04 April 2011

Evidence *against* cash transfers

If an area is at all isolated with limited access to markets, cash transfers are going to be less effective, as they create a shock to demand with no increase in supply, raising prices for everyone. In-kind transfers increase supply and so don't raise prices in the same way. This paper test this theory, finding that the price rise caused by cash transfers to Mexican villages reduces the transfer value by 11%.

Is 11% a fair price for some choice, control, and dignity? I suppose you'd have to ask those Mexicans...


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