Journal Issue: Children and Poverty Volume 7 Number 2 Summer/Fall 1997
The Food Stamp Program
The Food Stamp Program (FSP) is the cornerstone of the public assistance safety net for low-income individuals. Based on uniform national standards, the FSP is the only federal program that provides assistance to households solely on the basis of financial need. All other programs use other criteria, such as categorical criteria or nutrition risk criteria, in deciding whom to serve. Single individuals, childless couples, one- or two-parent households, elderly and disabled individuals, and working-poor households all are eligible for food stamp benefits, as long as they meet the financial eligibility criteria. Thus, the FSP is closer to a universal support program than any other federal program.
The FSP originated in the 1930s with a New Deal food stamp program largely designed to dispose of surplus agricultural commodities to stabilize farm prices. This initial program was discontinued in 1943. The discovery that many low-income families were going without food, combined with a continuing interest in farm price supports, led to the creation of a pilot food stamp program in 1962, its permanent authorization under the Food Stamp Act of 1964, and program strengthening and expansion during the 1970s. With outlays of $25.7 billion in fiscal year 1995, FSP expenditures exceeded combined federal and state cash expenditures through the Aid to Families with Dependent Children (AFDC) program. The FSP also served approximately twice as many individuals as AFDC. For many low-income families, FSP benefits account for a major share of total household resources. For families receiving AFDC, food stamps were estimated to account for 25% to 50% of total household resources.1
The FSP will likely be modified somewhat by recent welfare reform legislation. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, which converted AFDC to the Temporary Assistance for Needy Families (TANF) block grant, maintains the inverse relationship between FSP benefit levels and household income that existed under AFDC. When a household's income, including cash assistance income from programs funded by TANF block grants, declines, the level of FSP benefits to the household increases. Thus, if states cut benefit levels, institute time limits, or implement other policies that restrict access to assistance, food stamp benefits to affected families will increase.
While PRWORA does not change the implicit relationship between household income and food stamp benefits, it does include food stamp benefit reductions. The Center on Budget Policy and Priorities estimates that families with children, including immigrant families with children, will absorb about two-thirds, or $18.4 billion, of these cuts over the next six years. By 1998, families with children are expected to lose an average of $435 annually in food stamp benefits.2
PRWORA also grants states the discretion to change the food stamp benefit structure, and such changes could result in benefit levels that vary from state to state. In addition, PRWORA makes the great majority of legal immigrants ineligible for food stamps.
The FSP was designed to raise the level of nutrition through the provision of coupons that legally can be used only to purchase food. However, at least three possible behavioral responses might disrupt the intended effects of the FSP. First, households that meet FSP income eligibility standards may choose not to participate in the program. Second, households may simply substitute food stamps for other sources of funds ordinarily devoted to food expenditures, thereby resulting in no increase in food expenditures or an increase that is less than the dollar amount of food stamp benefits. Finally, even if food stamps increase food expenditures, improved nutrition is not assured. Because the FSP neither mandates the types of foods that can be purchased nor provides nutrition education, FSP participation may not improve nutritional status.Program Coverage
The FSP is reasonably successful at reaching those who are eligible for benefits and very successful at reaching eligible children. In January 1992, the FSP participation rate was 74% among income-eligible individuals and 89% among income-eligible households below the poverty level.3 In addition, most eligible children participate in the FSP; in 1992, 95% of income-eligible preschool children and 86% of all income-eligible children under 18 years of age participated in the FSP. Of nonparticipating households, approximately half were only eligible for the lowest benefit levels and most had household income exceeding the poverty level. Other reasons for nonparticipation include stigma associated with using food stamps, the administrative requirements for eligibility, lack of access to issuance offices, and perceptions that food stamp benefits are not needed.1Achievement of Program Goals
The goal of the FSP is to improve nutritional status, and numerous studies have examined the effects of food stamp benefits on food consumption, focusing on either food expenditures, nutrient availability, or nutrient intakes. Nutrient availability refers to the availability of calories and individual nutrients from household food supplies. Nutrient intakes refer to the actual consumption of nutrients. Nutrient intakes are generally less than nutrient availability.
Broadly summarized, the FSP is successful in increasing both food expenditures and the availability of nutrients to participating households; less is known about FSP effects on nutrient intakes. A careful and comprehensive review of studies of the effects of food stamps on food expenditures suggests that each dollar increase in food stamp benefits is associated with additional food expenditures of between 17 cents and 47 cents.4 In general, the studies reviewed all used careful statistical modeling and included adequate controls for differences between FSP participants and eligible nonparticipants. Several studies attempted to control for the potential effects of the self-selection of FSP participants, with little evidence of selection bias observed.5 Thus, monthly expenditures on food were increased by $29 to $79 for a typical FSP household receiving $168 worth of food stamp benefits monthly in 1993.
Most studies of the FSP's dietary effects use the household as the unit of analysis and examine the availability of nutrients from household food supplies. In general, the findings from these studies indicate that FSP participation increases the availability of calcium, vitamin C, and iron.4,5 However, a review of existing studies of nutrient intakes with adequate controls for differences in characteristics between FSP participants and nonparticipants failed to consistently show statistically significant effects of food stamp program participation on the actual consumption of nutrients.4 Despite the fact that mean nutrient intakes for Americans are adequate, a substantial fraction of children, particularly poor children, consume less than 70% of the recommended dietary allowance (RDA) for most nutrients; for this population, food stamps may be important. Some evidence indicates that poor children who participate in the FSP are more likely than nonparticipating poor children to consume more than 70% of the RDA.6Indirect Program Outcomes
Two major secondary outcomes are associated with the Food Stamp Program. First, since food stamps are frequently substituted for other cash income in purchasing food, the FSP acts as a cash income supplementation program. Approximately 30% of food stamp benefits go to increase household food expenditures, and 70% is used to divert other household income to nonfood expenditures. This substitution of food stamps for income normally devoted to food purchases has led some policymakers to question whether it would not be simpler and less expensive to administer food stamp benefits in the form of cash. Experimental studies of the effects of cash versus coupon benefits, however, suggest that the substitution would result in a reduction of household food expenditures.7
The other secondary outcome is related to the policy concern regarding the extent to which food stamps and other public assistance programs create incentives for participants not to work. As participants earn more from paid employment, food stamp benefits decline. For each dollar earned from work, food stamp benefits are reduced by somewhere between 24 cents and 36 cents (depending on housing costs and other allowable deductions).1 Estimating the degree of work reduction associated with FSP benefits per se is very difficult, however, because many FSP households are eligible for and participate in other programs whose benefits also decline as household income increases. A careful review of the evidence on the work disincentives associated with FSP participation suggests some work reduction effects but of uncertain size.1,8 (For further discussion of work reduction effects of means-tested programs, see the articles by Janet Currie and Robert Plotnick in this journal issue.)