Econometrica: Mar, 1989, Volume 57, Issue 2

Estimating the Value of an In-Kind Transfer: The Case of Food Stamps

https://doi.org/0012-9682(198903)57:2<385:ETVOAI>2.0.CO;2-B
p. 385-409

Robert Moffitt

That in-kind and cash transfers differ in value in general is well known to economists. However, the magnitude of the value of in-kind transfers has not been well determined in past work. Here the value of one in-kind transfer, Food Stamps, is examined by evaluating the experience of an actual conversion from stamps to cash in Puerto Rico in 1982. Perhaps surprisingly, the evidence clearly indicates that the cashout of the stamps had no detectable influence on food expenditures. The explanation partly lies in the distribution of expenditures, for the stamps were inframarginal for most recipients. However, some evidence also indicates that trafficking in stamps was widespread, including indirect evidence from estimates of the piecewise-linear constraint model.