Why Cash Violates Neutrality

Egalitarian liberal political philosophers have been at pains to show that there is a nonnegligible "place" for liberty within the framework of an egalitarian theory of justice. Thus, many have insisted that, when redistribution is required in order to achieve greater equality, assets should be transferred in the most abstract form possible, ideally through a system of cash transfers. In this article we argue that this strategy has the potential to generate significant violations of neutrality. The problem arises from the fact that individuals with certain rates of time preference often want to use social institutions as self-binding mechanisms and as a result may exhibit a preference for in-kind benefits or other institutional arrangements that are frequently misclassified as paternalistic. We argue that egalitarians who rely on cash transfers as a way of accommodating the demands of liberty do so at the expense of neutrality.