Cash Transfers, Food Prices, and Nutrition Impacts on Nonbeneficiary Children

Based on a randomized evaluation, the paper shows that a household-targeted Philippine cash transfer program significantly raised the local price of key foods relevant for child nutritional status. This shift in prices increased stunting among young nonbeneficiary children by 34 percent (11 percentage points). Price and stunting effects increase in program saturation; at median saturation, the village income shock is 15 percent. These effects persist 2.5 years after program introduction. The authors confirm the price patterns in their experimental sample against price information from nationally-representative household expenditure surveys across the 6-year rollout of the program. Failing to consider such general equilibrium effects may overstate the net benefits of targeted cash transfers. In areas where targeting of social programs covers a large proportion of the population, offering the program on a universal basis may avoid such long-lasting negative impacts at moderate additional cost.