APPLI CAT 1ON 3.3 Why Not Just Give the Poor Cash? Most counties provide a wide varlay of programe 1 help poor people.n the Urited States, hore sa gona program foe cam arsstance to ow-ncome families, bit most ane every spending is done Baugh 2 varies) of “ining” programs such as Focd Stamps, Medica, and lwvincome Fousing aeseance, Such programs have expanded vary ‘apidy during the pas 30 year, whereas the cash program as tonded to shvink especialy folowing the 1996 walare reform man). Inefficiency of in-Kind Programs “The lurpsim prince suggedts that these trance may be Unforunete because he ind programs do not generate [se rnuch were fer poor people a would the spending of the same funds on s cash program. The arguments ‘trated in igure 1. The ypieallow- income person's budget onsvant is gen by te ine [proeto ary assistance. Ths {yes ly of U.Aaant-powery program that prone, FIGURE 1 Supationtyf an Income Grant x period subsidy ongood X(consvaint ass utility to Us Forthe ame fonds 3 pureincome grant ("asa uty t6 Us. sy, good X st hihysubsiad pce wuld st his Stgetcortant to Fondrose sprout oUF Srepovenmert were fiasito pert be we aes on pure ncaa gore ths pesos her ee or Sort woud So? and tit moll porte higher clay t> Se resred (0 Hanes, heii program not cose. taco in wn orig the uty te income m= “There is empirical evidence supporting this conclusion, Carder spandng ptt poorpeope suggest Saencolarporeontooc nine progres wort an Sout $906 the reopens. Acorn medal cr i. ‘Sor mayb woehony soir8 70, eehoseng sma ‘ray bowen ee tan $6) Sparing onto nem nv pogums tere mn tote rv empecal eect ‘orc thoy por pee. Paternalism and Donor Preferences Why have most countries faored in-kind programe over cash easstance? Undoubtedly, some of th focus sem from petametaen—poley rukars inthe governert may fel tat they have a beter idea of how poer people sould spend thai ctr than do poor poopie Shretves. by Figure 1, fr example, X purchases ae indeed greater ‘ter thik program than uncer the cash grant rough Uti lower: related possibly that “donor” (sualy taxpayer) Rave song preferences for how sd %9 peat people should be provided. Donors may care more about roriding food or race cre topo people then about ‘rereasing ther ware ove, Poliveal apport for eee ‘ingly lors oct cath grants is simply nonexstert ‘The apparent preference for ind subides has led to 8 \astineroase in theameuntssperton such subscisin many ‘Countian lait generally good far goverment to decd how people collecting aibecie hould spend teieenoy? Grmight such subsites ell have ile value to thane who receive thom? Which nds of subsidies might mako sansa? ‘Whichkinda might be west inthe sense that poor people (gett value for the meney spentby the govemment” "Bag conssn "pn the sae goverment pen Ingbecaze bot pert thepesants consump