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J Health Econ. 2016 Mar;46:70-89. doi: 10.1016/j.jhealeco.2016.01.005. Epub 2016 Jan 29.

Does the benefits schedule of cash assistance programs affect the purchase of temptation goods? Evidence from Peru.

Author information

1
University of California at San Francisco, San Francisco, CA, United States. Electronic address: Justin.White@ucsf.edu.
2
Stanford University, San Francisco, CA, United States.

Abstract

A critique of cash assistance programs is that beneficiaries may spend the money on "temptation goods" such as alcohol and tobacco. We exploit a change in the payment schedule of Peru's conditional cash transfer program to identify the impact of benefit receipt frequency on the purchase of temptation goods. We use annual household data among cross-sectional and panel samples to analyze the effect of the policy change on the share of the household budget devoted to four categories of temptation goods. Using a difference-in-differences estimation approach, we find that larger, less frequent payments increased the expenditure share of alcohol by 55-80% and sweets by 10-40%, although the absolute magnitudes of these effects are small. Our study suggests that less frequent benefits scheduling may lead cash recipients to make certain types of temptation purchases.

KEYWORDS:

Alcohol; Conditional cash transfers; Impulse purchases; Temptation goods; Tobacco

PMID:
26874596
PMCID:
PMC4779683
[Available on 2017-03-01]
DOI:
10.1016/j.jhealeco.2016.01.005
[Indexed for MEDLINE]
Free PMC Article

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