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American Economic Review Vol. 114 No. 9 2024

In-Kind Transfers as Insurance

Lucie Gadenne1; Samuel Norris2; Monica Singhal3; Sandip Sukhtankar4

1 Queen Mary University of London, Institute for Fiscal Studies, BREAD, and CEPR (email: ) · 2 University of British Columbia (email: ) · 3 University of California, Davis and NBER (email: ) · 4 University of Virginia, JPAL, BREAD, and NBER (email: )

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.

DOI
10.1257/aer.20220822
Volume
114
Issue
9
Pages
2861-2897
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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