Direct Payment to Low-Income Households May Be a Better Form of Social Support Than General Subsidies for Food and Transport

Abstract

Helping the low-income in our community is ethical and a must to maintain social harmony and cohesion. This help is usually economic as the low income faces different levels of challenges in their daily life: chief amongst which is housing, food, education, healthcare, and transport. Many countries have chosen general subsidies for food and transport as social support for low-income families. But, such support is expensive as it occurs at the population level, with effects distributed across the wider population. This implies that the limited social spending budget is not achieving its greatest effect in helping the low-income people. Hence, to ameliorate the problem, it may be better to provide direct cash payments to low-income families to aid them to procure daily necessities as well as gradually move out of the poverty trap.

Keywords: poverty trap, direct cash payments, general subsidies, social spending budget, means testing, microeconomic, macroeconomic