Chapter 8: Benefits in Kind
8. Beneﬁts in kind Economists have a long tradition of arguing for cash beneﬁts instead of beneﬁts in kind. Still, beneﬁts in kind constitute a large part of the public budget for social protection. Child care, health care and elderly care are important examples. Beneﬁts in kind include vouchers – that is, rights to purchase a particular good, such as child care – giving the recipient the choice of producer from whom the good should be bought. What economists refer to when advocating cash beneﬁts is beneﬁts in kind like food stamps, subsidized housing, school lunches and other typically private goods. The argument is that the same amount of money would be better used if recipients were given a choice to consume what they like best. For example, a particular family getting £100 worth of food stamps might prefer to use this amount for, say, better housing. Since a cash beneﬁt of the same amount has a higher (or equally large) value to the family, food stamps are seen as a wasteful/ineﬃcient way to support families. This argument may be found in most textbooks on public ﬁnance and social policy. The economists’ view is criticized for assuming that the purpose of beneﬁts in kind is to enhance the general well being of the recipients, when the purpose in fact may be to satisfy some aspect of social justice. As we have seen in Chapter 3, equality of opportunity may require, for example,...
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