Academic journal article Journal of Agricultural and Applied Economics

Does the Food Stamp Program Affect Food Security Status and the Composition of Food Expenditures?

Academic journal article Journal of Agricultural and Applied Economics

Does the Food Stamp Program Affect Food Security Status and the Composition of Food Expenditures?

Article excerpt

This article considers interaction among participation in the Food Stamp Program (FSP), food security status, and the composition of food expenditures. A quadratic almost ideal demand system with a bootstrapping two-step method of estimation is applied to data from the Current Population Survey-Food Security Supplement data and used to estimate the model and account for endogeneity between the FSP participation and food insecurity. The results show that FSP participation is endogenously related with food security status and significantly affects total food expenditure and food-away-from-home expenditures.

Key Words: food away from home, food insecurity, food stamps

JEL Classifications: Q18, R21, 132

Over four decades, the Food Stamp Program (FSP) has provided a safety net to low-income households in the United States through food assistance designed to protect participants from hunger and encourage consumption of a nutritious diet (Eisinger). Although the food program is designed to help meet the food needs of low-income households and reduce hunger, being food insecure (FI) is not a requirement for participation in the program. For FSP participants, program benefits increase the household budget and thus free resources for expenditures on all goods. For many FSP households, the FSP transfers are less than the household's expenditures on food at home in total, and thus the program benefits are used in full before the month of allocation is over (Gundersen and Oliveira; Wilde and Ranney). However, because the design of the FSP allows benefits to cover only expenditures on food at home (FAH), that is, foods purchased in approved retail grocery stores, the program effectively discourages consumption of food away from home (FAFH).

The main objective of the study is to investigate whether the FSP affects food security status and the composition of food consumption or expenditures (both FAH and FAFH). Although there is evidence that food stamps increase overall food spending (Fox, Hamilton, and Lin), little is known about the program effect on composition of expenditures. Understanding the effect of the FSP on both food security and on the allocation of food expenditures provides basic information useful for evaluating the effectiveness of the program design and improving the well-being of target populations.

Several recent studies consider the effects of the FSP on food consumption and food security status. However, the results vary among the studies because of both data and research design (Wilde), and none examines the outcomes in terms of composition of food expenditures. For example, Gundersen and Oliveira used cross-sectional data from the Survey of Income and Program Participation and a simultaneous equation model with two probits and found that FSP participants had the same probability of food insufficiency as nonparticipants. Huffman and Jensen (2008) and Gibson-Davis and Foster also found no significant relationship between FSP receipts and food insecurity. Jensen found evidence that FSP participation and FI were affected in the same direction by random shocks. Borjas exploited a difference in state policies regarding benefits for immigrant populations after welfare reform along with the Current Population Survey-Food Insecurity data to show that a 10% cut in the fraction of the population that receives public assistance increased the percentage of FI households by about 5%. Yen et al. (2008) found that FSP participation had a negative effect on FI using 1996-1997 National Food Stamp Program Survey data. In sum, without access to experimental data, the challenge is to adequately account for program participation and selection bias in estimating program effects.

Purchases of food for consumption away from home are often necessitated by demands from time spent in the labor force or chosen as preferred sources of food because the FSP increases resources available to the household. …

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