Introduction
There is little doubt that cash transfers are amongst the most rigorously-evaluated interventions in development.
1 The basic question that this paper addresses, however, is not whether cash transfers work in general, but whether and why they do so relative to in-kind food assistance. Indeed, the cash versus food debate is among the most longstanding, controversial, and polarizing social protection quandaries. Consider the following quotes: [T]he big reason poor people are poor is because they don’t have enough money, and it shouldn’t come as a huge surprise that giving them money is a great way to reduce that problem – considerably more cost-effectively than paternalism [i.e. vouchers and in-kind transfers]. So let’s abandon the huge welfare bureaucracy and just give money to those we should help out. (Kenny 2013)
[T]housands of economics professors across the globe persuade millions of undergraduates that granting the poor distribution of benefits in-kind is less “efficient” than simply transferring to them cash (…). The economist’s traditional, normative dictum on benefits in-kind may be analytically elegant (…) but practically dead wrong. (Reinhardt 2013)
These excerpts seem to posit two irreconcilable perspectives. But is there some trust in both? What does the cross-country evidence and experience tell us about transfers’ relative performance? Until recently, a key limiting factor in informing the debate has been the paucity of robust comparative evidence. 1 As a result, the discussion on transfer selection has been largely based on inference— that is, based on findings from programs implemented in diverse contexts, relying on different evaluation methods, or designed for differing purposes. Such extrapolation and comparison of findings could, at best, be suggestive of relative effectiveness.
This paper reviews key findings emerging from a new generation of robust impact evaluations in ten developing countries, namely Bangladesh, Cambodia, the Democratic Republic of Congo, Ecuador, Ethiopia, Mexico, Niger, Sri Lanka, Uganda, and Yemen. These studies compare cash and food transfers under the same circumstances through randomized controlled trials (RCTs), quasi-experimental methods, or regression analysis. The paper, which frames and discusses emerging results within the broader issues that shape transfer selection debates, argues that the debate involves a range of factors that makes it more complex than often assumed.
Moreover, it shows that, in terms of effectiveness, there seems to be no systematic dominance of one transfer over the other, and that a number of information gaps persist. Overall, the paper argues that transfer selection may deserve further attention on a par with other program design features such as choices around conditionality and targeting methods.
The analysis is conducted within certain parameters. First, the note examines the transfer debate within the universe of safety net programs, including interventions such as conditional cash transfers, school feeding, public works, or social pensions. In those programs, the size of transfers is generally devised to enable access to food and meet some essential needs. According to survey data from 69 countries, the average size of safety net transfers is about 23 percent of the poor’s income or consumption (World Bank 2014). Therefore, the vast body of literature on “cash grants”—which involve relatively large sums of money to jump-start entrepreneurship and investment—go beyond the scope of this paper. Similarly, in-kind transfers may encompass a vast array of items such as shelter, agricultural inputs, and subsidized health care. Yet we only consider a subset of those transfers, namely food commodities; as such, we use the terms “in-kind” and “food” interchangeably. Also, we regard food as a tout-court transfer, while de facto food rations often include a bundle of commodities of various monetary and nutritional values.
The reminder of the paper is organized as follows: the next section sets out a framework examining key areas that influence transfer selection debates. The subsequent section describes the compilation of evaluations and sets out their results. The next section provides a discussion of the implications from the analysis, while the last section concludes.