 Payment modality preferences: Evidence from Ethiopia’s Productive Safety Net ProgrammeKalle Hirvonen and John Hoddinott No 125, ESSP working papers from International Food Policy Research Institute (IFPRI) Abstract: Economists typically default to the assumption that cash is always preferable to an in-kind transfer. We extend the classic Southworth (1945) framework to predict under what conditions this assumption holds. We take the model to longitudinal household data from Ethiopia where a large-scale social safety net intervention – the Productive Safety Net Programme (PSNP) – operates. Even though most PSNP payments are paid in cash, and even though the (temporal) transaction costs associated with food payments are higher than payments received as cash, the overwhelming majority of the beneficiary households prefer their payments only or partly in food. However, these preferences are neither homogeneous nor stable. Higher food prices induce shifts in preferences towards in-kind transfers, but more food secure households and those closer to food markets and to financial services prefer cash. There is suggestive evidence that preferences for food are also driven by self-control concerns. Keywords: social protection; food security; cash transfers; food prices; poverty; food aid; Ethiopia; Africa; Sub-Saharan Africa; Eastern Africa (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fpr:esspwp:125 Access Statistics for this paper More papers in ESSP working papers from International Food Policy Research Institute (IFPRI) Contact information at EDIRC. |
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