SMU SOE Seminar Series (September 9, 2026): Is a Dollar a Dollar? How Transfer Design Shapes Household Spending

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ABSTRACT

Government transfers vary along two design dimensions that standard models predict should not matter: whether benefits are paid in cash or kind, and whether they arrive as one-time or recurring payments. We test to what extent these design choices matter using sharp changes in four pandemic-era transfers to low-income families with children: one-time food vouchers, monthly food benefits, one-time cash payments, and monthly cash payments. We find that in the short run households spend more out of in-kind benefits than out of cash transfers of similar value, and more out of recurring payments than out of one-time transfers, with short-run food-store MPCs ranging from 0.18 (one-time) and 0.34 (monthly) for in-kind benefits, versus 0.06 (one-time) and 0.20 (monthly) for cash. These patterns suggest that the form and timing of transfers systematically shape household spending in ways that are consistent with mental accounting, labeling, and forward-looking responses. More broadly, our results imply that transfer design---not just generosity and targeting---is a first-order policy lever for both social insurance and short-run demand stabilization.