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The Freedom to Choose: Theory and Quasi-Experimental Evidence on Cash Transfer Restrictions

Author

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  • Jade Siu
  • Olivier Sterck
  • Cory Rodgers

Abstract

Should cash transfer programmes restrict consumer choice? For example, should food assistance delivered in cash be restricted to food and exclude temptation goods? Theoretically, if transfers are extra-marginal, restrictions induce (1) a substitution effect away from restricted goods and (2) a negative wealth effect if transfer recipients resell unrestricted goods at a loss to access restricted goods. The welfare impact on transfer recipients is negative. We test and corroborate these predictions by exploiting a natural experiment in a refugee settlement in Kenya, where some refugees receive monthly cash transfers restricted to food while others get unrestricted cash transfers.

Suggested Citation

  • Jade Siu & Olivier Sterck & Cory Rodgers, 2021. "The Freedom to Choose: Theory and Quasi-Experimental Evidence on Cash Transfer Restrictions," CSAE Working Paper Series 2021-14, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2021-14
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    Cited by:

    1. Rozo, Sandra & Grossman, Guy, 2025. "Refugees and Other Forcibly Displaced Populations," Policy Research Working Paper Series 11123, The World Bank.
    2. Gazeaud, Jules & Khan, Nausheen & Mvukiyehe, Eric & Sterck, Olivier, 2023. "With or without him? Experimental evidence on cash grants and gender-sensitive trainings in Tunisia," Journal of Development Economics, Elsevier, vol. 165(C).
    3. Leight, Jessica & Gentilini, Ugo, 2025. "Cash, food, and vouchers: An overview of the evidence," Other briefs 177186, International Food Policy Research Institute (IFPRI).
    4. Betts,Alexander Milton Stedman & Stierna,Maria Flinder & Omata,Naohiko & Sterck,Olivier Christian Brigitte, 2022. "Social Cohesion and Refugee-Host Interactions : Evidence from East Africa," Policy Research Working Paper Series 9917, The World Bank.
    5. Betts, Alexander & Flinder Stierna, Maria & Omata, Naohiko & Sterck, Olivier, 2024. "The economic lives of refugees," World Development, Elsevier, vol. 182(C).
    6. Delius, Antonia & Sterck, Olivier, 2024. "Cash transfers and micro-enterprise performance: Theory and quasi-experimental evidence from Kenya," Journal of Development Economics, Elsevier, vol. 167(C).
    7. Sawadogo, Rayangnewendé Frans, 2024. "Do fiscal rules shape private-sector investment decisions?," Journal of Macroeconomics, Elsevier, vol. 81(C).
    8. Betts, Alexander & Flinder Stierna, Maria & Omata, Naohiko & Sterck, Olivier, 2023. "Refugees welcome? Inter-group interaction and host community attitude formation," World Development, Elsevier, vol. 161(C).
    9. Kerwin, Jason & Rostom, Nada & Sterck, Olivier, 2024. "Striking the Right Balance: Why Standard Balance Tests Over-Reject the Null, and How to Fix It," IZA Discussion Papers 17217, Institute of Labor Economics (IZA).

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    Keywords

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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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