Transfers in Cash and in Kind: Theory Meets the Data

94 Pages Posted: 31 Oct 2007 Last revised: 19 Jul 2010

See all articles by Janet Currie

Janet Currie

Princeton University; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Firouz Gahvari

University of Illinois at Urbana-Champaign - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 2007

Abstract

We review theoretical explanations for in-kind transfers in light of the limited empirical evidence. After reviewing the traditional paternalistic arguments, we consider explanations based on imperfect information and self-targeting. We then discuss the large literature on in-kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the "Samaritan's Dilemma", pecuniary effects, credit constraints, asymmetric information amongst agents, and political economy considerations. Our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in-kind transfer programs, but that some of the other arguments may apply to specific cases. Political economy considerations must also be part of the story.

Suggested Citation

Currie, Janet and Gahvari, Firouz, Transfers in Cash and in Kind: Theory Meets the Data (October 2007). NBER Working Paper No. w13557, Available at SSRN: https://ssrn.com/abstract=1024972

Janet Currie (Contact Author)

Princeton University ( email )

Princeton, NJ 08544-1021
United States
6092587393 (Phone)

HOME PAGE: http://www.princeton.edu/~jcurrie

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Firouz Gahvari

University of Illinois at Urbana-Champaign - Department of Economics ( email )

313 David Kinley Hall, 1407 West Gregory Drive
Urbana, IL 61801
United States

HOME PAGE: http://www.economics.illinois.edu/people/fgahvari

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschingerstr. 5
Munich, DE-81679
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
1,601
PlumX Metrics