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Much ado about modalities: Multicountry experiments on the effects of cash and food transfers on consumption patterns

Author

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  • Gilligan, Daniel
  • Hidrobo, Melissa
  • Hoddinott, John
  • Roy, Shalini
  • Schwab, Benjamin

Abstract

Aid agencies often provide transfers in food rather than cash out of a paternalistic belief that food transfers will better improve household food security. However, evidence from Latin America shows that cash transfers often increase the share of food in consumption, counter to Engel’s Law. This finding suggests households treat transfer income differently, with previous literature arguing that transfers shift intrahousehold bargaining. Until now, there has been little rigorous evidence on how the effects of transfers on food consumption patterns differ by context or by transfer modality. We use experimental data from three countries, Ecuador, Uganda and Yemen, to test the relative impact of food transfers and cash transfers (and vouchers in Ecuador) on the food share of consumption, food Engel curves, and the composition of food consumption. We find that, in all three countries, there are no significant differences by modality in the impacts of transfers on overall food share or food Engel curves. In particular, in Ecuador, transfers in the form of food, cash, or vouchers all increase the share of food in total consumption, representing outward shifts of the food Engel curves, but there are no significant differences by modality in these shifts. In Uganda, neither food nor cash significantly changes the food share of consumption. In Yemen, there is also no significant difference in Engel curves between food and cash beneficiaries. However, we find in all three countries that there are differences by modality in impacts on the composition of food consumption. In two of the three countries, food transfers lead to increased food group shares of the items included in the food ration, and in all three countries, cash transfers lead to larger improvements in dietary diversity. We find no evidence of changes in intrahousehold bargaining power due to any transfer modality in all three countries, suggesting another factor may be responsible for shifting Engel curves in Ecuador.

Suggested Citation

  • Gilligan, Daniel & Hidrobo, Melissa & Hoddinott, John & Roy, Shalini & Schwab, Benjamin, 2014. "Much ado about modalities: Multicountry experiments on the effects of cash and food transfers on consumption patterns," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 171159, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:171159
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    File URL: http://ageconsearch.umn.edu/record/171159/files/Transfer%20modalities%20and%20consumption%205%2029%2014--AAEA.pdf
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    References listed on IDEAS

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    1. Jesse M. Cunha, 2014. "Testing Paternalism: Cash versus In-Kind Transfers," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 195-230, April.
    2. Manuela Angelucci & Orazio Attanasio, 2013. "The Demand for Food of Poor Urban Mexican Households: Understanding Policy Impacts Using Structural Models," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 146-178, February.
    3. Breisinger, Clemens & Collion, Marie-Helen & Diao, Xinshen & Rondot, Pierre, 2010. "Impacts of the triple global crisis on growth and poverty in Yemen," IFPRI discussion papers 955, International Food Policy Research Institute (IFPRI).
    4. 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.
    5. 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.
    6. Hidrobo, Melissa & Hoddinott, John & Peterman, Amber & Margolies, Amy & Moreira, Vanessa, 2014. "Cash, food, or vouchers? Evidence from a randomized experiment in northern Ecuador," Journal of Development Economics, Elsevier, vol. 107(C), pages 144-156.
    7. Orazio Attanasio & Erich Battistin & Alice Mesnard, 2012. "Food and Cash Transfers: Evidence from Colombia," Economic Journal, Royal Economic Society, vol. 122(559), pages 92-124, March.
    8. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597, October.
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    Cited by:

    1. repec:eee:jeborg:v:149:y:2018:i:c:p:372-388 is not listed on IDEAS
    2. Lara Cockx & Nathalie Francken, 2016. "Evolution and Impact of EU Aid for Food and Nutrition Security: A Review," FOODSECURE Working papers 47, LEI Wageningen UR.

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    Keywords

    Agricultural and Food Policy; International Development;

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