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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.

Suggested Citation

  • Jesse Cunha, 2010. "Testing Paternalism: Cash vs. In-kind Transfer in Rural Mexico," Discussion Papers 09-021, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:09-021
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    File URL: http://www-siepr.stanford.edu/repec/sip/09-021.pdf
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    References listed on IDEAS

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    Citations

    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 2014-04-04 02:35:00

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    Cited by:

    1. Ciro Avitabile, 2012. "Does Information Improve the Health Behavior of Adults Targeted by a Conditional Transfer Program?," Journal of Human Resources, University of Wisconsin Press, pages 785-825.
    2. Essers, Dennis, 2013. "South African labour market transitions during the global financial and economic crisis: Micro-level evidence from the NIDS panel and matched QLFS cross-sections," IOB Working Papers 2013.12, Universiteit Antwerpen, Institute of Development Policy (IOB).
    3. Sarah Baird & Craig McIntosh & Berk Özler, 2011. "Cash or Condition? Evidence from a Cash Transfer Experiment," The Quarterly Journal of Economics, Oxford University Press, pages 1709-1753.
    4. Rachel Griffith & Sarah Smith & Stephanie von Hinke Kessler Scholder, 2014. "Getting a healthy start? Nudge versus economic incentives," The Centre for Market and Public Organisation 14/328, Department of Economics, University of Bristol, UK.
    5. repec:bri:cmpowp:13/328 is not listed on IDEAS
    6. Durr-E-Nayab & Shujaat Farooq, 2014. "Effectiveness of Cash Transfer Programmes for Household Welfare in Pakistan: The Case of the Benazir Income Support Programme," The Pakistan Development Review, Pakistan Institute of Development Economics, pages 145-174.
    7. 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.
    8. Durr-E-Nayab & Shujaat Farooq, 2014. "Effectiveness of Cash Transfer Programmes for Household Welfare in Pakistan: The Case of the Benazir Income Support Programme," The Pakistan Development Review, Pakistan Institute of Development Economics, pages 145-174.
    9. Sarah Baird & Craig McIntosh & Berk Özler, 2011. "Cash or Condition? Evidence from a Cash Transfer Experiment," The Quarterly Journal of Economics, Oxford University Press, pages 1709-1753.
    10. Hoddinott, John & Sandstrom, Susanna & Upton, Joanna, 2013. "The impact of cash and food transfers: Evidence from a randomized intervention in Niger," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149919, Agricultural and Applied Economics Association.
    11. 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.
    12. Davidsson, Michael & Rickman, Dan S., 2011. "U.S. Micropolitan Area Growth: A Spatial Equilibrium Growth Analysis," The Review of Regional Studies, Southern Regional Science Association, pages 179-203.
    13. Katz, Benjamin & Chaffin, Josh & Alon, Inbal & Ager, Alastair, 2014. "Livelihoods, economic strengthening, child protection and well-being in Western Uganda," Children and Youth Services Review, Elsevier, pages 149-156.
    14. Andreas Hubener & Raimond Maurer & Olivia S. Mitchell, 2016. "How Family Status and Social Security Claiming Options Shape Optimal Life Cycle Portfolios," Review of Financial Studies, Society for Financial Studies, pages 937-978.
    15. Ethan M.J. Lieber & Lee M. Lockwood, 2017. "Targeting with In-kind Transfers: Evidence from Medicaid Home Care," Working Papers wp359, University of Michigan, Michigan Retirement Research Center.
    16. 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.

    More about this item

    Keywords

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

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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