Is a Dollar a Dollar? How Transfer Design Shapes Household Spending

Government transfers vary along two design dimensions that standard models predict should not matter: whether benefits are paid in cash or kind, and whether they arrive as one-time or recurring payments. We test to what extent these design choices affect household spending using sharp changes in four pandemic-era transfers to low-income families with children: one-time food vouchers, monthly food benefits, one-time cash payments, and monthly cash payments. Linking variation in benefit timing and amount to high-frequency household scanner data, we estimate spending responses in a harmonized difference-in-differences and event-study framework.
We find that households spend more out of in-kind benefits than out of cash transfers of similar value, and more out of recurring payments than out of one-time transfers in the short-run. Our estimates produce the first internally comparable set of short-run food-store MPCs across different transfer types ranging from 0.20 (one-time) and 0.43 (monthly) for in-kind benefits, versus 0.07 (one-time) and 0.22 (monthly) for cash. The patterns suggest that the form and timing of transfers systematically shape household spending in ways that are consistent with mental accounting, labeling, and forward-looking responses. More broadly, our results imply that transfer design—not just generosity and targeting—is a first-order policy lever for both social insurance and short-run demand stabilization.