Claiming that the cash transferred will be chasing the same basket of goods implies Kenya is a closed economic system. Cash transfers would have benefits even if this were true. The current economy of Kenya reflects the aggregate preferences of the buying power of Kenyans. Transferring money to someone who is poor, i.e. has little voice, changes aggregate preferences. We regard the current distribution of economic power in Kenya as perverse. Not necessarily due to any causal analysis or moral judgement of the path that got them here, but simply by looking at the results. The poor desire more of the basic necessities of life, but the current system has not delivered them.
In-kind transfers relies on the idea that pumping money into the system is getting us more of the same thing that got them to where they are. But research in this area so far has indicated that IKT are just as prone to appropriation as cash transfers. If the two are roughly equal in how much benefit we expect to actually go to the poor, then cash transfers win simply by virtue of being lower friction. We can also ask beneficiaries directly about cash transfers vs IKT, but results here have been split AFAIK.
Anyway, Kenya obviously isn’t a closed system. And money does result in the movement of goods and services from elsewhere. We want to look at what beneficiaries actually spend money on and look at the coupling of that as far as is possible. Oil is a good indicator to the extent that it is coupled to the needs of the poor and a bad one to the extent it isn’t. Gas for generators in villages? Good. Though I don’t know to what extent this is a good proxy for things cash transfer beneficiaries do with their money. Oil is a liquid (low friction) market and thus is probably not reflective of price disparities elsewhere.
Claiming that the cash transferred will be chasing the same basket of goods implies Kenya is a closed economic system. Cash transfers would have benefits even if this were true. The current economy of Kenya reflects the aggregate preferences of the buying power of Kenyans. Transferring money to someone who is poor, i.e. has little voice, changes aggregate preferences. We regard the current distribution of economic power in Kenya as perverse. Not necessarily due to any causal analysis or moral judgement of the path that got them here, but simply by looking at the results. The poor desire more of the basic necessities of life, but the current system has not delivered them.
In-kind transfers relies on the idea that pumping money into the system is getting us more of the same thing that got them to where they are. But research in this area so far has indicated that IKT are just as prone to appropriation as cash transfers. If the two are roughly equal in how much benefit we expect to actually go to the poor, then cash transfers win simply by virtue of being lower friction. We can also ask beneficiaries directly about cash transfers vs IKT, but results here have been split AFAIK.
Anyway, Kenya obviously isn’t a closed system. And money does result in the movement of goods and services from elsewhere. We want to look at what beneficiaries actually spend money on and look at the coupling of that as far as is possible. Oil is a good indicator to the extent that it is coupled to the needs of the poor and a bad one to the extent it isn’t. Gas for generators in villages? Good. Though I don’t know to what extent this is a good proxy for things cash transfer beneficiaries do with their money. Oil is a liquid (low friction) market and thus is probably not reflective of price disparities elsewhere.