| Sumario: | The choice of different modalities for transferring resources to extremely poor households—food provided in-kind, cash, or intermediate modalities such as vouchers—has long been the subject of active debate in both policy and research. This note provides an overview of the recent evidence around the relative effectiveness of cash and food aid, drawing on studies conducted over the last 20 years around the world.
Each modality has some potential advantages. Cash transfers are flexible in allowing recipients to use resources to meet a range of material needs (including, but not limited to food); and when they do choose to purchase food, allows them to choose a basket of items that is optimal based on their preferences. (The corresponding disadvantage of food transfers is that if recipients de sire nonfood items, they have to resell food for funds, often at a nontrivial transaction cost.) Cash transfers are often easier and lower-cost to deliver (particularly given the substantial growth of electronic payment systems) compared with the more complex logistical requirements of delivering food, especially perishable food. They are also generally less observable, potentially rendering them less likely to generate stigma or demands for sharing from nonrecipients. Cash can also have indirect beneficiaries through positive spillover effects in the local economy, though the evidence base for this is not large, and suggests that spillovers may be negative in some contexts.
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