized Evaluation of the Role of Conditionality," Economics Working Paper Series 1301, Oklahoma State University, Department of Economics and Legal Studies in Business.
  3. Jesse M. Cunha & Giacomo De Giorgi & Seema Jayachandran, 2011. "The Price Effects of Cash Versus In-Kind Transfers," NBER Working Papers 17456, National Bureau of Economic Research, Inc.
  4. Schwab, Benjamin, 2013. "In the form of bread? A randomized comparison of cash and food transfers in Yemen," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150448, Agricultural and Applied Economics Association.
  5. Durr-e-Nayab & Shujaat Farooq, 2012. "Effectiveness of Cash Transfer Programmes for Household Welfare in Pakistan: The Case of the Benazir Income Support Programme," Poverty and Social Dynamics Paper Series 2012:04, Pakistan Institute of Development Economics.
  6. Ethan M.J. Lieber & Lee M. Lockwood, 2013. "Costs and Benefits of In-Kind Transfers: The Case of Medicaid Home Care Benefits," Working Papers wp294, University of Michigan, Michigan Retirement Research Center.

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