Discussion paper

DP15844 In-Kind Transfers as Insurance

In-kind transfers can provide insurance benefits when prices of consumption goods vary, as is common in developing countries. We develop a model demonstrating that in-kind transfers are welfare improving to beneficiaries relative to cash if the covariance between the marginal utility of income and price is positive. Using calorie shortfalls as a marginal utility proxy, we find that in-kind transfers are preferred for low-income Indian households. Expansions in India's flagship in-kind food transfer program not only increase caloric intake but also reduce caloric sensitivity to prices. Our results contribute to ongoing debates about the optimal form of social protection programs.


Gadenne, L, M Singhal, S Sukhtankar and S Norris (2022), ‘DP15844 In-Kind Transfers as Insurance‘, CEPR Discussion Paper No. 15844. CEPR Press, Paris & London. https://cepr.org/publications/dp15844