Do Food Prices Affect Food Security? Evidence from the CPS 2002-2006
In this paper, we estimate the effect of food prices on food insecurity for SNAP recipients using data from the Current Population Survey and the recently published Quarterly Food At Home Price Database. We form a local food price index based on amounts of food for a household of four as established by the Thrifty Food Plan. We use an econometric model that accounts for the endogeneity of SNAP receipt to food insecurity and for household-level unobservables. We find that the average effect of food prices on the probability of food insecurity is positive and significant: an increase of one standard deviation in the price of our food basket is associated with an increase in food insecurity of between 1.3 and 2 percentage points for SNAP households. These results are fairly large in terms of the prevalence of food insecurity in our sample. An increase in food insecurity of this magnitude would be about 8 percent of total food insecurity prevalence for the populations in question. These results suggest that indexing SNAP benefits to local food prices could improve its ability to ameliorate the effects of food insecurity.
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