Benefits in kind

By:

James Knight

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock… read more.

Updated: Aug 20, 2021

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Government provision of goods and services to those in need of them. This is an alternative to providing citizens with monetary incomes sufficient to meet their needs via the market. Governments wishing to provide for the basic needs of their citizens, including subsistence, housing, education, and medical services, have to choose between these two methods. Providing income is supported by the argument that people vary in their individual tastes and needs so that any available resources will be more efficiently used in giving cash that can be spent on goods and services. There are, however, various arguments in favour of benefits in kind. In the case of medical and educational services, the tasks of assessing and meeting needs are closely connected. Housing, medical services, and education are often regarded as merit goods: improved housing, health, and education are supposed to benefit society at large as well as the individual recipient. There is the possibility that if those in need of services for themselves, and more particularly for their children, were given money to pay for them, they might prefer to spend some or all of it on different commodities. As an attempt to combine the merits of market provision of services with the advantages of benefits in kind, it has been proposed that, for example, education should be supplied by the state issuing parents with ‘vouchers, which could be spent only at educational institutions, and would not otherwise be tradable.

Reference: Oxford Press Dictonary of Economics, 5th edt.