Technology-Enabled Agent Choice and Uptake of Social Assistance Programs: Evidence from India’s Food Security Program

Abstract

Problem definition: Beneficiaries of social assistance programs with transfers of undifferentiated commodities often have a designated agent to collect their entitlements from. This gives monopoly power to agents over beneficiaries. When coupled with weak government monitoring, agents do not have incentives to adhere to stipulated operating guidelines, leading to reduced uptake by beneficiaries. Some governments are attempting to break the monopoly by allowing beneficiaries to choose agents. However, the impact of choice on uptake may be limited by lack of alternate agents in beneficiaries’ vicinities, restricted ability of agents to compete with undifferentiated commodities, and collusion among agents. Methodology/results: Using a reverse difference-in-differences framework on data from a food security program in two neighboring states in India, Andhra Pradesh and Telangana, we find that providing agent choice results in a 6.6% increase in the quantity of entitlements collected by the beneficiary households. We also find that increase in uptake is about four times higher in regions with high agent density compared with those with low agent density. This emphasizes the importance of having an alternate agent in the vicinity for choice to be effective. Nearly all of the increase in uptake is attributable to new beneficiaries collecting entitlements from their preassigned agent. This is suggestive of agents improving adherence to operating guidelines in response to choice. We find associative evidence for this response in the number of days agents keep their shops open. Managerial implications: Governments executing in-kind transfers of undifferentiated commodities are piloting interventions to provide choice to their beneficiaries. Replacement of in-kind transfers with cash, an increasingly popular intervention, may be challenging in volatile markets, as the magnitude of the transfer needs to be periodically adjusted. Our results indicate that alternate designs of providing choice even in a limited form, that is, the place where the beneficiaries can collect their entitlements with products and prices fixed, can present a viable alternative.