Abstract:-

Are in-kind transfers associated with deadweight losses? To answer this question, we conducted an incentivized field experiment in India, offering low-income respondents a choice between a free quantity of rice and varying amounts of cash to elicit their willingness to pay for rice. Contrary to standard economic theory, we find evidence of deadweight gain on average, though with variation across respondents. We investigate potential explanations for this result, focusing on infra-marginality, commitment considerations and intra-household bargaining dynamics. Notably, we uncover a striking contrast: women in female-headed households exhibit deadweight losses, while women in male-headed households experience deadweight gains. Upon examining alternative explanations, our results highlight that greater bargaining power of women within households increases the propensity to choose cash over rice.