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Rising Food Prices Take a Bite Out of Food Stamp Benefits

Author

Listed:
  • Hanson, Kenneth
  • Andrews, Margaret S.

Abstract

The Food Stamp Program is designed to provide low-income families with increased food purchasing power to obtain a nutritionally adequate diet. As in most other Federal Government assistance programs, benefits are adjusted in response to rising prices—in this case, rising food prices. The current method of adjustment results in a shortfall between the maximum food stamp benefit and the cost of a nutritionally adequate diet as specified by USDA’s Thrifty Food Plan. During fiscal year (FY) 2007, the food purchasing shortfall in the caseload-weighted maximum benefit for the program grew from $7 in October 2006 to $19 in September 2007. In FY 2008, the amount grew from almost $8 in October 2007 to $34 in July 2008 and to $38 in September 2008. In an average month, food stamp households faced shortfalls of over $2 in FY 2003, $12 in FY 2007, and $22 in FY 2008. These losses in food purchasing power account for 1 percent, 4 percent, and 7 percent of the maximum benefit in each respective year. Alternative adjustment methods can reduce the shortfall but will raise program costs.

Suggested Citation

  • Hanson, Kenneth & Andrews, Margaret S., 2008. "Rising Food Prices Take a Bite Out of Food Stamp Benefits," Economic Information Bulletin 58624, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uersib:58624
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    File URL: http://purl.umn.edu/58624
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    Cited by:

    1. Leslie McGranahan & Anna L. Paulson, 2011. "How do benefit adjustments for government transfer programs compare with their participants' inflation experiences?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 113-136.
    2. Jessica E. Todd, 2015. "Revisiting the Supplemental Nutrition Assistance Program cycle of food intake: Investigating heterogeneity, diet quality, and a large boost in benefit amounts," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(3), pages 437-458.

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