Transfers in Cash and In-Kind: Theory Meets the Data
Journal of Economic Literature
no. 2, June 2008
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.
Currie, Janet, and Firouz Gahvari.
"Transfers in Cash and In-Kind: Theory Meets the Data."
Journal of Economic Literature,
Consumer Economics: Theory
National Government Expenditures and Related Policies: General
Health: Government Policy; Regulation; Public Health
Education: Government Policy
Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs