In-Kind Transfers as Insurance
Lucie Gadenne, Samuel Norris, Monica Singhal, Sandip Sukhtankar
American Economic Review · 2024 · Volume 114 · Issue 9
Abstract
Households in developing countries often face variation in the prices of consumption goods. We develop a model demonstrating that in-kind transfers will provide insurance benefits against price risk if the covariance between the marginal utility of income and price is positive. Using calorie shortfalls as a proxy for marginal utility, we find that this condition holds for low-income Indian households. Expansions in India's flagship in-kind food transfer program not only increase caloric intake but also reduce caloric sensitivity to prices. Our results contribute to ongoing debates about the optimal form of social protection programs.
Keywords
Consumer Economics: Empirical Analysis, National Government Expenditures and Welfare Programs, Health: Government Policy, Regulation, Public Health, Welfare, Well-Being, and Poverty: Government Programs, Provision and Effects of Welfare Programs, Microeconomic Analyses of Economic Development, Economic Development: Human Resources, Human Development, Income Distribution, Migration
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