People continue to argue about what form assistance for the poor should take. One school says, Give

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People continue to argue about what form assistance for the poor should take. One school says, "Give people money and let them buy health services and the foods they need." The other school says, "If you give money to the poor, they may spend it on beer and drugs. Your dollar goes further in alleviating malnourishment and disease if you provide the services "in kind" (meaning by directly providing the good or service rather than providing money to buy the good or service.) The dollar that you earn may be yours to spend, but society's income-support dollar is a dollar that society has the right to channel directly to its targets." The argument of the first school might rest on demand theory: Let each household decide how to maximize its utility on a limited budget. Chapter 5 shows why this argument might be right. But what if the parents' utility includes mainly beer and lottery tickets and no milk or clothing for the children?

Might you agree with the second view? From your own personal experience and reading, which of these two arguments would you endorse? Explain your reasoning.

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Economics

ISBN: ?978-0073511290

19th edition

Authors: Paul A. Samuelson, William Nordhaus

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