Cash Equivalence, Welfare Stigma, and Food Stamps

Abstract

The Food Stamp Program (FSP) is one of the largest domestic redistributive transfer programs with approximately 22 million participants at a cost of $12 billion in 1983. The stated objective of the FSP is raise the levels of nutrition among low income by providing such households with an opportunity to obtain a low-cost nutritionally adequate diet [29,5]. For program evaluation and cost forecasting, accurate estimates of the determinants of eligible households' program participation and food expenditure decisions are of particular concern in light of the elimination of the purchase requirement (EPR) and other recent structural changes in the program. The problem of obtaining these estimates has three dimensions. First, observations on the behavior of eligible households under the post-EPR institutional setting are required. Second, the roles of welfare stigma and the cash equivalence of the in-kind food stamps must be clarified. Finally, because program participation is a household choice that affects food expenditures, the interdependence of eligible households' FSP participation and food expenditure decisions must be accommodated.' Emphasizing an important component of this interdependence, the connection between cash equivalence of stamps in the participation decision and in expenditures for food, this paper tackles all three dimensions. The purpose of this study is to determine the extent to which food stamps are cash equivalent and to determine which program and household characteristics, including the degree of cash equivalence and stigma, affect post-EPR Food Stamp Program participation