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

38 Pages Posted: 29 Jan 2020 Last revised: 30 Jan 2020

See all articles by Kalle Hirvonen

Kalle Hirvonen

International Food Policy Research Institute (IFPRI)

John Hoddinott

Cornell University - Charles H. Dyson School of Applied Economics and Management

Date Written: January 28, 2020

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 towards 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

Hirvonen, Kalle and Hoddinott, John, Beneficiary Views on Cash and In-Kind Payments: Evidence from Ethiopia's Productive Safety (January 28, 2020). World Bank Policy Research Working Paper No. 9125, Available at SSRN: https://ssrn.com/abstract=3527136

Kalle Hirvonen (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

John Hoddinott

Cornell University - Charles H. Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

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