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A Case for In-Kind Transfers

Published online by Cambridge University Press:  05 December 2008

Steven Kelman
Steven Kelman
Affiliation:
John F. Kennedy School of Government, Harvard University
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Extract

One of the most common policy-related messages that economists present to non-economists is the superiority of cash over in-kind transfers as a policy tool. A good deal of government policy on behalf of the poor consists, of course, of various forms of in-kind assistance, such as medical care or food stamps. However, if we wish to help the poor, the argument goes, in-kind transfers are an inferior way to do so.

Type
Essays
Information
Economics & Philosophy , Volume 2 , Issue 1 , April 1986 , pp. 55 - 73
Copyright
Copyright © Cambridge University Press 1986

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References

1. Versions of this argument appear in virtually all textbooks in microeconomic theory. For a good discussion, see Schelling, Thomas C., “Economic Reasoning and the Ethics of Policy, ” The Public Interest, No. 63 (Spring 1981), 37–61.Google Scholar

2. This is explicit in Milton Friedman's proposal in Capitalism and Freedom (University of Chicago Press, 1962) for a negative income tax.

3. I ignore here important arguments to the effect that the distribution of wealth “the market” produces is influenced in an important way by prior government entitlements determinations, which also establish baselines for conclusions, about “adverse” effects of taxation on incentives. See, for example, Duncan, Kennedy and Frank, Michaelman, “Are Property and Contracts Efficient?”, Hofstra Law Review, 8 (1980)Google Scholar. I discuss this issue in “Limited Government: An Incoherent Concept,” Journal of Policy and Management, 3 (Fall 1983), 31–44.

4. Sen, Amartya and Williams, Bernard, “Introduction,” in their Utilitarianism and Beyond (Cambridge: Cambridge University Press, 1982), p. 4.CrossRefGoogle Scholar

5. A good introductory discussion of the concept of rights appears in Feinberg, Joel, Sociol Philosophy (Englewood Cliffs: Prentice, Hall, 1973), Chapts. 4–6.Google Scholar

6. This phrase was, of course, used by philosophers long before it became associated with a view on abortion.

7.. On “respect for persons, ” see Cranor, Carl, “Toward a Theory of Respect for Persons,” American Philosophical Quarterly, 12 (1975), 309–19Google Scholar, Hudson, Stephen D., “The Nature of Respect,” Social Theory and Practice, 6 (Spring 1980), 69–90CrossRefGoogle Scholar, and Green, O.H. (editor), Respect for Persons (New Orleans: Tulane University Press, 1982).Google Scholar

8. Scanlon, T.M., “Preference and Urgency,” Journal of Philosophy, 72 (11 1975), p. 660.CrossRefGoogle Scholar

9. A good collection of essays on issues of positive and negative rights is Steinbock, Bonny (editor), Killing and Letting Die (Englewood Cliffs: Prentice Hall, 1980).Google Scholar

10. For a qualifier, see below, p. 39.

11. In a comment on an earlier draft, Thomas Schelling noted that whether you give a poor person “a dollar for the soup, pay the bill after they've eaten the soup, give them a soup coupon, or cook the soup and serve it too, the ‘justification’ must be pretty much the same.”

12. For a discussion, see Frankena, William K., “Obligation and Motivation in Recent Moral Philosophy,” in Readings in Ethical Theory, 2d ed., edited by Sellars, Wilfrid and Hospers, John (Englewood Cliffs: Prentice-Hall, 1970).Google Scholar

13. Kelman, Steven, What Price Incentives? Economists and the Environment (Boston: Auburn House, 1981), Chapter 2.Google Scholar

14. For a discussion, see ibid., pp. 54–83.

15. Thurow, Lester C., “Government Expenditures: Cash or In-Kind Aid?” in Markets and Morals, edited by Dworkin, Gerald et al. (New York: Halsted Press, 1977).Google Scholar

16. See Hochman, Harold M. and Rogers, James D., “Pareto Optimal Redistribution,” American Economic Review 59 (09 1969), 542–57.Google Scholar

17. It should be noted that there is a tradition within welfare economics that is critical of the “compensationist” approach on grounds somewhat related to those presented here. See Samuelson, Paul A., “Evaluation of Real National Income,” Oxford Economic Papers 2 (01 1950).CrossRefGoogle Scholar Samuelson sharply criticizes attempts to draw policy conclusions from the notion of Pareto improvement in the absence of explicit ethical views about distribution. I am indebted to Francis Bator for calling this to my attention.