One advantage that cash transfers have over “in kind” redistribution (e.g., providing people directly with medical care rather than cash that could be spent on medical care) is that cash tends to be better for the recipient.
Focusing on the _recipient_ of the transfer may be an error because the optimising is being done on the donor end, and the donors may be much more interested in seeing that bad faith actors do not exploit their generosity than that the good faith actors get the most out of it. One can imagine a small town which implemented your strategy, where it worked out well, which caused all the heroin users from the big city to move in to take advantage of the program. The very fungibility of cash makes it an attractive target for robbery and mooching.
I mainly agree, but let me present a Devil's Advocate objection that the status quo is due exclusively to a status quo bias.
That would be that it could be the result of an optimization process. Weighting the probabilities, we think that the number of people who would gamble away their SS checks is low enough compared to the suboptimality of retirement facilities is low, but the number of people who would US cash for smoking and drinking compared to the suboptimality of the restricted choice of the amount to spend on food is high.
My larger point is that to challenge the status quo we need to argue that it is in fact inferior to an alternative, not just a violation of consumer sovereignty.
Focusing on the _recipient_ of the transfer may be an error because the optimising is being done on the donor end, and the donors may be much more interested in seeing that bad faith actors do not exploit their generosity than that the good faith actors get the most out of it. One can imagine a small town which implemented your strategy, where it worked out well, which caused all the heroin users from the big city to move in to take advantage of the program. The very fungibility of cash makes it an attractive target for robbery and mooching.
I mainly agree, but let me present a Devil's Advocate objection that the status quo is due exclusively to a status quo bias.
That would be that it could be the result of an optimization process. Weighting the probabilities, we think that the number of people who would gamble away their SS checks is low enough compared to the suboptimality of retirement facilities is low, but the number of people who would US cash for smoking and drinking compared to the suboptimality of the restricted choice of the amount to spend on food is high.
My larger point is that to challenge the status quo we need to argue that it is in fact inferior to an alternative, not just a violation of consumer sovereignty.
Neat thought experiment. I wonder, could we extend the logic behind cash transfers to include education and healthcare, instead of, say, vouchers?