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Deadweight Losses or Gains from In-kind Transfers: Experimental Evidence

  • Economics Discussion Papers
  • March 31, 2024
  • Klaus Abbink, Gaurav Datt, Lata Gangadharan, Digvijay Negi, Bharat Ramaswami

Are in-kind transfers associated with deadweight losses? To answer this question, we conducted an incentivized field experiment in India and offered low-income respondents the choice between a free quantity of rice and varying amounts of cash to elicit their willingness to pay for rice. Contrary to expectation, we find evidence of deadweight gain on average, though with a striking contrast between a deadweight loss among women from female-headed households and a deadweight gain among women from male-headed households. After investigating alternative mechanisms, our results highlight that greater bargaining power of women within households increases the propensity to choose cash over rice.

Study at Ashoka

Study at Ashoka

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