Mexico Tried Giving Poor People Cash Instead of Food. It Worked.
Dylan Matthews - Vox
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June 27, 2014

Alejandro Higuera Osuna, the mayor of Mazatlán, Mexico, and his wife, the city's family assistance director Juana Guillermina Higuera Avila, provide food boxes to a woman. (DIF Mazáltan)

In the United States, most government aid takes the form of in-kind transfers: that is, the government gives you stuff, or a voucher to buy specific stuff, rather than just cash to buy whatever you like. That has led to a panoply of programs — food stamps, housing assistance, Medicaid, insurance subsidies — that are each focused on a particular purpose. But there's only value in giving people, say, food rather than money if they wouldn't have used the money to buy food anyway. And a new study suggests that when people in Mexico got cash rather than food aid, they spent it on… food.

In the study, Naval Postgraduate School's Jesse Cunha looks at the Mexican government's food assistance program, known as Programa de Apoyo Alimentario (loosely translated to Food Aid Program, or PAL). "Participating households receive monthly transfers (trucked into the villages) consisting of ten common food items, such as corn flour, beans, rice, oil, and powdered milk," Cunha explains. "Eligibility for the program was determined through a means test, and take-up among eligible households was virtually universal."

During the program's rollout in 2003, the government did an experiment in 200 villages where households eligible for the program randomly received "either the in-kind food transfer, an unrestricted cash transfer, or no transfer." Evaluating the experimental data, Cunha finds that "both cash and in-kind transfers increased total consumption relative to no transfer, and that effect sizes are indistinguishable from one another."

In other words: if you just give people cash, they still buy as much food as they would have gotten had you given them food instead.

Read the rest at Vox

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