Why Is So Much Redistribution In-Kind and Not in Cash? Evidence from a Survey Experiment

Abstract

Economists often point to the superiority of cash transfers over in-kind assistance as a means of redistribution because recipients can choose how to use these resources. However, among the trillions of dollars of annual U.S. transfers, redistribution is mostly in-kind. We conducted a survey experiment—using a choice between a cash transfer and a transfer that could be spent only on a bundle of “necessities”—to help explain why. We show that the general population overwhelmingly prefers in-kind redistribution, largely for paternalistic reasons. This preference was common to a majority of virtually all segments of the general population, though not to a sample of educational elites. A persuasion treatment on the value of choice, while impactful, did not change this overall preference for in-kind. For an equal-sized program, below-poverty respondents preferred receiving cash. But they appeared to prefer the larger in-kind transfer to the smaller cash transfer that the general population was willing to support. This suggests that an in-kind transfer may be preferable to both recipients and the general population.

Keywords: redistribution, survey experiment, social economics, in-kind, cash, universal basic income, paternalism, self-control mechanisms, behavioral economics, inequality

JEL Classification: D91, D64, H53, I38