Why Is So Much Redistribution In-Kind and Not in Cash? Evidence from a Survey Experiment

Zachary Liscow and Abigail Pershing

National Tax Journal, 2022, vol. 75, issue 2, 313 - 354

Abstract: Economists often point to the superiority of cash over in-kind transfers as a means of redistribution because recipients can choose how to use these resources. However, among the trillions of dollars of annual US transfers, redistribution is mostly in-kind. We conducted a survey experiment to help explain why. Respondents considered an in-kind transfer that could be spent only on a bundle of “necessities.” The general population overwhelmingly preferred providing this in-kind transfer versus a cash transfer, largely for paternalistic reasons. This preference was common to a majority of virtually all segments of the general population, though not to a sample of educational elites. A persuasion treatment on the value of choice, while impactful, did not change this overall preference for in-kind. In a separate survey, below-poverty respondents preferred receiving cash. But the general population was willing to support a larger transfer in-kind than in cash. And below-poverty respondents appeared to prefer this larger in-kind transfer to the smaller cash transfer, suggesting that an in-kind transfer may be preferable to both recipients and the general population.

Date: 2022
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