The Price Effects of Cash Versus In-Kind Transfers

Cunha, Jesse M.; Giorgi, Giacomo De; Jayachandran, Seema

doi:10.1093/restud/rdy018

Cited by 113 publications

(41 citation statements)

References 31 publications

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“…The exclusion of the poorest communities (targeted by a different program studied, for instance, by Cunha, De Giorgi, and Jayachandran (2017)) was justified by the fact that to comply with the Progresa requirements, eligible households had to have access to certain public services and infrastructure such as schools and health care centers. However, they were not the most marginalized communities in the country.…”

Section: Quantity Discounts: the Case Of Mexicomentioning

confidence: 99%

Nonlinear Pricing in Village Economies

Attanasio

Pastorino

2020

ECTA

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This paper examines the prices of basic staples in rural Mexico. We document that nonlinear pricing in the form of quantity discounts is common, that quantity discounts are sizable for basic staples, and that the well-known conditional cash transfer program Progresa has significantly increased quantity discounts, although the program, as documented in previous studies, has not affected unit prices on average. To account for these patterns, we propose a model of price discrimination that nests those of Maskin and Riley (1984) and Jullien (2000), in which consumers differ in their tastes and, because of subsistence constraints, in their ability to pay for a good. We show that under mild conditions, a model in which consumers face heterogeneous subsistence or budget constraints is equivalent to one in which consumers have access to heterogeneous outside options. We rely on known results to characterize the equilibrium price schedule, which is nonlinear in quantity. We analyze the effect of nonlinear pricing on market participation as well as the impact of a market-wide transfer, analogous to the Progresa one, when consumers are differentially constrained. We show that the model is structurally identified from data on prices and quantities from a single market under common assumptions. We estimate the model using data on three commonly consumed commodities from municipalities and localities in Mexico. Interestingly, we find that relative to linear pricing, nonlinear pricing is beneficial to a large number of households, including those consuming small quantities, mostly because of the higher degree of market participation that nonlinear pricing induces. We also show that the Progresa transfer has affected the slopes of the price schedules of the three commodities we study, which have become steeper as consistent with our model, leading to an increase in the intensity of price discrimination. Finally, we find that a reduced form of our model, in which the size of quantity discounts depends on the hazard rate of the distribution of quantities purchased in a village, accounts for the shift in price schedules induced by the program. have provided superlative research assistance. We especially thank Brian Albrecht, Adway De, Kai Ding, Keyvan Eslami, and Rishabh Kirpalani for many useful comments and Joan Gieseke for invaluable editorial assistance. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

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Section: Quantity Discounts: the Case Of Mexicomentioning

confidence: 99%

Nonlinear Pricing in Village Economies

Attanasio

Pastorino

2020

ECTA

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“…If the inkind transfer amount is no greater than the unconstrained utility-maximizing expenditure, then the transfer is inframarginal; if not, the cash transfer dominates. Yet, in-kind transfers may have significant advantages in certain contexts (Bruce and Waldman 1991;Cunha, De Giorgi, and Jayachandran 2018;Currie and Gahvari 2008;Gadenne et al 2021;Hirvonen and Hoddinott 2021).…”

Section: Efficiencymentioning

confidence: 99%

Disbursing Emergency Relief through Utilities: Evidence from Ghana

Berkouwer¹,

Biscaye²,

Puller³

et al. 2021

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The views expressed in this article do not necessarily represent the views of the United States or the U.S. Department of the Treasury. We thank Maria Vagliasindi, Arthur van Benthem, and seminar participants at PacDev and UC Berkeley for helpful comments. The DFID Energy and Economic Growth initiative and the TAMU Private Enterprise Research Center generously provided financial support. This study has received Institutional Review Board approval from the University of California at Berkeley (ID 2017-12-10599). To prevent any increased risk of Covid-19 transmission, all surveys conducted by this research team between February 15, 2020 and February 15, 2021 were conducted over the phone. We thank Geetika Pandya and Miranda Lambert for excellent research assistance and Kwame Abrokwah and his team for superbly implementing field activities. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…For example, Crépon et al () included two levels of randomization in their experiment, one of them being the proportion of individuals assigned to treatment, allowing them to capture the GE effects of their intervention. Another example is the study by Cunha, Giorgi, and Jayachandran (), who estimate the GE effects of cash versus in‐kind transfers in Mexican villages: both types of transfers had similar value (allowing a partial equilibrium comparison), but the in‐kind transfers also generated more supply of certain goods in the market, affecting the calculation of the intervention's GE effect.…”

Section: Dozen Thingsmentioning

confidence: 99%

The Dozen Things Experimental Economists Should Do (More of)

Czibor¹,

Jimenez-Gomez²,

List

2019

Southern Economic Journal

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What was once broadly viewed as an impossibility—learning from experimental data in economics—has now become commonplace. Governmental bodies, think tanks, and corporations around the world employ teams of experimental researchers to answer their most pressing questions. For their part, in the past two decades academics have begun to more actively partner with organizations to generate data via field experimentation. Although this revolution in evidence‐based approaches has served to deepen the economic science, recently a credibility crisis has caused even the most ardent experimental proponents to pause. This study takes a step back from the burgeoning experimental literature and introduces 12 actions that might help to alleviate this credibility crisis and raise experimental economics to an even higher level. In this way, we view our “12 action wish list” as discussion points to enrich the field.

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The Price Effects of Cash Versus In-Kind Transfers

Cited by 113 publications

References 31 publications

Nonlinear Pricing in Village Economies

Nonlinear Pricing in Village Economies

Disbursing Emergency Relief through Utilities: Evidence from Ghana

The Dozen Things Experimental Economists Should Do (More of)

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