The Kenya government devotes a significant proportion of its resources to investments in human capital— health and education. In 2006/07, more than a third of the government budget was allocated to these social sectors. This paper uses a benefit incidence approach to estimate who is benefiting from these services, both on average and at the margin, using data from the recent Kenya Integrated Household and Budget Survey (KIHBS). The analysis shows that households clearly benefit from government social spending in Kenya. Our estimates suggest that government spending on education overall amounts to about 10 percent of household income/consumption, and health spending to just over 2 percent. Education spending dominates—the overall subsidy being five times that of health. The benefits to the poorest groups (the poorest 20 percent) are even more significant. The in-kind transfers they gain by sending children to school and using government subsidized health facilities amounts to over 40 percent of their income. For the richest quintile, it is only 5 percent of their income. The education subsidy, moreover, is better targeted to the poorest groups—18 percent of the subsidy benefits the poorest quintile, while just 14 percent of health spending reaches the poorest. At the other end of the income scale, the richest get the largest share of the health spending—27 percent of the health recurrent budget. Because they benefit little from spending on primary education, the richest quintile get only its proportionate share of overall education spending. In general, our estimates of the incidence of marginal changes in spending on education and health follow a similar pattern to those observed on average. They confirm that additional spending on primary education and primary health-care are likely to benefit the poorest groups in Kenyan society. There is no evidence of a gender imbalance/bias in the marginal benefits from education spending, and females are predicted to benefit more than males from an expansion in primary health spending. And whilst the richest females are shown to benefit most from an expansion of hospital services, their counterparts in the poorer quintiles gain far, far less—even less than the males in the quintile