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The Effect of Food Stamps and Income on Household Food Expenditures

  • Levedahl, J. William
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    This report, reexamining past estimates of tile effect of income and food stamp benefits on food expenditures, finds that a cash-only Food Stamp Program would result in a significant reduction in food expenditures, although smaller than suggested, by some previous results. Most prior studies found spending on food from marginal food stamp benefits to be several times greater than from marginal income, suggesting that cashing out the Food Stamp Program could greatly reduce food expenditures. The present study finds a 10-cent reduction in food spending for each dollar of food stamp benefits converted to a cash payment. Previous specifications of the-food expenditure equation plus one based on the translog specification are estimated using data·from the 1979-80 Nationwide Food Consumption Survey, Low Income Sample. In contrast to prior studies, the structural relationship of food stamp benefits to income is explicitly modeled. The report demonstrates that the functional form of the food expenditure equation was important in obtaining results previously reported.

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    File URL: http://purl.umn.edu/157026
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    Paper provided by United States Department of Agriculture, Economic Research Service in its series Technical Bulletins with number 157026.

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    Date of creation: Jul 1991
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    Handle: RePEc:ags:uerstb:157026
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    1. 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.
    2. Hall, Robert E & Mishkin, Frederic S, 1982. "The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households," Econometrica, Econometric Society, vol. 50(2), pages 461-81, March.
    3. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    4. Benus, J & Kmenta, J & Shapiro, Harold T, 1976. "The Dynamics of Household Budget Allocation to Food Expenditures," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 129-38, May.
    5. Smallwood, David M. & Blaylock, James R., 1985. "Analysis Of Food Stamp Program Participation And Food Expenditures," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 10(01), July.
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