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Why would cash transfers typically be preferred by recipients over in-kind transfers?

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awlgeelady | Student, Undergraduate

Posted May 9, 2013 at 1:46 PM via web

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Why would cash transfers typically be preferred by recipients over in-kind transfers?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 9, 2013 at 1:57 PM (Answer #1)

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In general, people will prefer to get cash transfers from the government rather than in-kind transfers because these transfers give them more power and autonomy.  They come with fewer “strings” attached and are therefore more useful in tangible ways.  It is also more dignified, in a sense, to get money rather than in-kind transfers.

If a government provides cash transfers, as with a welfare system, the recipients have much more freedom and flexibility than they would have if the transfers were in-kind.  For example, let us say that the government gave a poor family a chunk of money rather than food stamps.  The family could, potentially, spend the money wisely on food and thereby have some savings left over to use for other purposes.  By contrast, an in-kind transfer would require them to use all of their benefit on food, giving them very little flexibility.

If we are talking about true in-kind transfers, such as bags of flour and cans of meat, the same applies, only more so.  With a cash transfer, the family can choose what they want to buy.  With the in-kind transfers, the family has to use whatever they are given.  This gives them much less choice and flexibility and is therefore less useful and also perhaps demeaning to some degree.

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