Availability and utilization of choice in food security programs : Analysis of an intervention from the Indian Public Distribution System (PDS)

Despite substantial expenditure, food security programs in developing countries suffer from several inefficiencies that prevent beneficiaries from receiving their entitlements in entirety. Some of these inefficiencies are attributable to the monopoly power wielded by agents involved in the last-mile delivery. Governments have attempted to address this challenge by either introducing new private players to increase competition or by replacing the distribution of physical grains with cash transfers. However, evidence on the relative effectiveness of these approaches is not conclusive. Recently, several states in India have introduced a novel reform, termed portability, in India's Public Distribution System (PDS) which allows beneficiaries the choice to collect their entitlements from any of the licensed shops instead of being tied to one designated shop. Provision of such choice, however, is meaningful to beneficiaries only if they have an adequate number of alternative shops in their proximity to exercise this choice. In this paper, we use large-scale program data from the state of Andhra Pradesh, one of the first states to introduce portability, to empirically quantify the relationship between its utilization by beneficiaries and availability of alternate shops near them. Using logistic and count regression models along with associated variance decomposition methods, we find that: i) addition of one extra shop within 0.5 km radius of the beneficiary household increases the odds of utilizing portability by 6.8%, ii) variation in the availability of alternate shops explains more than 60% of the variation in utilization of portability and the number of alternate shops used, and iii) vulnerable households have lower rate of portability utilization than non-vulnerable households. These findings highlight the importance of physical program characteristics (network shop density) in effective implementation of a choice-based public policy intervention