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Cash transfers and temptation goods : a review of global evidence

Author

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  • Evans, David K.
  • Popova, Anna

Abstract

Cash transfers have been demonstrated to improve education and health outcomes and alleviate poverty in various contexts. However, policy makers and others often express concern that poor households will use transfers to buy alcohol, tobacco, or other"temptation goods."The income effect of transfers will increase expenditures if alcohol and tobacco are normal goods, but this may be offset by other effects, including the substitution effect, the effect of social messaging about the appropriate use of transfers, and the effect of shifting dynamics in intra-household bargaining. The net effect is ambiguous. This paper reviews 19 studies with quantitative evidence on the impact of cash transfers on temptation goods, as well as 11 studies that surveyed the number of respondents who reported they used transfers for temptation goods. Almost without exception, studies find either no significant impact or a significant negative impact of transfers on temptation goods. In the only (two, non-experimental) studies with positive significant impacts, the magnitude is small. This result is supported by data from Latin America, Africa, and Asia. A growing number of studies from a range of contexts therefore indicate that concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded.

Suggested Citation

  • Evans, David K. & Popova, Anna, 2014. "Cash transfers and temptation goods : a review of global evidence," Policy Research Working Paper Series 6886, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6886
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    References listed on IDEAS

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    1. Adele Atkinson & Debbie Harrison & Flore-Anne Messy & Juan Yermo, 2012. "Lessons from National Pensions Communication Campaigns," OECD Working Papers on Finance, Insurance and Private Pensions 18, OECD Publishing.
    2. Pablo Antolin & Olga Fuentes, 2012. "Communicating Pension Risk to DC Plan Members: The Chilean Case of a Pension Risk Simulator," OECD Working Papers on Finance, Insurance and Private Pensions 28, OECD Publishing.
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    Cited by:

    1. Marta Kozicka & Regine Weber & Matthias Kalkuhl, 2016. "Public Distribution System vs. Market: Analysis of Wheat and Rice Consumption in India," FOODSECURE Working papers 40, LEI Wageningen UR.
    2. Christopher Blattman & Julian C. Jamison & Margaret Sheridan, 2015. "Reducing crime and violence: Experimental evidence from cognitive behavioral therapy in Liberia," NBER Working Papers 21204, National Bureau of Economic Research, Inc.
    3. M. Caridad Araujo & Mariano Bosch & Norbert Schady, 2017. "Can Cash Transfers Help Households Escape an Inter-Generational Poverty Trap?," NBER Chapters,in: The Economics of Asset Accumulation and Poverty Traps National Bureau of Economic Research, Inc.
    4. Gentilini, Ugo, 2014. "Our daily bread : what is the evidence on comparing cash versus food transfers?," Social Protection and Labor Policy and Technical Notes 89502, The World Bank.
    5. repec:wbk:wbpubs:26490 is not listed on IDEAS
    6. Aker,Jenny C., 2015. "Comparing cash and voucher transfers in a humanitarian context : evidence from the Democratic Republic of Congo," Policy Research Working Paper Series 7469, The World Bank.
    7. Kozicka, Marta & Weber, Regine & Kalkuhl, Matthias, 2016. "Public Distribution System in India - Leakage, Self-Selection and Targeting Errors," Annual Conference 2016 (Augsburg): Demographic Change 145499, Verein für Socialpolitik / German Economic Association.
    8. Brune, Lasse & Giné, Xavier & Goldberg, Jessica & Yang, Dean, 2017. "Savings defaults and payment delays for cash transfers: Field experimental evidence from Malawi," Journal of Development Economics, Elsevier, pages 1-13.

    More about this item

    Keywords

    Debt Markets; Rural Poverty Reduction; Services&Transfers to Poor; Economic Theory&Research; Poverty Impact Evaluation;

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