The Effect of Food Stamp Cashout on Food Expenditures: An Assessment of the Findings from Four Demonstrations

Abstract

Using findings from four demonstrations, we examine estimates of the effect on household food expenditures of converting food stamps into a cash transfer. We provide arguments for why the estimate produced by one of the demonstrations should be regarded as an outlier. The disparity in the difference-in-means estimates from the remaining three demonstrations is reduced when each is normalized by dividing by the average value of benefits in the respective demonstration site. The normalized estimates imply a reduction in food expenditures of between 18 and 28 cents for each dollar of food stamps cashed out. At the aggregate level, these estimates imply that nationwide cashout would result in a reduction in household food spending of between 4.2 and 6.5 billion dollars, whereas the associated reduction in the cost of administering the Food Stamp Program would be about 0.3 billion dollars.