In defense of cash transfer’s
From this, was born a discussion (a little chilled by these days) on the best use of these resources. The proposals are wide and varied, ranging from the financing of investment projects and industrialization, through stabilization funds, to redistributive policies based on bonds and transfers of income. Therefore the current debate revolves around one of the oldest questions that the economy has tried to answer: Who assigns better does the State or the household’s?
Obviously bonds have become the most simplest and used option in Bolivia, allowing targets ranging from the redistribution of wealth to monetary compensation for services or public goods that the State does not provide, or provide poorly. This feature is what has drawn criticism that begin from the political use that is given to technical comments and to argue that social welfare functions and individual are not normally the same (ie, for example, households can be measured more alcohol consumption, while the society expected to spend on more education).
As the title says, these lines are written in defense of the bonds, basically because, beyond criticism, one of the main qualities of direct cash transfers is the FREEDOM it gives households to make their consumption decisions. Technically, if it is true that there are more households that value beer weekend that the education of children, what matters is not the atypical cases, what matters is the general distribution of consumption of households that receive vouchers and evaluate certain expenses, such as health and education, which can only have a positive effect on household welfare in the long term.
To prove this point I will refer to data of “Bonosol2” (here clarify: if it is true that the Bonosol is a transfer that has failed to give many years, this bond was applied for a long time, which provides a large set data and also had a "universal" nature.) The following chart shows how much of household monthly income earmarked between 2002 and 2007 receiving and not receiving Bonosol, but similar in other characteristics (ie per household it received Bonosol was sought in the surveys MECOVI another home that has not Bonosol received, but has as far as possible, the same number of members, the same income level, are in the same labor market, same location, etc..)
Monthly allocation of household expenditure on health and education by geographic area.
SOURCE: Based on survey data from 2002 to 2007 MECOVI
What is striking about this chart is the strong increase in spending on education than households that received Bonosol have over those who did not receive. If you believe that voucher recipients were elderly (who are not supposed to spend on education) this graph shows the rationality of households, in the sense that resources received by older generations are used to build the human capital of younger generations This clearly contradicts the argument against the bonds. However, not only to observe the current expenditure, but also the sensitivity of the demand (ie how will vary as the consumption of various homes when their income) families have about the consumption of health-related goods and education.
The following table shows the income elasticity (that sensibility of which we spoke) of households who did and did not receive Bonosol between 2002 and 2007. The results shown can be understood as follows: After giving a home Bonosol this family is willing to spend 115% more than they used to spend on education.
Income Elasticity of Health and Education (2002 - 2007)
| Bien | Households that received Bonosol | Households that not received Bonosol |
| Health | 1,0141 | 1,1454 |
| Education | 1,1550 | 0,9747 |
SOURCE: Based on survey data from 2002 to 2007 MECOVI
From this I would go for a conclusion: beyond the age of receiving bonuses in the home, each home to have their preferences and needs much clearer than any planner stuck at a desk in a public office. The Bonosol was aimed at older adults, so it was expected that the household expenses reflect the needs and preferences of that group of people, but was spending on the education of the younger ones who were affected positively.
Therefore, dear reader, in addition to the good intentions that may have the public sector should be aware that there is a difference between information on the preferences you and your family have and the one with the government. Moreover, for the government or economists as your server, we can bridge this information gap between you and us, we need many costly data, which in many cases (like the small evaluation that we do here) can only be get in the long term, while the needs to which household heads must answer are very short term.
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