Question: One general argument for public assistance in the form of direct cash handouts is that recipients buy things that taxpayers find, for example, illegal drugs, gambling, etc. Suppose the recipient can resell the physical transfer at no cost. In this case, is there a difference between direct cache handouts and physical transfers?
Solution: The general argument for providing cash in place of food, housing or healthcare, such as in-kind assistance, is to spend on what taxpayers think is opposed: illegal drugs, gambling, or other “vee.” The idea is that giving away Griceries in place of money or renting vouchers will allow recipients to receive assistance and fund consumption that they believe are harmful or immoral.
However, this argument is based on the assumption that Uber does not retain under closer scrutiny.
At its core, the discussion assumes that demand for offensive products rises with revenue, that is, products have the elasticity of postal revenue. Giving Sumone more money is more likely to spend more on drugs and gambling. It could be true.
The problem is that at the same time, it assumes that submatting removes different things about physical transfers. Giving people food, housing or medical care means that they cannot increase the consumption of purposeful products. This is only possible if income is in the form of in-kind support and is no longer affected by changes in income.
Even if Sumone can’t sell the food or homes he received directly, he would have spent money on getting those items for free. That extra money can be used with anything – including purpose goods. Unless people believe that they consume more physical profits and don’t spend anything else with the money they save, we should expect Inca innoms to be reassigned towards what they cherish in the margins.
In other words, the logic of the physical transfer argument is contradictory to itself. They claim that cash causes bad behavior, but the enemy is not a problem.
Now, suppos readics can resell the actual product. In that case, the transfer will be equivalent to cash in any meaningful way. They can turn food or housing vouchers into money and use them like howile. Economically, a physical transfer is carried out exactly like a cash transfer.
However, even if Estale Isn is possible, the basic conclusions still continue. Important ideas are simple. Money can be exchanged and saves money. If the recipient has already purchased food before the government gavem food, the food transfer will simply free up existing money for use elsewhere.
Whether undesired product consumption rises as a result of one thing: whether those products are regular products, i.e. products where people consume more ASSE effective income will rise. If they are, and the argument is assumed to be when they criticize cash handouts – whether it is in physical or cash, transfers that increase effective innomes have the same effect.
