Cash Transfers and Temptation Goods : A Review of Global Evidence
Cash transfers have been demonstrated to improve education and health outcomes and alleviate poverty in various contexts. However, policy makers and others often express concern that poor households will use transfers to buy alcohol, tobacco, or ot...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/05/19546774/cash-transfers-temptation-goods-review-global-evidence http://hdl.handle.net/10986/18802 |
| Summary: | Cash transfers have been demonstrated to
improve education and health outcomes and alleviate poverty
in various contexts. However, policy makers and others often
express concern that poor households will use transfers to
buy alcohol, tobacco, or other "temptation goods."
The income effect of transfers will increase expenditures if
alcohol and tobacco are normal goods, but this may be offset
by other effects, including the substitution effect, the
effect of social messaging about the appropriate use of
transfers, and the effect of shifting dynamics in
intra-household bargaining. The net effect is ambiguous.
This paper reviews 19 studies with quantitative evidence on
the impact of cash transfers on temptation goods, as well as
11 studies that surveyed the number of respondents who
reported they used transfers for temptation goods. Almost
without exception, studies find either no significant impact
or a significant negative impact of transfers on temptation
goods. In the only (two, non-experimental) studies with
positive significant impacts, the magnitude is small. This
result is supported by data from Latin America, Africa, and
Asia. A growing number of studies from a range of contexts
therefore indicate that concerns about the use of cash
transfers for alcohol and tobacco consumption are unfounded. |
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