THE EFFECT OF THE FOOD STAMP PROGRAM ON NUTRIENT INTAKE

I. INTRODUCTION One of the goals of the Food Stamp Program, as stated in the preamble of the law, is to ensure that low-income households have the opportunity to attain a nutritionally adequate diet. Previous economic studies evaluating the effects of food stamp income on nutrient intake have typically found a positive, usually small, correlation between the receipt of food stamps and nutrition. Two recent papers by Devaney and Moffitt [1991] and Horton and Campbell [1991] reach very positive conclusions concerning the effect of income in general. Papers from the nutrition literature generally find positive but weak and often insignificant effects of income on nutrition. We employ information on two groups of low-income people and find slightly different results for the two groups, but very different results from many of the other studies. For a sample of rural families, taken from data from the Rural Income Maintenance Experiment, we find almost no effect of food stamp income or evidence of selection bias. (1) However, for a sample of elderly people, from the Food Stamp Cashout Project, we find strong evidence that self selection into the Food Stamp Program is highly correlated with attaining nutritional adequacy and that, controlling for the self selection, food stamp income and other income have a negative effect on nutrition. We re-examine the relationship between food stamp income and the nutrient intake of the poor and improve upon the existing literature in several important ways. First, it is possible that the positive correlation between the receipt of food stamps and nutrition is not a direct causal link, but rather is the result of other factors affecting both. For example, in one of the samples examined in this paper, only 50 percent of those eligible actually apply for and receive food stamps. It could be the case that those who care more about nutrition are at the same time more likely to apply for and receive food stamps and more likely to maintain a nutritionally adequate diet. These possible self-selection problems can be disentangled from possible direct effects of food stamp income on nutrition using estimation procedures which correct for selection bias. Another issue which our research addresses is that the level of one nutrient may be correlated with the levels of other nutrients. This may occur either because individuals who care about nutrition may be more likely to attain adequate levels of all nutrients or because combinations of nutrients occur naturally in foods. We posit a multi-equation model of the levels of nutrients and allow the disturbances in each equation to be correlated. None of the previous studies considered this correlation. Finally, we recognize the fact that, above some level, extra nutrients are superfluous. If an individual has attained a nutritionally adequate diet, then whether or not food stamp income allows him or her to consume more nutrients is irrelevant. We are primarily interested in, therefore, whether or not an individual attains an adequate level of a nutrient, rather than the absolute amount of a nutrient consumed. In previous studies, Devaney and Moffitt [1991] had addressed simultaneously the issues of selection bias and the superfluity of nutrients above some level. The finding that food stamp income actually lowers nutrient intake, ceteris paribus, is a novel result for studies of the Food Stamp Program, but it would not be novel in the literature on nutrition in less developed countries (Pitt and Rosenzweig [1985], Behrman and Deolalikar [1987]). It is reasonable to believe that, as income increases, households employ relatively more money than time in household production (this is Silberberg's [1985] explanation for decreased efficiency in producing pure nutrients); in other words, as income increases, people spend less time preparing meals and more money on foods which are easier to prepare. If, as is often the case, foods which are more convenient to prepare are less nutritious than foods which require a lot of time to prepare, then our result is not surprising. …