Cash transfers improve education and health outcomes and alleviate poverty in various contexts. This study finds that concerns that poor households will use transfers to buy alcohol, tobacco, or other “temptation goods” are unfounded. There is clear evidence that transfers are not consistently used for alcohol or tobacco consumption across different contexts and types of cash transfer programmes. It underlines the need to combine qualitative and quantitative data.
This paper reviews studies from 1997 to early 2014: 19 with quantitative evidence on the impact of cash transfers on temptation goods, as well as 11 studies that surveyed the number of respondents who reported they used transfers for temptation goods. Eligible studies include both experimental and quasi-experimental designs. The review is limited to papers that compare cash transfer recipients to a group that receives no transfers. Specifically, in the systematic review we consider the effects on consumption of all those goods which studies themselves identify as “temptation”, “demerit”, or “anti-social” goods, or those which reflect “misuse” or “waste” but focus on the effects of alcohol and tobacco consumption for comparative purposes.
Key findings
- Impact estimates: Across 44 estimates from 19 studies (across 10 countries around the world), this study finds almost without exception, either no significant impact or a significant negative impact of transfers on expenditures on alcohol and tobacco. This finding is similar whether the analysis includes experimental and quasi-experimental designs or if it is restricted to randomized trials alone. Likewise, studies that have tried to quantify the proportion of beneficiaries who spend transfers on temptation goods find negligible effects. This result is consistent across the world, supported by data from Latin America, Africa, and Asia. It is also consistent across conditional and unconditional cash transfer programs.
- Level estimates: 11 studies representing programs in 8 countries are less consistent that impact estimates as they look only at transfer expenditures, but are consistent with the finding of insignificant quantities being spent on alcohol and tobacco.
- Potential issues with the data above are not a major concern for the authors:
- Social desirability bias in the above estimates is not considered to be an issue here because: (1) alcohol and tobacco are not singled out in surveys and (2)transfer income is not asked about separately allowing respondents to answer 0 or the same amount pre-programme.
- Insufficient statistical power. Every study finding positive and insignificant estimates for temptation goods produces significant estimates suggesting that the insignificance of these temptation good estimates derives from lack of quantitative evidence, not statistical power.
- Based on three identified studies there is no significant difference between the impact of cash and in-kind transfers on temptation goods expenditure.
- While qualitative results suggest a larger fraction of cash transfer expenditure on temptation goods than the impact and level estimates. However, this does not negate these findings. The estimates are based on averages, and qualitative results may either be (a) influenced by ‘saliency bias’ – based on events or conversations within their communities that are highly noticeable – or (b) (less likely) be based on responses from those who do not know where their household income is spent.
Implications
- Qualitative reports should be complemented with quantitative data to give a broader picture.
