Testing Paternalism: Cash vs. In-kind Transfer in Rural Mexico
AbstractWelfare 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.
Download InfoIf 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.
Bibliographic InfoPaper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 09-021.
Date of creation: Apr 2010
Date of revision:
In-kind transfers; Paternalism; Food expenditure; PAL;
Find related papers by JEL classification:
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
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.:
- Hoddinott, John & Skoufias, Emmanual, 2003.
"The impact of Progresa on food consumption,"
150, International Food Policy Research Institute (IFPRI).
- Mahnaz Islam & John Hoddinott, 2009. "Evidence of Intrahousehold Flypaper Effects from a Nutrition Intervention in Rural Guatemala," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 215-238, 01.
- 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.
- Jere R. Behrman & John Hoddinott, 2005. "Programme Evaluation with Unobserved Heterogeneity and Selective Implementation: The Mexican "PROGRESA" Impact on Child Nutrition," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(4), pages 547-569, 08.
- John A. Maluccio, 2007.
"The Impact of Conditional Cash Transfers on Consumption and Investment in Nicaragua,"
Middlebury College Working Paper Series
0722, Middlebury College, Department of Economics.
- John Maluccio, 2010. "The Impact of Conditional Cash Transfers on Consumption and Investment in Nicaragua," Journal of Development Studies, Taylor & Francis Journals, vol. 46(1), pages 14-38.
- Manuela Angelucci & Giacomo De Giorgi, 2009. "Indirect Effects of an Aid Program: How Do Cash Transfers Affect Ineligibles' Consumption?," American Economic Review, American Economic Association, vol. 99(1), pages 486-508, March.
- 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.
- Janet Currie & Firouz Gahvari, 2007. "Transfers in Cash and In Kind: Theory Meets the Data," NBER Working Papers 13557, National Bureau of Economic Research, Inc.
- 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.
- de Janvry, Alain & Fargeix, Andre & Sadoulet, Elisabeth, 1991. "The political feasibility of rural poverty reduction," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 351-367, November.
- Miriam Bruhn & David McKenzie, 2009.
"In Pursuit of Balance: Randomization in Practice in Development Field Experiments,"
American Economic Journal: Applied Economics,
American Economic Association, vol. 1(4), pages 200-232, October.
- Bruhn, Miriam & McKenzie, David, 2008. "In pursuit of balance : randomization in practice in development field experiments," Policy Research Working Paper Series 4752, The World Bank.
- Currie, J. & Cole, N., 1992.
"Welfare and Child Health: the Link Between AFDC Participation and Birth Weight,"
92-9, Massachusetts Institute of Technology (MIT), Department of Economics.
- Currie, Janet & Cole, Nancy, 1993. "Welfare and Child Health: The Link between AFDC Participation and Birth Weight," American Economic Review, American Economic Association, vol. 83(4), pages 971-85, September.
- Pollak, Robert A, 1969. "Conditional Demand Functions and Consumption Theory," The Quarterly Journal of Economics, MIT Press, vol. 83(1), pages 60-78, February.
- Michael Kremer, 2003. "Randomized Evaluations of Educational Programs in Developing Countries: Some Lessons," American Economic Review, American Economic Association, vol. 93(2), pages 102-106, May.
- Daly, George & Giertz, Fred J, 1972. "Welfare Economics and Welfare Reform," American Economic Review, American Economic Association, vol. 62(1), pages 131-38, March.
- Neary, J.P & Roberts, K.W.S, 1978.
"The Theory of Household Behaviour under Rationing,"
The Warwick Economics Research Paper Series (TWERPS)
132, University of Warwick, Department of Economics.
- Carlo Del Ninno & Paul Dorosh, 2003. "Impacts of in-kind transfers on household food consumption: Evidence from targeted food programmes in Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 40(1), pages 48-78.
- 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.
- Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2007.
"Consumption Reponses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program,"
0711, Harris School of Public Policy Studies, University of Chicago.
- Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2009. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 109-39, October.
- 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.
- Moffitt, Robert, 1989. "Estimating the Value of an In-Kind Transfer: The Case of Food Stamps," Econometrica, Econometric Society, vol. 57(2), pages 385-409, March.
- Shapiro, Jesse M., 2005.
"Is there a daily discount rate? Evidence from the food stamp nutrition cycle,"
Journal of Public Economics,
Elsevier, vol. 89(2-3), pages 303-325, February.
- Jesse M. Shapiro, 2003. "Is there a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle," Microeconomics 0304005, EconWPA, revised 21 Apr 2003.
- Besley, Timothy, 1988. "A simple model for merit good arguments," Journal of Public Economics, Elsevier, vol. 35(3), pages 371-383, April.
- Thomas M. Fraker & Alberto P. Martini & James C. Ohls, 1995. "The Effect of Food Stamp Cashout on Food Expenditures: An Assessment of the Findings from Four Demonstrations," Journal of Human Resources, University of Wisconsin Press, vol. 30(4), pages 633-649.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
- 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.
- Sarah Baird & Craig McIntosh & Berk �zler, 2011. "Cash or Condition? Evidence from a Cash Transfer Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1709-1753.
- 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.
- Akresh, Richard & de Walque, Damien & Kazianga, Harounan, 2013. "Cash transfers and child schooling : evidence from a randomized evaluation of the role of conditionality," Policy Research Working Paper Series 6340, The World Bank.
- 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.
- Cunha, Jesse & De Giorgi, Giacomo & Jayachandran, Seema, 2011. "The Price Effects of Cash Versus In-Kind Transfers," CEPR Discussion Papers 8581, C.E.P.R. Discussion Papers.
- 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.
- 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.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne Shor).
If references are entirely missing, you can add them using this form.