Our Daily Bread What is the Evidence on Comparing Cash

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Our Daily Bread, What is the Evidence on Comparing Cash versus Food Transfers. Ugo Gentilini 1, World Bank Social Protection and Labor Global Practice ugentilini worldbank org The author is grateful to. Ana Veronica Lopez for her research assistance Special thanks go to Akhter Ahmed Jenny Aker Harold Alderman. Carlo del Ninno Aulo Gelli Margaret Grosh Matt Hobson John Hoddinott Phillippe Leite Hideki Mori Philip. O Keefe Robert Palacios Jamele Rigolini Susanna Sandstrom Kalanidhi Subbarao Levan Tchatchua Ruslan. Yemtsov and Eric Zapatero for their precious comments and support The paper only reflects the personal views of. the author and not necessarily those of the World Bank. Abstract This paper reviews key issues in the cash versus food debate including as they relate. to political economy theory evidence and practice In doing so it benefited from a new. generation of 12 impact evaluations deliberately comparing alternative transfer modalities. Findings show that differences in effectiveness vary by indicator although they tend to be. moderate on average In some cases differences are more marked i e food consumption and. calorie availability but in most instances they are not statistically significant In general. transfers performance and their difference seem a function of the organic and fluid interactions. among factors like the profile and initial conditions of beneficiaries the capacity of local. markets and program objectives and design Costs associated with cash transfers and vouchers. tend to be substantially lower relative to food Yet methods for cost effectiveness analysis vary. and need to be more standardized and nuanced The reviewed evaluations are helping to shift the. debate from one shaped by ideology political economy and inference of evidence to one. centering on robust and context specific results, Keywords social protection safety nets food security political economy cash transfers in. kind transfers food aid vouchers impact evaluations cost effectiveness. JEL codes D610 H530 O120 O130 Q180,Table of Contents. Executive summary 5,1 Introduction 7,2 Anatomy of the debate 8.
2 1 Political economy 9,2 2 Theory 12,2 3 Evidence and practice 14. 3 Impact evaluations 18,3 1 Descriptive features 18. 3 2 Impacts 23,3 3 Costs 34,4 Discussion 38,5 Conclusions 40. References 41,Annex 1 49,List of Figures Tables and Boxes. Figure 1 Microeconomic effects of cash and in kind transfers 13. Figure 2 Mean seasonal price change in the Malawi maize market 1989 2009 16. Figure 3 Preferences for food and performance of the TPDS 17. Figure 4 Relationship between impact of transfers effect size and initial conditions calories 25. Figure 5 Difference in impact between food and cash transfers on food consumption 26. Figure 6 Difference in impact between food and cash transfers on per capita calorie in take 27. Figure 7 Difference in impact between food and cash transfers on Food Consumption Scores 29. Figure 8 Difference in impact between food and cash transfers on the Dietary Diversity Index 30. Figure 9 Difference in impact between vouchers and cash transfers on Household Dietary. Diversity Scores 31, Figure 10 Difference in impact between food and cash transfers on poverty 32.
Figure 11 Summary of differences in impacts by transfer modality and indicator 33. Figure 12 Summary of differences in impacts by indicator ranges and averages 34. Figure 13 Difference in total costs USD between transfer modalities with and without. procurement 37, Table 1 Descriptive statistics of impact evaluations 22. Table 2 Indicators included in the evaluations 23, Table 3 Relative impacts of food and cash transfers on dietary diversity indicators 29. Table 4 Costs per transfer and transfer ratios 34, Table 5 Beneficiary transaction costs for obtaining transfers time and monetary 36. Table 6 Cost of increasing a given indicator by 15 percent in Ecuador 36. Box 1 Local economic multipliers 15,Box 2 Use of cash by beneficiaries 24. Box 3 Indicators for dietary diversity 28,Executive summary.
Currently one of the hottest social protection debates is whether India should replace its public. food distribution system with cash transfers The issue has been widely covered in the literature. and media with arguments made for and against the transition Similar discussions on cash. versus food are unfolding in countries in the process of reforming their subsidy regimes some. of which in the Middle East the issue equally arises in contexts of responding to chronic food. insecurity such as in Ethiopia and Niger or to sudden disasters such as in Bangladesh and the. Philippines All these examples beg the question of when is it best to provide food instead of. cash a longstanding quandary part of a larger in kind versus cash controversy While evidence. is mounting on the effectiveness of cash in general what do we know about its performance. relative to food in particular, Until recently a key limiting factor in informing the debate in developing countries has been the. paucity of robust comparative evidence As a result the discussion on transfer selection has been. largely based on inference that is based on findings from individual programs implemented in. diverse contexts relying on different evaluation methods or designed for differing purposes. Such extrapolation and comparison of findings could at best be suggestive of relative. effectiveness Drawing from a new generation of evaluations deliberately comparing alternative. transfers this paper takes stock of key issues and evidence on the cash versus food debate. Conceptually the most fundamental dilemma is the trade off between providing choice and. promoting a given externality In kind transfers are often considered paternalistic since they. constrain recipients from maximizing their utility through choice that is the mainstream. argument in favor of cash is that it provides choice and empowers This is a strong rationale. although it also stimulates some reflections for example can choice be exercised where there is. no or limited availability of food Or is choice just the ability to freely dispose of a given. transfer e g cash or should such definition also include the opportunity to choose what to get. in the first place e g cash or food It is not unlikely and it is indeed desirable that these. quandaries will keep fomenting debates in the years to come Also the political economy of. transfer provision would most probably continue to play an important role in shaping what is. provided to recipients Yet those issues should not substitute for or distract from designing and. advocating for assistance based on contextual evidence and performance on the ground. So what do we know about the impacts of alternative transfer modalities The traditional source. of comparative evidence draws from studies on the ex food stamp program now SNAP in the. United States Contrary to predictions of standard theory these overwhelmingly show that. inframarginal in kind transfers are more effective than an equivalent cash transfer in increasing. food consumption A comprehensive review showed that virtually every study finds food. stamps increase household nutrient availability at 2 to 10 times the rate of a like value of cash. income Why such difference While a cash out puzzle is an empirical regularity the debate is. inconclusive on the reasons behind it, But what s the state of the evidence in developing countries The paper reviewed 12 comparative. studies in 10 countries including responses to droughts Niger man made crises Democratic. Republic of Congo and Ecuador and natural disasters Sri Lanka others were implemented as. part of social protection systems such as Bangladesh Ethiopia Mexico and Cambodia while. others envisaged developmental interventions in fragile contexts such as Yemen and Uganda. While conditions and design differed between country studies programs within countries put. cash and food and vouchers when considered on an equal methodological footing. By examining the performance of transfers on a dozen indicators most of which food security. related we paper finds that differences in effectiveness vary by indicator although they tend to. be moderate on average There are cases were differences are more marked e g cash being. more effective in enhancing food consumption while food seems to outperform cash in. increasing household caloric intake although in most cases they are not statistically significant. In general transfers performance and their difference seem a function of the organic and fluid. interactions among a number of factors e g profile and initial conditions of beneficiaries. capacity of local markets and program objectives and design instead of inherent merits of one. modality over the other, The reviewed studies show that cash transfers tend to be at least twice more efficient than food. based interventions Yet methods for cost analyses vary in scope breadth and depth For. example only in two cases it was possible to examine a fuller measure of program efficiency. that account for food procurement costs Such approach led to widely different results that those. based on sole implementation costs In some cases efficiency gains may have been achieved by. shifting costs to beneficiaries in the form of higher travel costs and waiting time to obtain. transfers It is also likely that both costs and effects are fairly dynamic e g set up and variable. costs and may follow seasonal patterns for example While the challenges in undertaking. robust cost analyses should not be underplayed it is important that future cost effectiveness. studies are more standardized and nuanced, Finally a dozen evaluations are just a new beginning not the end of the debate while. promising they are dwarfed by for example the level of empirical attention devoted to. programs like SNAP or conditional cash transfers While the review has shown the growing. knowledge on transfer debate it also exposed a number of information gaps For example the. implementation of voucher programs or combined program modalities seem underexplored also. evidence largely based on food consumption calories and dietary diversity data may tell us little. for example about chronic malnutrition Yet the reviewed studies are already succeeding in. triggering a more fundamental change namely to shifting the terms of the debate from one. largely shaped by ideology political economy and inference of evidence to one centering on. comparable robust and context specific results,1 Introduction.
The current hype for cash transfers is hard to underplay Ozler 2013a Publications titled Show. Them the Money Let Them Eat Cash and Just Give Money to the Poor have made a strong case. for supporting vulnerable people with cash Blattman and Niehaus 2014 Blattman 2014 Hanlon. et al 2011 Evidence and advocacy papers have mushroomed dedicated learning and training. platforms have been established and operational guidelines were developed for both. development and humanitarian contexts CaLP 2013 Cash transfers are subject to extensive. media coverage while the blogosphere regularly host vibrant discussions on cash in connection. for example to the distribution of wealth from natural resources subsidy reforms enhancing. state accountability or exploring variants in program design The Economist 2014 Devarajan. 2013 Ozler 2013b Moss 2013 Pritchett 2012, To be sure cash transfers are among the most rigorously evaluated fields in social sciences. including a proven track record of performance in attaining intended objectives and broader. multipliers Andrews et al 2014 Davis et al 2012 IEG 2011 The basic question that this paper. addresses is not whether cash transfers work in general but whether and when they do so. relative to in kind food assistance Indeed the cash versus in kind debate is among the most. longstanding controversial and polarizing social protection quandaries Take the following. T he big reason poor people are poor is because they don t have enough money and it. shouldn t come as a huge surprise that giving them money is a great way to reduce that problem. considerably more cost effectively than paternalism i e vouchers and in kind transfers So. let s abandon the huge welfare bureaucracy and just give money to those we should help out. Kenny 2013, T housands of economics professors across the globe persuade millions of undergraduates. that granting the poor distribution of benefits in kind is less efficient than simply transferring. to them cash The economist s traditional normative dictum on benefits in kind may be. analytically elegant but practically dead wrong Reinhardt 2013. These seem to posit two irreconcilable perspectives But is there some truth in both What does. the cross country evidence and experience tell us about transfers relative performance Until. recently a key limiting factor in informing the debate in developing countries has been the. paucity of robust comparative evidence 2 As a result the discussion on transfer selection has. been largely based on inference that is based on findings from individual programs. implemented in diverse contexts relying on different evaluation methods or designed for. A notable exception is the United States Supplemental Nutrition Assistance Program SNAP or ex Food Stamp. Program As mentioned in the next section SNAP has been subject to ample empirical scrutiny in comparison to. 1 Our Daily Bread What is the Evidence on Comparing Cash versus Food Transfers July 2014 Ugo Gentilini 1 1 World Bank Social Protection and Labor Global Practice ugentilini worldbank org The author is grateful to Ana Veronica Lopez for her research assistance

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