The effect of income shocks on food insufficiency

Abstract

In this paper we investigate the relationship between income shocks and food insufficiency for U.S. households. Using Survey of Income and Program Participation data on U.S. households, we test the importance of both stable and transitory income components in determining food insufficiency. In a logistic regression model, we find that both the level of income and negative income shocks affect the predicted probability of food insufficiency, while positive income shocks do not. Although we do not have a definitive measure of a household’s liquidity constraint status, our work suggests that negative shocks may matter more for households that face liquidity constraints. Understanding the role of income shocks in determining food insufficiency is especially important in light of recent policy changes. It is likely that welfare reform in the U.S. increased the volatility of income in the low-income population. Our findings here suggest that this increase in volatility may not be without consequence.