The Welfare and Market of Effects of Delays in Humanitarian Assistance

Abstract

Humanitarian aid delivery is often delayed due to logistical, bureaucratic, or security challenges. While the Permanent Income Hypothesis (PIH) predicts limited impacts, its assumptions may not hold in humanitarian contexts. We test this hypothesis using high-frequency panel data and random variation in interview dates in one of the world’s largest refugee camps, in Kenya. We find that households are able to smooth consumption within the regular aid cycle, but delays lead to sharp declines in caloric intake, food security, and food stocks, with evidence of downstream effects on subjective well-being, time preferences, and cognitive function. Access to credit mitigates these effects, but at a 17% cost premium. Local market prices also respond to the timing of aid, with spillovers across camps. These findings challenge the PIH and models with present-biased preferences, and underscore the hidden costs of frictions in aid delivery.

Keywords: Humanitarian assistance, Cash transfers, Consumption smoothing, Permanent Income Hypothesis

JEL Classification: D50, I38, O12, O19