The welfare and market effects of delays in humanitarian assistance
Vittorio Bruni, Olivier Sterck
Delays in aid delivery are common, yet their impacts on households and markets remain theoretically ambiguous and empirically understudied. The Permanent Income Hypothesis predicts consumption smoothing, while models with financial constraints or present bias predict sharp consumption declines. We test these pre¬dictions using high-frequency data and random interview timing in a large refugee camp in Kenya. While households smooth consumption under regular aid cycles, delays reduce food consumption and well-being, with downstream effects on in-tertemporal preferences and cognitive function. Local prices respond to aid timing, and credit access mitigates impacts, but at a 17% premium. Results support credit constraint models.