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Beneficiary Views on Cash and In-Kind Payments: Evidence from Ethiopia's Productive Safety Net Programme

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  • Kalle Hirvonen
  • John Hoddinott

Abstract

Economists often default to the assumption that cash is always preferable to an in-kind transfer. Do beneficiaries feel the same way? This paper addresses this issue using longitudinal household data from Ethiopia, where a large-scale social safety net intervention (PSNP) operates. Even though most payments are made in cash, and even though the (temporal) transaction costs associated with food payments are higher than payments received as cash, most beneficiaries stated that they prefer their payments only or partly in food. Higher food prices induce shifts in stated preferences toward in-kind transfers. More food-secure households, those closer to food markets and to financial services are more likely to prefer cash. Though shifts occur, the stated preference for food is dominant: In no year do more than 17 percent of households prefer only cash. There is suggestive evidence that stated preferences for food are also driven by self-control concerns.

Suggested Citation

  • Kalle Hirvonen & John Hoddinott, 2021. "Beneficiary Views on Cash and In-Kind Payments: Evidence from Ethiopia's Productive Safety Net Programme," The World Bank Economic Review, World Bank, vol. 35(2), pages 398-413.
    • Handle: RePEc:oup:wbecrv:v:35:y:2021:i:2:p:398-413.
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    File URL: http://hdl.handle.net/10.1093/wber/lhaa002
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    References listed on IDEAS

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    2. Bearse, P. & Glomm, G. & Janeba, E., 2000. "Why poor countries rely mostly on redistribution in-kind," Journal of Public Economics, Elsevier, vol. 75(3), pages 463-481, March.
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    4. repec:pri:rpdevs:deaton_tarozzi_prices_poverty.pdf is not listed on IDEAS
    5. Jenny C. Aker, 2017. "Comparing Cash and Voucher Transfers in a Humanitarian Context: Evidence from the Democratic Republic of Congo," The World Bank Economic Review, World Bank, vol. 31(1), pages 44-70.
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    Cited by:

    1. Berkouwer, Susanna & Biscaye, Pierre & Hsu, Eric & Kim, Oliver & Lee, Kenneth & Miguel, Edward & Wolfram, Catherine, 2023. "Money or Power? Choosing Covid-19 aid in Kenya," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt77q3w4sm, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Li, Nicholas, 2023. "In-kind transfers, marketization costs and household specialization: Evidence from Indian farmers," Journal of Development Economics, Elsevier, vol. 164(C).
    3. Silvio Daidone & Francisco Pereira Fontes, 2023. "The role of social protection in mitigating the effects of rainfall shocks. Evidence from Ethiopia," Journal of Productivity Analysis, Springer, vol. 60(3), pages 315-332, December.
    4. Berkouwer, Susanna & Biscaye, Pierre & Hsu, Eric & Kim, Oliver & Lee, Kenneth & Miguel, Edward & Wolfram, Catherine, 2023. "Money or Power? Choosing Covid-19 aid in Kenya," Department of Economics, Working Paper Series qt77q3w4sm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    5. Berkouwer, Susanna & Biscaye, Pierre & Hsu, Eric & Kim, Oliver & Lee, Kenneth & Miguel, Edward & Wolfram, Catherine, 2023. "Money or Power? Choosing Covid-19 aid in Kenya," Energy Economics, Elsevier, vol. 127(PB).

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