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Cash vs. Food: Measuring the Effectiveness of Food Assistance

Food assistance programs are a staple in the international development world, used to address both humanitarian crises and longer term development goals. But what type of food assistance program is most effective in the fight against hunger and malnutrition?
A new IFPRI report examines this question.

Cash, Food, or Vouchers: Evidence from a Randomized Experiment in Northern Ecuador compares the impact and cost-effectiveness of cash transfers, in-kind (food) transfers, and food voucher programs in several urban and peri-urban Ecuadorian communities. The report finds that, although all three types of programs increase both the quality and quantity of food consumed by recipients, significant differences appear in the types of food consumed, the cost of implementing the programs, and recipients' preferences and willingness to use the programs. Understanding such differences can help policymakers effectively tailor assistance programs to meet the needs of varying locations and populations.

Food transfers resulted in the largest increase in calories consumed, with the majority of these calories coming from cereals. Food vouchers, on the other hand, led to a larger increase in dietary diversity - households receiving food vouchers consumed vegetables, eggs, meat, and dairy products on a more regular basis. According to the report's authors, this may be attributable to marketing efforts surrounding the use of vouchers, as well as nutrition guidelines that limit how vouchers can be spent.

Differences were also found regarding how each type of program benefited poor households compared to more well-off households. Food transfers, by generating higher food consumption and caloric intake, led to significantly larger impacts for the poorest households. Food vouchers and cash transfers had generally similar impacts across all households.

Finally, significant differences were found in the cost of implementing all three programs. The authors found that that the marginal cost of each program was $11.50 for a food transfer, $3.03 for a cash transfer, and $3.30 for a voucher. Looking at both the costs and impacts, food transfers appear to be the least cost-effective way of improving food consumption levels and dietary diversity across the board. The cost-effectiveness of cash transfers and food vouchers, however, is not as straightforward and ultimately depends on the specific goal of the program. If the desired outcome is an improvement in food consumption, then there is no significant difference between cash transfers and food vouchers. Food vouchers, on the other hand, may be better for achieving improved dietary diversity. Finally, if the goal is to improve overall welfare, cash transfers may be the most effective. The report found that, in addition to being the cheapest means of providing assistance, cash transfer programs are also generally more preferred by recipients; this preference may be due to the increased freedom felt by recipients of cash transfers, as well as the potential for cash transfers to generate household savings and improve overall welfare.

While the authors point out that their findings may not apply to non-urban populations, whose consumption patterns are more vulnerable to weather shocks and restricted access to more diverse food sources, the results of the experiment provide a deeper understanding of food assistance programs and how they can be used most effectively to meet specific development goals.