ABSTRACT
This chapter describes the characteristics of benefits in kind and in cash, and reviews the main arguments for and against in-kind provision. It discusses the implications of choosing one type of benefit over the other in terms of distributional effects, incentives to participate in the labour market, impact upon consumption and administrative ease. The chapter reviews the implications of provision in cash versus in kind for household resources, redistribution, consumption, labour supply and benefit administration. Social benefits, whether in cash or in kind, may be means-tested to target the poor. The main argument in favour of cash provision is personal autonomy–or, translated into the language of economists, "consumer sovereignty". Recipients of an income transfer may spend the money involved as they like, rather than being constrained to consume a particular quantity of a particular good provided in kind. Empirical work on the redistributive role of benefits in kind has proliferated since the pioneering work of Smeeding.
