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Cash vs. in-kind transfers: Indian data meets theory

Listed author(s):
  • Khera, Reetika

This paper uses qualitative and quantitative data from a survey of over 1200 rural households in nine Indian states to explore the arguments for and against cash and in-kind (in this case, food) transfers. When respondents were asked to think about, argue, and ‘choose’ between the two, two-thirds of the respondents expressed a preference for food. Rather than the choice made by respondents, the focus here is on understanding the reasons behind their choice, as explained by beneficiaries themselves. Two main findings emerge. First, some arguments corroborate existing theory (e.g., paternalism, fungibility), but others (e.g., self-control, transition costs) are not incorporated in existing theory on the advantages of in-kind transfers. Second, context is important. Most importantly, respondents’ reported preferences were associated with the benefits they were experiencing under the status quo: where the PDS performed better at distributing food, respondents were more likely to report preferring food to cash transfers. The contention of traditional theory that cash is superior fails to factor in contextual concerns.

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File URL: http://www.sciencedirect.com/science/article/pii/S0306919214000499
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Article provided by Elsevier in its journal Food Policy.

Volume (Year): 46 (2014)
Issue (Month): C ()
Pages: 116-128

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Handle: RePEc:eee:jfpoli:v:46:y:2014:i:c:p:116-128
DOI: 10.1016/j.foodpol.2014.03.009
Contact details of provider: Web page: http://www.elsevier.com/locate/foodpol

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  1. David Mosse & Sanjeev Gupta & Mona Mehta & Vidya Shah & Julia fnms Rees & KRIBP Project Team, 2002. "Brokered livelihoods: Debt, Labour Migration and Development in Tribal Western India," Journal of Development Studies, Taylor & Francis Journals, vol. 38(5), pages 59-88.
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  4. Spears Dean, 2011. "Economic Decision-Making in Poverty Depletes Behavioral Control," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-44, December.
  5. Puja Dutta & Stephen Howes & Rinku Murgai, 2010. "Small but effective: India's targeted unconditional cash transfers," ASARC Working Papers 2010-18, The Australian National University, Australia South Asia Research Centre.
  6. Kelman, Steven, 1986. "A Case for In-Kind Transfers," Economics and Philosophy, Cambridge University Press, vol. 2(01), pages 55-73, April.
  7. repec:pri:rpdevs:deaton_price_trends_in_india_version_3_jan_08_all.pdf is not listed on IDEAS
  8. Sabates-Wheeler, Rachel & Devereux, Stephen, 2010. "Cash transfers and high food prices: Explaining outcomes on Ethiopia's Productive Safety Net Programme," Food Policy, Elsevier, vol. 35(4), pages 274-285, August.
  9. repec:pri:rpdevs:deaton_price_trends_in_india_version_3_jan_08_all is not listed on IDEAS
  10. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
  11. Christopher Barrett & Robert Bell & Erin Lentz & Daniel Maxwell, 2009. "Market information and food insecurity response analysis," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 1(2), pages 151-168, June.
  12. 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 333-383, June.
  13. Reetika Khera, 2011. "Trends In Diversion Of Pds Grain," Working papers 198, Centre for Development Economics, Delhi School of Economics.
  14. Angus Deaton, 2008. "Price trends in India and their implications for measuring poverty," Working Papers 1008, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
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