Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82057
Authors: 
Winther Hansen, Jes
Year of Publication: 
2005
Series/Report no.: 
EPRU Working Paper Series 2005-11
Abstract: 
Present-biased preferences cause distortions in consumption that can motivate the use of paternalistic in-kind transfers. Empirically, goods are consumed to different degrees when consumption outlay changes. Economists distinguish between necessary goods and luxury goods. A present-biased individual has an intertemporal distortion of consumption toward the present, which in turn distorts present consumption toward luxury goods. In-kind transfers of necessary goods, such as food stamps, can alleviate the intertemporal distortion and make present-biased transfer recipients better off. Further, transfers in kind are asymmetrical in the sense that they can target present-biased recipients without affecting fully rational recipients.
Subjects: 
in-kind transfers
time preference
JEL: 
D91
H21
H42
I38
Document Type: 
Working Paper

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