Paternalism, Giving, and Incorrect Beliefs: Lab-in-Field experiment

Cash transfers are a common and effective means of combating poverty, yet their adoption is limited by concerns that some recipients of -transfers will mis-use the transfer by spending some of it inappropriately. Voters and charitable donors may thus prefer restricting the transfers to a limited set of purchases even when this restriction is costly. In this experiment, we examine whether potential transfer recipients themselves would prefer to restrict the transfers received by others. We sample 600 low-income households in rural Kenya who make incentivized decisions between an unrestricted voucher that can make purchases at local shops and a restricted voucher that can make all the same purchases except alcohol or cigarettes. Half the sample receives information: the share of prior recipients in our study who redeemed part of their voucher for alcohol or cigarettes. Our primary analysis will focus on whether the information shifts beliefs about future mis-use of transfers and whether it shifts the choice to impose costly restrictions. A secondary analysis compares the participants' willingness to tolerate costs for restricting others' transfers against their willingness to restrict their own transfer.