They study the effect of PROGRESA’s pre-school child nutrition programs on child height and report that the programs had substantial positive impacts on growth and in reducing the probability of being stunted for children aged 1- 3. The authors also postulate that the program addresses externalities arising from household bargaining: PROGRESA directs its resources to mothers based in part on prior evidence from other populations that suggest better child health and nutrition when women rather than men receive resources.!! A natural question is whether fungibility is an issue in all CCT schemes or only particular types such as nutritional interventions. For instance, if a CCT scheme leads to higher school enrollment, is there an associated fungibility problem? Although there is limited empirical evidence, the answer is yes. In particular, these programs may reduce the amount of education that is given at home to the child or the composition of education across children. In the Female Stipend Program in Bangladesh, Khandker and others (2003) examine whether providing stipends only for girls had an effect on boys’ schooling since the program effectively reduces the price of girls’ compared to boys’ education. Their evidence is mixed. Using household data they find that the effect on boys’ schooling is statistically insignificant. However, using school enrollment data they find a 29 percent decline in boys’ enrollment in program schools. This can either be interpreted as an absolute decline, or, given the evidence from household surveys, a movement away from program to non-program schools for boys, although why this should happen is not clear. 4 Equity and Conditional Cash Transfers The second objective of conditional cash transfers, as a screening mechanism for targeting and redistribution, has a long history in workfare and food distribution programs. Recent reviews by Ravallion (2003) and Van de Walle (1998) document both the ways in which these schemes have been evaluated as well as their ability to lift households out of poverty. These reviews show that success is closely tied to whether the conditionality simultaneously satisfied two goals: ensuring that the targeted group was willing to satisfy the conditions of program participation and ensuring that the group not targeted found the conditionality too expensive compared to the rewards of the program. In the targeting literature, the failure of the first is often referred to as “errors of exclusion” and 'lTn Vaso de Leche, a program that Stifel and Alderman (2003) consider to be the largest social transfer in Peru, selected households receive milk or milk-products. Although the program is well targeted to the poor and leakages are minimal, it fails to achieve its main nutritional objective of improving child height. The authors argue that the reason behind the lack of impact is that half the in-kind transfers are infra-marginal (Type III agents in Figure 1) so that the provision of milk did not have an impact beyond the income transfers it represented. The authors conclude that cash transfers may have been a superior means of increasing consumption of milk if they are less costly and more efficiently distributed than food transfers. However, as suggested by Van de Walle (1998), in-kind transfers might be more politically feasible than cash transfers. Whether political gains outweigh implementation cost in this instance remains an open question.

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