Friday, 10 Oct 2025
  • Contact
  • Privacy Policy
  • Terms & Conditions
  • DMCA
logo logo
  • World
  • Politics
  • Crime
  • Economy
  • Tech & Science
  • Sports
  • Entertainment
  • More
    • Education
    • Celebrities
    • Culture and Arts
    • Environment
    • Health and Wellness
    • Lifestyle
  • 🔥
  • Trump
  • VIDEO
  • House
  • White
  • ScienceAlert
  • Trumps
  • Watch
  • man
  • Health
  • Season
Font ResizerAa
American FocusAmerican Focus
Search
  • World
  • Politics
  • Crime
  • Economy
  • Tech & Science
  • Sports
  • Entertainment
  • More
    • Education
    • Celebrities
    • Culture and Arts
    • Environment
    • Health and Wellness
    • Lifestyle
Follow US
© 2024 americanfocus.online – All Rights Reserved.
American Focus > Blog > Economy > Cash Transfers: Cutsinger’s Solution – Econlib
Economy

Cash Transfers: Cutsinger’s Solution – Econlib

Last updated: July 2, 2025 11:16 am
Share
Cash Transfers: Cutsinger’s Solution – Econlib
SHARE

Question: A prevalent argument against providing public assistance in the form of direct cash handouts is the concern that recipients may spend this money on items deemed objectionable by taxpayers, such as illegal drugs or gambling. To mitigate this risk, proponents suggest that public assistance should be delivered as in-kind transfers, such as food, housing, or medical care. What assumptions are made about the income elasticities of these objectionable goods? Furthermore, if recipients could easily resell the in-kind transfers, would there be any significant difference between cash handouts and in-kind assistance?

Solution: The argument against providing cash assistance instead of in-kind support—like groceries, housing, or medical services—centers on the fear that cash could be spent on activities considered objectionable by society, such as drug use or gambling. The rationale is simple: by providing food or housing vouchers rather than cash, we can theoretically steer recipients away from using aid for purposes deemed harmful or immoral.

However, this line of reasoning is built on shaky foundations.

At its essence, the argument presupposes that the demand for objectionable goods increases with income—implying these goods have a positive income elasticity. The assumption is that if individuals receive more money, they will likely spend more on drugs or gambling, which is a plausible assertion.

Yet, this very argument also makes an opposing assumption regarding in-kind transfers: it suggests that receiving food, housing, or medical care will not lead to an uptick in the consumption of objectionable goods. This can only be true if these goods somehow remain unaffected by changes in income when received as in-kind support.

See also  BYD brings EV price wars to small cars in Europe

Even if individuals cannot directly sell the food or housing provided, receiving these essentials for free liberates funds that would otherwise be allocated to them. That saved money can then be directed toward anything—including those objectionable goods. Unless we subscribe to the notion that individuals will consume only the in-kind goods and ignore everything else, we should anticipate that some of that saved income will find its way into the purchase of whatever they value on the margin.

In essence, the rationale for in-kind transfers is self-contradictory. It posits that cash leads to negative behavior because of income’s influence—while simultaneously claiming in-kind transfers do not because income suddenly becomes irrelevant.

Now, if we entertain the notion that recipients could resell the in-kind goods, the transfer effectively mirrors cash assistance in all significant respects. They could convert food or housing vouchers into cash and spend it as they wish. From an economic standpoint, resale transforms the in-kind transfer into a cash transfer.

However, even if resale isn’t an option, the fundamental conclusion remains unchanged. The crux of the matter is fungibility: money is interchangeable, and so is the value of money saved. If a recipient was already purchasing food prior to receiving a food transfer, that assistance merely liberates their existing funds to be spent elsewhere.

Whether the consumption of objectionable goods increases as a result hinges on one critical factor: whether those goods are classified as normal goods—items that people tend to purchase more of as their effective income rises. If they are—and the argument against cash assistance implies they are—then any transfer that boosts effective income, whether in-kind or in cash, will yield similar effects.

See also  TD Cowen Maintains Buy Rating on RTX Corporation (RTX), Lifts PT

TAGGED:cashCutsingersEconlibsolutiontransfers
Share This Article
Twitter Email Copy Link Print
Previous Article Wells Fargo, Goldman raised their dividends. How they match up versus other Club names Wells Fargo, Goldman raised their dividends. How they match up versus other Club names
Next Article Diddy’s Defense Says He Won’t Call Escorts If He’s Released on Bond Diddy’s Defense Says He Won’t Call Escorts If He’s Released on Bond
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Posts

Goncalves Family Demands Judge Unseal All Kohberger Case Documents

The family of the victim in the Bryan Kohberger quadruple murder case is demanding full…

July 17, 2025

3 reasons why Paige Bueckers can bring light to Dallas sports fanbase amid Luka Doncic trade travesty

The Dallas basketball scene was buzzing with excitement on Monday as the Wings selected former…

April 15, 2025

Watch: Home Run Celebration Triggers Team Badly as Parents, Players, Coaches Ejected |

What began as a jubilant home run celebration quickly devolved into a theatrical display of…

May 27, 2025

This snail may hold a secret to human eye regeneration

This discovery opens up a whole new realm of possibilities for regenerative medicine, especially in…

August 6, 2025

Schumer And Jeffries Flat Out Reject Mike Johnson’s Partisan CR

PoliticusUSA remains steadfastly independent, delivering news and insights free of bias. Show your support by…

September 24, 2025

You Might Also Like

Why Is Wolfspeed Stock Soaring Today?
Economy

Why Is Wolfspeed Stock Soaring Today?

October 10, 2025
When Godzilla Breaks Windows
Economy

When Godzilla Breaks Windows

October 10, 2025
Peter Schiff Describes Bitcoin’s Jump Over 6,000 As ‘Bear Market Rally’: ‘Too Early For Bitcoiners To Get Excited…’
Economy

Peter Schiff Describes Bitcoin’s Jump Over $126,000 As ‘Bear Market Rally’: ‘Too Early For Bitcoiners To Get Excited…’

October 10, 2025
Veteran analyst drops sharp take on GTA 6 hype
Economy

Veteran analyst drops sharp take on GTA 6 hype

October 10, 2025
logo logo
Facebook Twitter Youtube

About US


Explore global affairs, political insights, and linguistic origins. Stay informed with our comprehensive coverage of world news, politics, and Lifestyle.

Top Categories
  • Crime
  • Environment
  • Sports
  • Tech and Science
Usefull Links
  • Contact
  • Privacy Policy
  • Terms & Conditions
  • DMCA

© 2024 americanfocus.online –  All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?