Money or Power? Financial Infrastructure and Optimal Policy

Working Paper
Published on 15 February 2022


In response to the Covid-19 crisis, 186 countries implemented direct cash transfers to households, and 181 introduced in-kind programs that lowered the cost of utilities such as electricity, water, transport, and mobile money. During times of crisis, do people prefer cash or in-kind transfers, and why? To study this, we ran surveys with more than 2,000 respondents across two separate contexts: urban Kenya and urban Ghana. In urban Kenya 95% of recipients prefer mobile money over electricity transfers of a similar monetary value. But Kenya is an outlier with high mobile money adoption: this likely increases its value and reduces the transaction cost of buying electricity credit. In contrast, in urban Ghana—where mobile money is less widespread and the transaction costs for buying electricity are higher—half of recipients prefer electricity transfers, and many are willing to forego significant value to receive electricity instead of mobile money. While other differences may also contribute to the gap, these results point to a large role for local financial infrastructure. This may affect optimal government policy in response to an economic crisis: the adoption of modern financial technologies increases the efficiency of cash transfer programs, even as in-kind transfers continue to be preferred in settings where mobile money uptake is lower.


Susanna Berkouwer

University of Pennsylvania

Pierre Biscaye

University of California, Berkeley

Eric Hsu

Yale University

Oliver Kim

University of California, Berkeley

Kenneth Lee

Energy Policy Institute

Edward Miguel

University of California, Berkeley

Catherine Wolfram

Massachusetts Institute of Technology (MIT)