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11.07.2013 - Jenny Aker
 

11.07.2013 - Jenny Aker

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Cash or Vouchers: The Relative Impacts of Cash and Vouchers in the Democratic Republic of Congo

Cash or Vouchers: The Relative Impacts of Cash and Vouchers in the Democratic Republic of Congo

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  • Good afternoon, and thank you for the opportunity to present here today. I am very excited to be presenting on this topic, not only because this is very much a new paper, but also because I like this area of research. I am looking forward to your comments, suggestions and criticisms.
  • Governments, economists and development practitioners alike have long recognized the importance of redistributing wealth to the poor. The key question, of course, is what is the best way to do that.While conditional and unconditional cash transfer programs have become an increasingly important part of social protection programs in both developed and developing countries since the 1990s, a majority of these programs are still in-kind – such as food aid, food stamps, medicines, and inputs – especially in humanitarian situations.Even within the US, more than $100 billion is designated for “food and nutrition” in the president’s 2013 budget,including food stamps, Medicaid and housing vouchers, relative to cash- based welfare programs. http://www.bloomberg.com/news/2012-02-28/cash-better-than-food-stamps-in-helping-poor-commentary-by-edward-glaeser.html
  • And in international aid programs, over 58% of USAID’s emergency budget is allocated to in-kind transfers and vouchers, and over 25% of that is vouchers.Hanrahan, Charles E. "International Food Aid Programs: Backgrond and Issues." Congressional Research Service, May 20, 2013, p. 10http://www.fas.org/sgp/crs/misc/R41072.pdf
  • In light of the fact that program recipients would weakly prefer an equal-valued cash transfer to an in-kind transfer – since it offers the same, or more, budgetary choices – why would governments not use cash? There are multiple reasons put forth for this, from targeting to paternalism to local supply.Yet despite the importance of this question for policymakers and donors alike, very little credible evidence exists for any in-kind program, and particularly comparing those with cash transfers. This is especially the case in developing countries.
  • This paper looks at the case of one developing country, DRC, one of the largest countries in Africa and, despite its vast natural resources, one of the poorest countries in the world. DRC, and especially the eastern part of the country, has been in the midst of a civil war since the 1990s, with millions killed and internally displaced. Despite a peace deal in 2003, internal fighting remains, with 1.7 million IDPs in eastern Congo as of 2011.
  • These IDPs are living in both formal and informal camps throughout eastern DRC. In response to the conflict, a variety of international organizations have used in-kind transfers – primarily food aid, seeds and tools distribution and, more recently, vouchers – with the goal of enabling households to meet their basic food and non-food needs.
  • And that is really the goal of this research. We are interested in understanding the relative effects of cash versus in-kind transfers.
  • Theory: Only extra-marginal and binding transfers will differentially influence purchases Household asset ownership was worth 60$, and increased by 31% (to 80$) after the program.
  • Baird et al show that the CCT reduced dropout as compared with the UCT, but no improved outcomes.
  • Bushani is a camp located about 20 km from Masisi center – 2 hours by car, 4 hours by foot.Population of approximately 2,500 households.Living in camp since 2009. The total value of the transfer was approximately 2/3 of the total annual GDP per capita for DRC, similar to the value of other income transfer programs in DRC and other humanitarian contexts.
  • There were 8 blocs (neighborhoods) in total.Since we have no pure comparison group we cannot estimate the impact of each program or draw Engel curves.
  • The multisectoral fair included over 122 vendors and four primary schools in the area, and provided access to NFIs, household items, clothes, school fees, agricultural inputs (seeds and tools, and small animals. A full list of items available at the multisectoral fair is available upon request. As no vendors were willing to sell plastic sheeting or mosquito nets, Concern purchased and sold these items at the fair. Program recipients could purchase school fees for either the entire year or on a semester basis.The second and third vouchers could be spent on food at “open markets”, whereby program recipients could circulate freely among pre-arranged boutiques and kiosks selling foodstuffs in the Masisi Centre market. For all of the voucher fairs, program recipients had to travel to Masisi Centre on a pre-arranged day to receive and spend their voucher. Eleven food vendors were eligible to participate at the second food voucher fair, and vendors were unwilling to provide palm oil. For this reason, Concern purchased and sold palm oil at local prices at the second food voucher fair. Additional items on the second food fair included sugar, cassava flour, beans, rice, vegetable oil, dried fish and salt. The third food voucher fair included 18 food vendors and the same food items, in addition to potatoes and peanuts.
  • First, in-kind transfers may induce the non-poor to self-select out of welfare programs, thereby assisting in targeting. Second, in certain contexts, food and non-food items might not be available on local markets, necessitating in-kind transfers to overcome these market failures. Or, in-kind transfers may be more politically feasible than in-kind transfers. Perhaps the most often cited rational for in-kind over cash transfers, however, is one of paternalsm. Finally, vouchers might be less likely to steal.A paternalistic government issues transfers in kind to encourage the consumption of specific transferred goods.
  • First, in-kind transfers may induce the non-poor to self-select out of welfare programs, thereby assisting in targeting. Second, in certain contexts, food and non-food items might not be available on local markets, necessitating in-kind transfers to overcome these market failures. Or, in-kind transfers may be more politically feasible than in-kind transfers. Perhaps the most often cited rational for in-kind over cash transfers, however, is one of paternalsm. Finally, vouchers might be less likely to steal.A paternalistic government issues transfers in kind to encourage the consumption of specific transferred goods.
  • Assume households have preferences for two goods, say, food and non-food items, and they maximize a utility function U (qF, qNF), strictly increasing and concave in both arguments. Pre-transfer, households have a budget constraint, and pF and pNF are the market prices of the two goods – this shows the indifference curves of two types of households here.
  • A cash transfer of T shifts the budget constraint up to CE, with resulting increases in consumption at A’ and B’.
  • While an equal-valued in-kind transfer of food – either food aid, or in this case, a voucher – leads to a kinked budget constraint that depends on the resale price of food items. Now, if frictionless resale is unavailable, then cash is weakly preferred to the transfer in-kind, if we compare the two types of households. The first household (B) is indifferent between the transfer type, moving from indifference curve B to B’ under either transfer modality. The second household, though, is weakly worse off under the in-kind transfer, consuming at A’’ (the kink), while it would have chosen A’ under the cash transfer.
  • Now, if resale is allowed – even with some costs, -- this will shift up the kink and allow households to reach a higher level of utility. This means that the voucher for household A will be non-binding – in other words, the household consumes less of the good than it was provided (or purchased) under the voucher, and binding otherwise.There can be other potential reasons that the voucher is non-binding besides resale – such as, perhaps, intra-household dynamics or inter-household sharing – but this gives you the idea.
  • I am going to skip most of the information on timeline, etc. Basically, there is a baseline survey and one post-treatment round of the survey. For each of the two intervention there are approximately 100 villages with 11 respondents each per village. The same survey instrument was used.We collected information on migration and migration outcomes, as well as data on household demographics, and mobile phone usage. Note: We did not collect data on income and expenditures, or the amount spent on each product, as pre-tests suggested that this was subject to a high degree of measurement error. Even if this measurement error was classical, which lead to unbiased and efficient results, the standard errors would be more precise, which would make it be more difficult to detect an effect.
  • Significant. Some differences between attriters and non-attriters, but overall the non-attriters were balanced between the two.Had a sample of about 200 people by March 2012, only about 130 people for November 2011.
  • First, it is important to note that in terms of total food consumption, the vouchers are in general infra-marginal for about 50% of households. That is, with a cash transfer equal in value to about 2400 FC per week for the last two transfers (which could only be spent on food items), about 50% of households consume more than that.
  • So if we look at that more formally again, we see that a simple OLS yields similar results. This is robust to the use of a Poisson.
  • Resale of the goods would detract from a pure paternalistic motive if it’s to increase food consumption, whereas lumpy consumption supports the paternalistic motive – again if it is oriented towards consumption.
  • So, as a proxy, we simply look at whether households consumed those goods in the previous 24 hours. It doesn’t appear as if any of these purchases remained binding, although this could be due to resale,
  • “Traders knew that we received the vouchers for free…so when we came to buy from them, they were unwilling to negotiate (the price) with us.”Voucher program recipient, Bushani Camp

11.07.2013 - Jenny Aker 11.07.2013 - Jenny Aker Presentation Transcript

  • Cash or Vouchers? The Relative Impacts of Cash and Vouchers in the Democratic Republic of Congo Jenny C. Aker, Tufts University IFPRI November 7, 2013 Jenny C. Aker Cash and Vouchers in DRC
  • Motivation • How should society (donors, governments and NGOs) redistribute to the poor? • Cash transfer programs are an increasingly important part of social protection programs in both developed and developing countries • Majority of welfare transfers are still “in-kind”  Food aid, food stamps, medicines, inputs, vouchers  Especially in developing (conflict) countries Jenny C. Aker Cash and Vouchers in DRC
  • International Cash and In-Kind Transfers % of USAID Emergency Food Security Program Budget 90% 80% 2011 Total: $232 million 79% 2012 Total: $374 million % of EFSP Budget 70% 60% 50% 44% 42% 40% 30% 20% 14% 9.0% 10% 12% 0% In-Kind (Local/Regional Purchase) Vouchers Cash Transfers Type of Assistance Source: Congressional Research Service, 2013 Jenny C. Aker Cash and Vouchers in DRC
  • Motivation • If program recipients would weakly prefer an equalvalued cash transfer to an in-kind transfer, why not use cash? • Cash might not be the preferred modality for redistributing wealth  Targeting  Local supply  Political feasibility  “Paternalism” • Little evidence of the relative effects of each modality in developing countries Jenny C. Aker Cash and Vouchers in DRC
  • Jenny C. Aker Cash and Vouchers in DRC
  • Jenny C. Aker Cash and Vouchers in DRC
  • Research Questions Goals Research • What are the relative effects of cash versus in-kind transfers (vouchers) on household purchases, consumption and other measures of wellbeing? • Households randomly assigned to equal-valued cash or voucher transfer  No pure comparison group • Assess impact on purchasing decisions, consumption, other indicators of wellbeing • Investigate mechanisms Jenny C. Aker Cash and of each modality • Calculate the cost-effectiveness Vouchers in DRC
  • Preview of Findings • Starkly different purchasing patterns between the two modalities Voucher transfer extra-marginal for some food items • Few differential effects on other outcomes (food security, food expenditures, assets, coping strategies)  Cash households were able to save more of their transfer • Different purchases primarily due to program design, but voucher could be resold • Costs of voucher program higher for implementing agency (and potentially program recipients) Jenny C. Aker Cash and Vouchers in DRC
  • Related Literature • In-kind transfers  Food stamps in the US (Moffitt 1989, Fraker et al 1995, Whitmore 2002, Hoynes and Schazenbach 2009) • Unconditional cash transfers  Increased food consumption (Hoddindott and Skoufias 2004, Attanasio and Mesnard 2005, Maluccio 2007), improved child health (Gertler 2004) • Conditional versus unconditional cash transfers (Baird et al 2011) • Cash versus food transfers (Del Ninno and Dorosh 2003, Ahmed et al 2009, Cunha 2012, Hoddinott et al 2013, Gilligan et al 2013) • Cash, food and vouchers (Hidrobo et al 2012) Jenny C. Aker Cash and Vouchers in DRC
  • Democratic Republic of Congo • Civil war since the 1990s  “Africa’s world war”  Over three million people killed  Peace deal in 2003, but continued fighting and millions internally displaced (1.7 million as of July 2011) • Internally displaced populations live in host communities and/or camps  Few income-generating opportunities, little access to basic needs  International organizations provide in-kind transfers (seeds and tools, non-food items, vouchers) and cash (primarily cash-for-work) • Limited investment in basic infrastructure (roads, power, landlines, mobile phones)  Markets still function (three markets within a 20-km radius of the camp) Jenny C. Aker Cash and Vouchers in DRC
  • Transfer Program • Implemented by Concern Worldwide in one informal camp (Bushani) All households in the camp eligible for the transfer Transfer provided to the woman within the household • US$130 transfer provided in three installments between September 2011 and March 2012 US$90 provided in September 2011, US$20 provided in October 2011 and US$20 in March 2012 Provided to increase asset accumulation (NFIs) and meet food needs All households had to travel to Masisi (3 hours’ walk) to obtain their transfer Jenny C. Aker Cash and Vouchers in DRC
  • Bushani Camp Nyabiondo Masisi
  • Research Design • 474 households stratified by neighborhood and randomly assigned to one of two transfer modalities • T1: Unconditional cash transfer. Cash transfers provided in three installments • T2. Voucher. Vouchers provided in three installments  First voucher could be spent on food and non-food items at a “multisectoral fair”  Second and third vouchers could only be spent on food items • Equivalently-valued transfers provided at same time and same amounts • Both groups had to travel to main urban center (Masisi, 15 km from camp) to pick up their transfer • Voucher households informed of the restriction in advance • No pure comparison group Jenny C. Aker Cash and Vouchers in DRC
  • Voucher Fair
  • Voucher Fair • First voucher fair: Included over 122 vendors and four primary schools in the area, and provided access to NFIs, household items, clothes, school fees, agricultural inputs (seeds and tools), and small animals. • Second and third voucher fairs: Vouchers could be spent on food at “open markets”, whereby program recipients could circulate freely among pre-arranged boutiques and kiosks. o Vouchers could not be used to purchase meat and condiments.
  • Why Vouchers? • • • • • Paternalism Targeting Market supply Political feasibility Security Jenny C. Aker Cash and Vouchers in DRC
  • Why Vouchers? • • • • • Paternalism Targeting Market supply Political feasibility Security Jenny C. Aker Cash and Vouchers in DRC
  • External Validity • Design similar to other voucher programs in humanitarian contexts • Differs from “traditional” voucher transfers by: • Timing – had to be spent in one day • Location – could only be spent at voucher fair (rather than vendors, kiosks or marketes in different locations)
  • Theoretical Framework qNFI A B qFood Jenny C. Aker Cash and Vouchers in DRC
  • Cash Transfer qNFI A’ A B’ B T/pFood qFood Jenny C. Aker Cash and Vouchers in DRC
  • Voucher with no resale A’’: Voucher is extra-marginal and binding qNFI A’ A’’ B’: Voucher is infra-marginal A B’ B qF=T/pFood qFood Jenny C. Aker Cash and Vouchers in DRC
  • Voucher with resale A’’: Voucher is extra-marginal and binding qNFI A’ A’’’ A’’’: Voucher is extra-marginal and non-binding A’’ B’: Voucher is infra-marginal A Can also affect preferences and make the goods more substitutable B’ B qF=T/pFood qFood Jenny C. Aker Cash and Vouchers in DRC
  • Theoretical Predictions • If transfers are extra-marginal, then there should be differential effects of cash and vouchers on household purchases • If vouchers are binding, then there should be differential effects of cash and vouchers on consumption • But would these differences lead to improved wellbeing? Jenny C. Aker Cash and Vouchers in DRC
  • Data Data • Panel survey of 250 households over three rounds (September 2011, November 2011 and March 2012)  Data on uses of transfer, assets, income sources, food security  No full expenditure or consumption module but income and food expenditures from the previous week  Extensive margin of purchases for each transfer, and quantities purchased for subset of goods • Price data for 40 products on the primary market and voucher fairs • Exit surveys from voucher fairs and cash transfer recipients on purchases • Cost data for each transfer modality Jenny C. Aker Cash and Vouchers in DRC 25
  • Project Timeline Project Timeline Year February March April May June July August Design program 2011 September October Identify First cash Second program transfer and cash recipients voucher transfer and assign (multisectora and household l fair) voucher s distribution Baseline (food fair) survey November December Midterm survey Monitor voucher fairs, prices, security situation 2012 Third cash transfer and voucher distributio n Final household survey Jenny C. Aker Cash and Vouchers in DRC 26
  • Project Timeline Jenny C. Aker Cash and Vouchers in DRC
  • Variables Table 1. Comparison of Pre-Program Characteristics Voucher Cash Mean (s.d.) Panel A: Socio-Demographic Characteristics Household size Number of children (less than 15 years of age) Program recipient is married Program recipient is widowed Age of program recipient Program recipient has some education Program recipient born in Masisi Territory Number of years living in the camp Mean (s.d.) 5.40 (2.00) 3.23 (1.87) 0.69 (0.42) 0.21 (0.35) 34.15 (14.19) 0.50 (0.50) 0.96 (0.19) 1.53 (0.76) 5.55 (1.85) 3.21 (1.58) 0.78 (0.42) 0.15 (0.41) 34.87 (13.12) 0.48 (0.50) 0.87 (0.33) 1.42 (0.82) p-value Jenny C. Aker Cash and Vouchers in DRC 0.314 0.888 0.285 0.272 0.503 0.767 0.04** 0.867
  • Table 1. Comparison of Pre-Program Characteristics Variables Voucher Cash Panel B: Income and Income Sources Number of income sources 1.73 1.82 (0.72) (0.93) Total income earned during the past week (Congolese Franc) 2387 2491 (4610) (4863) Value of food purchases in the past week (Congolese Franc) 1883 1729 (4531) (1536) Panel C: Agricultural Production and Livestock Had access to land 0.02 0.02 (0.15) (0.13) Owned poultry 0.02 0.04 (0.12) (0.20) Panel D: Asset Ownership Total value (USD) of assets 62.30 60.60 (24.52) (25.50) Number of durable goods categories owned 0.01 0.01 (0.09) (0.09) Number of non-durable goods categories owned 10.87 11.00 (3.58) (3.55) Panel E: Food Security Household diet diversity score (out of 12) 2.77 3.04 (1.82) (1.67) Number of meals in last day (household 1.27 1.29 (0.58) (0.47) Number of meals eaten in last day (children) 1.29 1.29 (0.59) (0.49) Suffered from food insecurity since last harvest 0.99 0.99 (0.09) (0.09) Months of adequate food provisioning 1.57 1.86 (1.23) (1.16) Number of observations 133 120 Well-balanced Jenny C. Aker Cash and Vouchers in DRC p-value 0.345 0.885 0.678 0.863 0.284 0.821 0.834 0.453 0.204 0.908 0.885 0.838 0.042** 253
  • Empirical Strategy ' yi = g + acash + Xi0 l + q N + ei • yi is outcome of household i (uses of the transfer, quantities purchased, food security and asset ownership) • cashi is the treatment status indicator of household i • Xi0 is vector of baseline covariates • θN is neighborhood fixed effects (level of stratification) • εi individual shocks or ability • Use pooled data (November and March) and control for round fixed effects • Also control for baseline outcome variable as a robustness check (MacKenzie 2012) • Main threats to identification: Attrition, spillovers, multiple hypothesis-testing Jenny C. Aker Cash and Vouchers in DRC 30
  • Are Transfers Infra- or Extra-Marginal? • Quantity of goods purchased by cash transfer households as compared with voucher households: Identifies whether transfer is infra- or extra-marginal • Quantity of goods purchased versus consumed for voucher households: Identifies whether transfer is binding or non-binding Jenny C. Aker Cash and Vouchers in DRC 31
  • Total Food Expenditures Voucher inframarginal for 50% of households 2346 FC = Weekly value of of Weekly value voucher: 2400 FC Voucher Cdf of weekly household food expenditures: Cash Transfer Group Jenny C. Aker Cash and Vouchers in DRC
  • Table 2: Uses of the Transfer Panel A: Food Items Number of different purchases made (last transfer) Staple grains (maize, maize flour) Other grains (cassava flour, rice) Extramarginality for some food items Stronger differences for second and third transfers Beans Condiments Oil Meat Vegetables Salt Fish Panel B: Agricultural Items Livestock Seeds Panel C: Other Non-Food Items Clothing Housing Materials Panel D: Education and Health Expenditures School fees Medicines Reimburse debts Observations All Transfers (1) (2) Voucher Cash Mean (s.d.) Coeff(s.e.) 4.94 3.07*** (2.75) (0.33) Third Transfer (3) Cash Coeff(s.e.) 4.03*** (0.45) 0.49 (0.50) 0.73 (0.45) 0.27 (0.45) 0.15 (0.36) 0.56 (0.50) 0.03 (0.18) 0.08 (0.26) 0.93 (0.26) 0.45 (0.50) 0.25*** (0.06) -0.12** (0.06) 0.22*** (0.06) 0.27*** (0.05) 0.21*** (0.06) 0.65*** (0.04) 0.36*** (0.05) -0.12** (0.05) -0.02 (0.08) 0.25*** (0.07) -0.10* (0.08) 0.38*** (0.07) 0.26*** (0.05) 0.27*** (0.08) 0.55*** (0.06) 0.35*** (0.06) -0.12** (0.05) -0.02 (0.08) 0.09 (0.30) 0.37 (0.48) 0.05 (0.04) -0.06 (0.06) 0.08** (0.03) 0.03 (0.05) 0.38 (0.49) 0.232 (0.42) 0.26*** (0.06) 0.15*** -0.06 0.42*** (0.06) 0.11*** (0.03) 0.28 (0.45) 0.01 (0.12) 0.301 (0.46) 0.42*** (0.06) 0.08*** (0.03) 0.31*** (0.06) 308 0.64*** (0.06) 0.05* (0.03) 0.43*** (0.06) 178
  • Uses of the Transfer (Second) 100.0% 90.0% 80.0% Cash Voucher 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%
  • Are Specific Items Extra-Marginal? • Among food items, salt and rice were more likely to be purchased by voucher households (for all three transfers, but stronger for second and third transfers) o Fish not statistically significant across all rounds, just second round • This gives a sense of the extensive margin of overprovision • What about intensive margin of over-provision? Jenny C. Aker Cash and Vouchers in DRC 35
  • Intensive Margin of Overprovision Table 3: Quantities Demanded of Specific Food Items (1) (2) Voucher Cash Mean (s.d.) Salt (kg) Coeff(s.e.) 1.77 -0.57*** (0.18) 1.75 -1.41*** (2.52) Number of observations (2.64) (1.40) Fish (number) -9.97*** (18.57) Rice (kg) 12.34 (0.32) 130 130 Jenny C. Aker Cash and Vouchers in DRC
  • Are the Transfers Binding? • Individual welfare losses associated with overprovision can be mitigated if the transfer is non-binding • To measure whether the transfer is binding, we want to measure the difference between purchases and consumption for extra-marginal goods • No data on actual quantities consumed, just whether consumed • (Given quantities of fish and salt, we could estimate daily consumption of these goods between last transfer and food recall period, assuming transfers were binding) Jenny C. Aker Cash and Vouchers in DRC
  • Table 5: Food Security All Transfers (1) Voucher Mean (s.d.) Panel A: Household Diet Diversity Household diet diversity (out of 12) Data were collected 3 weeks after each transfer, so difficult to separate between resale, storage or lumpy consumption Grains Tubers Beans Vegetables Fruits Fats Eggs Milk Meat Fish Condiments Sugar (2) Cash Coeff(s.e.) Third Transfer (3) Cash Coeff(s.e.) 2.62 (1.91) 0.708 (0.46) 0.736 (0.44) 0.222 (0.42) 0.618 (0.49) 0.041 (0.20) 0.416 (0.49) 0 (0.00) 0 (0.00) 0.06 (0.23) 0.153 (0.36) 0.013 (0.12) 0.298 (0.46) 0.09 (0.19) -0.02 (0.06) -0.00 (0.06) 0.02 (0.05) 0.03 (0.06) -0.01 (0.03) 0.08 (0.06) 0.02 (0.01) 0.00 (0.00) 0.02 (0.03) 0.03 (0.05) -0.01 (0.02) -0.04 (0.05) -0.07 (0.23) 0.02 (0.08) -0.01 (0.08) -0.01 (0.07) -0.01 (0.08) -0.03 (0.04) 0.02 (0.08) 0.01 (0.01) 0.00 (0.00) -0.03 (0.03) 0.04 (0.06) -0.04 (0.03) -0.02 (0.07)
  • Did the Vouchers lead to Differential Effects on Well-Being? • Food security (number of meals per day, number of months of adequate household food provisioning, food insecurity since previous harvest) • Asset ownership and savings (durable and nondurable goods categories) • Agricultural assets (land, livestock) • Coping strategies Jenny C. Aker Cash and Vouchers in DRC
  • Food Security Table 5: Food Security All Transfers Third Transfer (1) (2) (3) Voucher Cash Cash Mean (s.d.) Coeff(s.e.) Coeff(s.e.) 1.41 0.01 -0.03 (0.28) (0.07) (0.10) 2.12 -0.26 -0.51 (2.79) (0.31) (0.51) 2.06 0.13 0.08 (0.84) (0.09) (0.12) 308 178 Panel B: Other Measures of Food Security Number of meals per day (household) Number of meals per day (children) Months of adequate food provisioning Number of observations Jenny C. Aker Cash and Vouchers in DRC
  • Income and Asset Ownership Table 5: Proxy Indicators of Well-Being All Transfers (1) (2) Voucher Cash Mean (s.d.) Coeff(s.e.) Panel A: Income, Expenditures and Savings Income in the previous week (Congolese Francs) Amount spent on food in previous week (Congolese Francs) Money left from transfer (Congolese Francs) Amount of money remaining (savings) Panel B: Assets Total value of household assets (USD) Number of durable assets owned Number of non-durable assets owned Own poultry Own rabbits Third Transfer (3) Cash Coeff(s.e.) 3,357 (2938.83) 739 (639.74) 834.22 (1,039.19) 2,601 (2371.64) 0.00 (0.00) 0.00 (0.00) -119 (274.58) 0.09*** (0.03) 1,787** (704.44) -336.90 (373.81) 0.07** (0.03) 1,130** (513.64) 89.07 (35.20) 0.00 (0.00) 10.62 (7.03) 0.1294 (0.34) 0.0117 (0.11) -1.15 (4.53) -0.01 (0.02) 0.33 (0.67) -0.04 (0.04) 0.02 (0.02) 0.36 (5.09) 0.01 (0.01) 0.44 (0.91) -0.08 (0.05) 0.04 (0.03) Jenny C. Aker Cash and Vouchers in DRC
  • Coping Strategies Table 5: Proxy Indicators of Well-Being All Transfers Third Transfer (1) (2) (3) Voucher Cash Cash Mean (s.d.) Coeff(s.e.) Coeff(s.e.) 0.0161 -0.02 -0.01 (0.13) (0.02) (0.01) 0.27419 0.03 0.07 (0.45) (0.06) (0.08) 0.0161 -0.02 -0.01 (0.13) (0.02) (0.02) 308 178 Panel C: Coping Strategies Sold household goods Reduced number of meals per day Took children out of school Number of observations Jenny C. Aker Cash and Vouchers in DRC
  • Summary • Different purchases in both groups – voucher households purchased more rice, salt and perhaps fish  No differential effects on individual food consumption • Proxy indicators of well-being the same between the two groups  However, cash households saved some of their transfer and reported suffering less from food insecurity Jenny C. Aker Cash and Vouchers in DRC
  • Mechanisms • Why did purchases differ between the two groups? • Vouchers restricted to food fairs for last two transfers  Voucher households had to purchase items in food fairs on that day (location and timing of purchases)  Voucher households would have had to pay transport costs for many (or heavy) items • Voucher households had more (less ) bargaining power vis-à-vis traders – had to pay higher prices • Women in voucher households had more (less) bargaining power within the household Jenny C. Aker Cash and Vouchers in DRC 44
  • Table 7: Mechanisms on Purchases (1) Voucher Mean (s.d.) Panel A: Location of Purchases Boutique in camp Market outside camp Masisi Center market (20 km from camp) Nyabiondo market (2 km from camp) Hospital Voucher fair School Panel B: Timing of Purchases Spent money in more than one purchase (2) Cash Coeff(s.e.) 0.01 (0.11) 0.02 (0.12) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.99 (0.12) 0.00 (0.00) 0.00 (0.01) 0.97*** (0.02) 0.45*** (0.08) 0.46*** (0.08) 0.01 (0.01) -0.99*** (0.01) 0.01 (0.01) 0.013 (0.12) 0.77*** (0.04) 0.94 (0.24) 0.46 (0.50) 0.06 (0.24) -0.02 (0.03) -0.03 (0.06) -0.02 (0.03) 0.79 (0.40) -0.03 (0.05) 308 Panel C: Intra-Household Decision-Making with Respect to Transfers Beneficiary responsible for spending all or part of transfer Husband responsible for spending transfer No one else responsible for spending transfer Discussed how to use transfer in advance with other person Number of observations Jenny C. Aker Cash and Vouchers in DRC
  • Mechanisms If something was too heavy, I didn’t buy it…I wanted to buy two boxes of salt but could only carry one, so I bought one plus other things. Voucher program recipient, Masisi camp Jenny C. Aker Cash and Vouchers in DRC
  • Mechanisms • Why did consumption not differ between the two groups? • Time delay between purchases and consumption  Storage or lumpy consumption  Wouldn’t explain lack of difference in salt consumption • Resale of goods purchased  Almost all households stated that they purchased the overprovided goods for resale • Sharing of goods (and cash) between the two groups Jenny C. Aker Cash and Vouchers in DRC 47
  • Table 8: Mechanisms on Outcomes Sharing of money and goods (1) Voucher Mean (s.d.) Panel A: Transfers are Non-Binding Program recipient shared part of money received Program recipient shared part of goods purchased No differential effects on intrahousehold decisionmaking 0.25 (0.44) 0.46 (0.50) Panel C: Intra-Household Decision-Making with Respect to Transfers Husband makes education decisions alone 0.3 (0.46) Husband makes agriculture decisions alone 0.26 (0.44) Husband decides whether to share with other households alone 0.16 (0.04) Husband decides whether/how to save alone 0.31 (0.47) Ratio of women to men's clothing 2.32 (1.58) Number of observations Jenny C. Aker Cash and Vouchers in DRC (2) Cash Coeff(s.e.) 0.11* (0.06) -0.15** (0.06) 0.05 (0.06) 0.05 (0.06) 0.03 (0.06) 0.02 (0.06) -0.08 (0.40) 308
  • Heterogeneous Effects • Household size • Female-headed households • Baseline food expenditures 49
  • Threats to Identification • • • • • Differential take-up or leakage Differential shocks Differential price effects Spillovers Multiple hypothesis-testing Jenny C. Aker Cash and Vouchers in DRC 50
  • Table 9: Alternative Explanations (1) (2) Voucher Cash Mean (s.d.) Coeff(s.e.) Panel A: Take Up and Leakage Received transfer 2.98 -0.01 (0.01) 80,825.00 1,142.94 -6042 (717.43) 18,352.54 159.25 (167.97) (229.52) 0.54 0.07 (0.05) (0.07) 0.27 0.04 (0.05) (0.06) 0.08 -0.00 (0.03) Amount received (second transfer) (0.00) (0.03) Amount received (first two transfers) -0.00 (0.00) Number of transfers received 1.00 (0.04) Panel B: Illness and Death Affected by conflict Household member affected by illness Household member died Number of observations 308
  • Differential Price Effects • Impact of cash on vouchers:  Cash transfers relatively small (total of 474 households and USD$60,000 over six months, amidst IDP population of 60,000 in the area)  Purchases occurred in three different markets 15-20 km apart  Maximum prices at voucher fair were based upon recent market prices for the same goods and same market • Impact of vouchers on cash:  If vouchers increased prices, consumers could have chosen other markets closer to the camp Jenny C. Aker Cash and Vouchers in DRC 52
  • Threats to Identification • Spillovers  Spillovers less of an issue for purchasing decisions (as compared with other outcomes)  Would be less likely to observe a difference in purchasing decisions • Multiple hypothesis-testing  Bonferroni correction on families of outcomes (Sankoh et al 1997)  Most differences remain statistically significant for extensive margin (for cash households) and intensive margin (for voucher households) Jenny C. Aker Cash and Vouchers in DRC 53
  • Cost Effectiveness Analysis • Costs to implementing agency • Costs to program recipients Jenny C. Aker Cash and Vouchers in DRC 54
  • Costs per Program Recipient $16.00 Transfer Fees Account Opening Costs $14.00 Voucher printing Materials (plastic sheeting, sticks) $12.00 Transport (fuel, lodging) Staff time $10.00 $8.00 $6.00 Cost per recipient is US$3 more for the voucher program Even if double the number of recipients per voucher fair, the voucher fair still US$1 more $4.00 $2.00 $0.00 Cash Voucher Jenny C. Aker Cash and Vouchers in DRC
  • Cost Effectiveness Analysis • Welfare cost (loss) to voucher recipients due to changes in purchasing decisions  Mitigated by the fact that vouchers and goods could be sold • Similar travel and opportunity costs for each modality  Both groups had to travel to Masisi Center (3-4 hour walk), but only voucher recipients had to spend there • Potentially higher security risks for voucher recipients  Had to travel and spend on particular days  Goods purchased were more observable to looters and militia than cash  Specifically an issue with gender-based violence in eastern DRC Jenny C. Aker Cash and Vouchers in DRC
  • Conclusions • Voucher changed household purchases for some goods  Voucher households purchased more salt, fish and rice than they would have if given cash  Cash households purchased more diverse food items (overall), school fees, medicines and debt reimbursement – not “temptation” goods • No differential effects on welfare  Non-binding transfers – could sell goods • Cash transfers more cost effective Jenny C. Aker Cash and Vouchers in DRC
  • Conclusions • If markets can provide necessary goods, cash is a preferred option from a welfare perspective  Might be other reasons to provide vouchers • Environment with high marginal utility of income • But how much cash and how often? “If we receive (a large sum) of cash all at once, I will spend it on silly things…like beer, or beers for my friends, or cookies for the children….” Cash and voucher recipients and spouses, Masisi camp Jenny C. Aker Cash and Vouchers in DRC
  • External Validity • Variety of voucher and cash-based programs in conflict and emergency situations  DRC, Sudan, Niger • Availability of supplies on local markets and selftargeting important  Poor and vulnerable populations are easily identified with IDPs – more difficult among host communities  Markets were able to provide goods Jenny C. Aker Cash and Vouchers in DRC