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Explaining The Food Stamp Cash-Out Puzzle

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  • Breunig, Robert
  • Dasgupta, Indraneel
  • Gundersen, Craig
  • Pattanaik, Prasanta

Abstract

Empirical studies have shown that food stamp participants spend a higher proportion of their benefit on food than they would with an equivalent amount of cash. Our study demonstrates that this result can be explained by the decision-making behavior of multi-adult households. Multi-adult households spend a higher proportion of their food stamp benefit than they would with an equivalent amount of cash. In contrast, single-adult households show little difference in food spending between food stamps and an equivalent amount of cash. Because over 30 percent of food stamp participants are in multi-adult households, switching from food stamps to cash may reduce food purchases of these needy households. If that is indeed the case, the use of food stamps and other in-kind benefits may be more desirable than other forms of assistance.

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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Food Assistance and Nutrition Research Reports with number 33869.

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Date of creation: 2001
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Handle: RePEc:ags:uersfa:33869

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Related research

Keywords: Food Stamp Program; cash transfers; cash-out puzzle; welfare stigma; Cournot model; intra-household distribution; Engel curves; Food Consumption/Nutrition/Food Safety; Food Security and Poverty;

References

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  2. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
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  4. Moffitt, Robert, 1989. "Estimating the Value of an In-Kind Transfer: The Case of Food Stamps," Econometrica, Econometric Society, vol. 57(2), pages 385-409, March.
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  8. Thomas M. Fraker & Alberto P. Martini & James C. Ohls, 1995. "The Effect of Food Stamp Cashout on Food Expenditures: An Assessment of the Findings from Four Demonstrations," Journal of Human Resources, University of Wisconsin Press, vol. 30(4), pages 633-649.
  9. Besley, T. & Coate, S., 1990. "Understanding Welfare Stigma: Taxpayer Resentment And Statistical Discrimination," Papers 42, Princeton, Woodrow Wilson School - Discussion Paper.
  10. Chiappori, Pierre-Andre & Haddad, Lawrence & Hoddinott, John & Kanbur, Ravi, 1993. "Unitary versus collective models of the household : time to shift theburden of proof?," Policy Research Working Paper Series 1217, The World Bank.
  11. Jim C. Ohls & Thomas M. Fraker & Alberto P. Martini & Michael Ponza, 1992. "The Effects of Cash-Out on Food Use by Food Stamp Program Participants in San Diego," Mathematica Policy Research Reports 1253, Mathematica Policy Research.
  12. Haddad, Lawrence & Hoddinott, John & Alderman, Harold & DEC, 1994. "Intrahousehold resource allocation : an overview," Policy Research Working Paper Series 1255, The World Bank.
  13. J. S. Butler & James C. Ohls & Barbara Posner, 1985. "The Effect of the Food Stamp Program on the Nutrient Intake of the Eligible Elderly," Journal of Human Resources, University of Wisconsin Press, vol. 20(3), pages 405-420.
  14. Joan R. Rodgers & John L. Rodgers, 1993. "Chronic Poverty in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 25-54.
  15. Dasgupta, Indraneel, 2001. "Gender-biased redistribution and intra-household distribution," European Economic Review, Elsevier, vol. 45(9), pages 1711-1722, October.
  16. Parke E. Wilde & Christine K. Ranney, 2000. "The Monthly Food Stamp Cycle: Shooping Frequency and Food Intake Decisions in an Endogenous Switching Regression Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 200-213.
  17. Barbara Devaney & Thomas Fraker, 1986. "Cashing out food stamps: Impacts on food expenditures and diet quality," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 5(4), pages 725-741.
  18. Alderman, Harold, et al, 1995. "Unitary versus Collective Models of the Household: Is It Time to Shift the Burden of Proof?," World Bank Research Observer, World Bank Group, vol. 10(1), pages 1-19, February.
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Citations

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Cited by:
  1. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications, The World Bank, number 6582, August.
  2. Stewart, Hayden & Blisard, Noel, 2006. "The Thrifty Food Plan and low-income households in the United States: What food groups are being neglected?," Food Policy, Elsevier, vol. 31(5), pages 469-482, October.
  3. Atasoy, Sibel & Mills, Bradford F. & Mykerezi, Elton, 2008. "Intensity of Food Stamp Use and Transient and Chronic Poverty: Evidence from the Panel Study of Income Dynamics," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6541, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Blisard, Noel & Stewart, Hayden, 2006. "How Low-Income Households Allocate Their Food Budget Relative to the Cost of the Thrifty Food Plan," Economic Research Report 7239, United States Department of Agriculture, Economic Research Service.
  5. Mykerezi, Elton & Mills, Bradford F., 2009. "On Intra-Annual Poverty in the U.S.: Prevalence, Causes and Response to Food Stamp Program Use," Staff Papers 49095, University of Minnesota, Department of Applied Economics.
  6. Nordström, Jonas & Thunström, Linda, 2007. "The Impact of Tax Reforms Designed to Encourage a Healthier Grain Consumption," UmeÃ¥ Economic Studies 717, Umeå University, Department of Economics.
  7. Indraneel Dasgupta & Ravi Kanbur, 2011. "Does philanthropy reduce inequality?," Journal of Economic Inequality, Springer, vol. 9(1), pages 1-21, March.
  8. Stewart, Hayden & Blisard, Noel & Jolliffe, Dean, 2003. "Do Income Constraints Inhibit Spending on Fruits and Vegetables Among Low-Income Households?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December.
  9. Zagorsky, Jay L. & Smith, Patricia K., 2009. "Does the U.S. Food Stamp Program contribute to adult weight gain?," Economics & Human Biology, Elsevier, vol. 7(2), pages 246-258, July.
  10. Jolliffe, Dean & Tiehen, Laura & Gundersen, Craig & Winicki, Joshua, 2003. "FOOD STAMP BENEFITS AND CHILD POVERTY IN THE 1990s," Food Assistance and Nutrition Research Reports 33833, United States Department of Agriculture, Economic Research Service.

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