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Cash or Coupons? Testing the Impacts of Cash versus Vouchers in the Democratic Republic of Congo - Working Paper 320

3/26/13
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Abstract

Despite the increased use of conditional and unconditional cash-transfer programs worldwide, a majority of social protection programs in both developed and developing countries use in-kind transfers and vouchers. This paper reports the results of a randomized evaluation of an unconditional cash transfer and voucher program in the Democratic Republic of Congo, a country that has been plagued by intense civil war for much of the past two decades. In response to the devastating conflict, a number of international organizations have used cash and vouchers to assist internally displaced populations. While the value of the voucher was less than the household’s normal total food expenditures (infra-marginal), voucher households purchased more food items than they would have otherwise had they been provided with cash (extra-marginal). There was also no evidence that cash-transfer households were using their transfers for temptation goods. The differences in purchases did not lead to differential improvements in food security, household coping strategies, or asset ownership between the two groups. However, cash-transfer households were able to save a portion of their transfer, and the cash-transfer program was more cost effective for the implementing agency. These results suggest that unconditional cash transfers can be a more efficient means of improving outcomes for extremely vulnerable populations, even in failed states. However, access to markets for goods and services is a necessary precondition for cash-transfer programs to succeed.