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Give me money (That’s what I want): The case for cash benchmarking

Recent controversy over the delivery of poor-quality food parcels for low-income schoolchildren in England has raised questions as to whether cash transfers might be a more efficient and dignified alternative to providing benefits in-kind. This briefing suggests that ‘cash benchmarking’ could help bring about policies that more reliably meet the needs of those they are trying to support.

Key points

  • ‘Cash benchmarking’ practices have become common in poorer countries in recent years and used by development agencies to compare programme outcomes against the alternative of giving people cash transfers of equivalent value
  • Giving people money has two potential benefits over government provision of services in kind:
  1. Efficiency: Individuals typically have a better understanding of their preferences and circumstances than the government.
  2. Non-Paternalism: Allowing people to make their own choices is often seen as better respecting their dignity and autonomy.
  • The underlying logic of cash benchmarking is just as applicable to rich-country contexts like the UK: it makes cash more salient as an option, highlights the opportunity cost of policies and highlights and tests the underlying assumptions behind the policy.

Recommendations

  • Cash benchmarking should be integrated into the policy process in three ways:
  1. As a thought experiment: people proposing policies should explicate why their favoured approach is better than giving cash.
  2. In government impact assessments: Officials should be encouraged to consider the option of cash transfers as a more challenging alternative to the ‘do nothing’ scenario.
  3. In policy evaluations: Experiments could involve a cash control group, or compare outcomes to established estimates for the impact of cash.

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