Cash or in-kind transfers: which social safety net has a greater impact on household welfare and vulnerability reduction?

Should policymakers and practitioners of humanitarian aid and development programs use cash or in-kind transfers? Which approach has a greater impact on household welfare and reduction in vulnerability to poverty (VP)? This debate has persisted for decades. While this discourse continues to evolve as new research emerges, empirical studies have predominantly focused on the cash versus food debate, comparing effectiveness in terms of cost efficiency, price effects, paternalism, preferences, design, and implementation. Less attention has been devoted to welfare and vulnerability to poverty—the primary objectives of social safety nets. Utilizing the Tanzanian 2017–18 Household Budget Survey dataset comprising 9,463 households, this study aimed to address this knowledge gap. The findings indicate that participation in both cash and in-kind transfers resulted in a statistically significant improvement in welfare and a reduction in VP among poor households. The magnitudes of welfare improvement and VP reduction were greater for cash-based transfer programs than for in-kind transfer programs. Policymakers and practitioners in the field of humanitarian aid and development programs, with the objective of enhancing the welfare of the poor and reducing vulnerability, may consider implementing social safety net programs that incorporate cash-based transfers.