Testing Paternalism: Cash Versus In-kind Transfers in Rural Mexico

Working paperWelfare programs are often implemented in-kind to promote outcomes that might not be realized under cash transfers. This paper tests whether such paternalistically motivated transfers are justified compared to cash, using a Randomized Controlled Trial of Mexico’s food assistance program. In relation to total food consumption, the in-kind transfer was infra-marginal and non-distorting. However, the transfer contained 10 food items, and there was a large variation in the extent to which individual foods were extra-marginal and distorting. Small differences in children’s nutritional intake under in-kind transfers did not lead to meaningful differential improvements in child health compared to cash