Effect of Food Stamps and Income on Household Food Expenditures

摘要

It is generally believed that food stamp benefits, compared with an equal amountof cash income, result in more food expenditures. The report questions that belief. Results from prior studies estimating the marginal propensity to spend out of food stamp benefits and out of income imply that providing cash instead of food stamps would greatly reduce food expenditures of low-income households. Based on a more comprehensive specification and flexible estimating model, however, the study finds an expenditure reduction at the lower end of the range of previous estimates. It is demonstrated that the functional form of the food expenditure equation was important in obtaining results of previous studies. The report also investigates the difference in the estimates of the marginal propensity to spend out of permanent income compared with reported income. In addition, the study examines how Food Stamp Program regulations affect the marginal propensity to spend out of income of households that receive food stamps.