Agent-Choice in Last-Mile Delivery of Food Security Programs: Impact, Usage and Implications

Problem definition: Last-mile delivery in public food security programs is executed through pre assigned agents who enjoy monopoly power over beneficiaries. When coupled with weak government monitoring, agents do not have incentives to adhere to stipulated service standards, leading to reduced uptake of grains by beneficiaries. Some governments are attempting to break the monopoly by providing the choice of agents to beneficiaries. However, impact of choice on access to food may be limited by the number of agents in beneficiaries’ vicinity, collusion among agents and inability of inventory policies to adapt to changing demand patterns. Methodology/results: Using reverse difference in differences framework on data from two neighboring states in India, Andhra Pradesh (AP) and Telangana (TS), we find that agent-choice increased uptake of grains from 88% to 94.6% of the entitlements. Increase in uptake was primarily driven by new beneficiaries being able to collect their entitlements from their pre-assigned agent. Only 4% of the increase was attributable to exercise of choice, i.e., new beneficiaries collecting their entitlements from an agent other than their pre-assigned one. We also find that increase in uptake was about four times higher in regions with high agent-density compared to those with low agent-density. Managerial implications: Policymakers attempting to address service inefficiencies in food security programs are considering design alternatives at the extreme ends of either complete privatization of last-mile delivery or replacement of physical grains with cash. We show that agent choice, which incorporates the advantages of both extremes to a certain degree, can be an alternate design innovation to consider. Existence of such choice alone can potentially improve access to grains even if the beneficiaries do not exercise it. Consequently, measures beyond utilization of choice need to be used to evaluate the impact of technology/choice interventions in public programs.