TY  - JOUR
AU  - Currie,Janet
AU  - Gahvari,Firouz
TI  - Transfers in Cash and In Kind: Theory Meets the Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13557
PY  - 2007
Y2  - October 2007
UR  - http://www.nber.org/papers/w13557
L1  - http://www.nber.org/papers/w13557.pdf
N1  - Author contact info:
Janet Currie
Princeton University
316 Wallace Hall
Princeton, NJ 08544
Tel: 609-258-7393
Fax: 609-258-5974
E-Mail: jcurrie@princeton.edu

Firouz Gahvari
Dept. of Economics
University of Illinois - Urbana-Champaign
1206 S Sixth, mc 706
Champaign, Il  61820
E-Mail: fgahvari@uiuc.edu
AB  - We review theoretical explanations for in-kind transfers in light of the limited empirical evidence. After reviewing the traditional paternalistic arguments, we consider explanations based on imperfect information and self-targeting. We then discuss the large literature on in-kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the "Samaritan's Dilemma", pecuniary effects, credit constraints, asymmetric information amongst agents, and political economy considerations.  Our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in-kind transfer programs, but that some of the other arguments may apply to specific cases. Political economy considerations must also be part of the story.
ER  -