{_ CurrentPerspectiveson FoodStampProgramParticipation

UnitedStatel

Nulrition FoodStamp Program

:Analysis Zando, Participation.Rates:

January1989
Current Perspectives on Food Stamp Program Participation

Titlesin thissedes:

FoodStampProgramParticipationRates

(November1988) ' Pat Doyleand HaroldBeebout

FoodStampProgramParticipationRatesAmongthePoverty

Population,1980-1987

(November1988) CaroleTrippeand HaroldBeebout

Determinantsof Participationinthe FoodStampProgram:

A Reviewof theUterature

(November1989) SusanAl/in and HaroldBeebout

EstimatingRatesof Participationin the FoodStampProgram:

A Reviewof theLiterature

(November1989) CaroleTdppe

FoodStampProgramParticipationRates:

August 1985

(Apr1990) il PatDoyle

TheEffectsof FoodStampsonFoodConsumption:

A Reviewof theLiterature

(October1990) ThomasM. Fraker

Participationinthe FoodStampProgram:

A MultivariateAnalysis

(March 1992) Nberto MarUni

FoodStampProgramParticipationRates:

January1988

(February1992) Carole Trippe and Pat Doyle

Trendsin FoodStampProgram

ParticipationRates:1976to 1990

(July 1992) Carole Trippe.Pat Doyleand AndrewAsher

FoodStampProgramParticipationRates:

January1989

(July 1992} CaroleTrippe and Pal Doyle
t.j._ United States Food and 3101 ParkCenter Drive

Department of Nutrition Second Floor

Agriculture Service Alexandria, VA 22302

Food Stamp Program

Participation Rates:

January 1989

CaroleTrippeandPatDoyle

A product of

MathematicaPolicyResearch,Inc.

600MarylandAvenue,S.W.

Suite550

Washington,DC20024

July 1992
ACKNOWLEDGMENTS

The authors wish to thank a number of people who provided guidance and support during the

course of this analysis. We thank Alana Landey, Bob Dalrymple, and Steven Carlson of the Food

and Nutrition Service for their technical guidance and review. Among the many MPR staff who

contributed, we thank Julie Sykes and Bob Cohen for conducting the computer programming, and

Cara Hendricks for computing every participation rate in the report. We also thank Tom Good for

his editing, and Sheana Carter and Deborah Patterson for their formatting and typing skills.

MPR Project Number: 7925-034

FNS Contract Number: 53-3198-0-22

FNS Project Officer: Alana Landey

This work was prepared as one task of a competitively awarded contract; the total amount of the

contract is $2,854,698.
CONTENTS

Chapter Page

EXECUTIVE SUMMARY ................................................ vii

I INTRODUCTION ............................................. 1

II METHODOLOGY AND DATA .................................. 5

A. THREE ALTERNATIVE MEASURES OF FSP PARTICIPATION .... 5

1. The IndividualParticipationRate ............................ 5

2. The Household Participation Rate ........................... 6

3. The BenefitRate ........................................ 6

B. ESTIMATION OF PARTICIPATION RATES .................... 6

III RESULTS................................................... 11

A. PARTICIPATION RATES BY SELECTED DEMOGRAPHIC

CHARACTERISTICS ....................................... 11

B. PARTICIPATION RATES BY SELECTED ECONOMIC

CHARACTERISTICS ....................................... 19

C. THE CHARAc-'rERISTICS OF ELIGIBLE NONPARTICIPANTS .... 27

IV CHANGES IN PARTICIPATION RATES FROM 1985 TO 1989 ......... 33

A. CHANGES IN AGGREGATE FSP PARTICIPATION RATES ....... 34

B. CHANGES IN PARTICIPATION RATES BY DEMOGRAPHIC AND

ECONOMIC SUBGROUPS .................................. 34

1. Chang_ among Demographic Subgroups ...................... 36

2 Changes among Economic Subgroups ......................... 38

_ Changes Among Eligible Non-participating Households ........... 41

C. REASONS FOR CHANGES IN FSP PARTICIPATION RATES FROM

l_tS5 TO 1989 .............................................. 41

I Change._ In Food Stamp Legislation .......................... 43

Changes in the Economy .................................. 45

3 Changes in the Medicaid Program ............................ 46

4 Expansions in the snap Questionnaire ........................ 46

D PROGRAM GROWTH SINCE JANUARY 1989 ................... 47

E CONCLUSIONS........................................... 47

REFERENCES ........................................................ 49

ooo

m
CONTENTS (continued)

Chapter Page

APPENDIX: TECHNICAL PROCEDURF_.S USED TO COMPUTE PARTICIPATION

RATES IN JANUARY 1989 .................................. 51

iv
TABLES

Table - Page

III. 1 INDIVIDUAL, HOUSEHOLD, AND BENEFIT PARTICIPATION

RATES: JANUARY 1989 ..................................... 12

111.2 HOUSEHOLD PARTICIPATION RATES BY HOUSEHOLD

SIZE: JANUARY 1989....................................... 13

llI.3 INDIVIDUAL PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: JANUARY 1989 ........... 15

II!.4 HOUSEHOLD PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: JANUARY 1989 ........... 17

IH.5 BENEFIT RATES BY SELECI_D DEMOGRAPHIC

CHARACTERISTICS OF THE HOUSEHOLD: JANUARY 1989 ...... 18

111.6 HOUSEHOLD PARTICIPATION RATES BY MONTHLY

BENEFITS AS A PERCENTAGE OF THE MAXIMLrM

FSP ALLOTMENT: JANUARY 1989 ........................... 20

Ili.7 INDIVIDUAL PARTICIPATION RATES BY 7HE RATIO

OF GROSS INCOME OF THE INDIVIDUAL'S FOOD

STAMP UNIT TO THE MONTHLY FEDERAL POVERTY

LEVEL: JANUARY 1989 ..................................... 22

· m.8 HOUSEHOLD PARTICIPATION RATES BY THE RATIO

OF THE GROSS INCOME OF THE FOOD STAMP

UNIT TO THE MONTHLY FEDERAL POVERTY LEVEL:

JANUARY 1989 ............................................ 23

111.9 BENEFIT RATES BY THE RATIO OF THE GROSS

INCOME OF THE FOOD STAMP UNIT TO THE MONTHLY

FEDERAL POVERTY LEVEL: JANUARY 1989 .................. 24

III. 10 HOUSEHOLD PARTICIPATION RATES BY SELECTED

SOURCES OF INCOME: JANUARY 1989 ....................... 26

III. 11 CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS ABOVE AND BELOW POVERTY:

JANUARY1989 ............................................ 28

HI. 12 THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS BELOW POVERTY THAT ARE ELIGIBLE

FOR THE MAXIMUM FOOD STAMP BENEFIT:

JANUARY1989 ............................................ 30

%,
TABLES (continued)

Table Page

ITI.13 DEMOGRAPHIC AND ECONOMIC CHAKACTERISTICS

OF ELIGIBLE NONPARTICIPATING HOUSEHOLDS:

JANUARY 1989 ............................................ 31

IV.1 COMPARISON OF PARTICIPATION RATES FOR 1985, 1988,

AND 1989 ................................................. 35

IV.2 COMPARISON OF HOUSEHOLD PARTICIPATION RATES BY

SELECTED DEMOGRAPHIC CHARACTERISTICS:

AUGUST 1985, JANUARY 1988, AND JANUARY 1989 ............. 37

IV.3 COMPARISON OF HOUSEHOI-D PARTICIPATION

RATES BY SELECTED ECONOMIC CHARACTERISTICS:

AUGUST 1985, JANUARY 1988, AND JANUARY 1989 ............. 40

IV.4 COMPARISON OF THE DEMOGRAPHIC AND ECONOMIC

CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS: AUGUST 1985, JANUARY 1988,

AND JANUARY 1989........................................ 42

A. 1 FACTORS THAT AFFECT THE SIMIJLATION OF

FOOD STAMP ELIGIBILITY WITH SIPP,

AND THE DIRECTION OF THE BIAS .......................... 59

vi
EXECUTIVE SUMMARY

Policymakers are concerned about the extent to which the Food Stamp Program (FSP) serves

its target population, as well as about which subgroups of the target population are more or less likely

to participate in the program. This report is the fourth in a series of reports that provides estimates

of rates of participation in the FSP, both among the total eligible population and among selected

subgroups of that population. This report presents participation rates for January 1989, and compares

these rates with the August 1985 and January 1988 rates that were presented in two previous reports

in the series. 1 The participation rates for all three years were derived with a consistent data base

and methodology. Specifically, all three rates were derived from administrative counts of participants

for the numerator and from Survey of Income and Program Participation (SIPP)-based estimates of

eligibles for the denominator.

The FSP participation rate isthe ratio of the number of persons (or households) who participate

in the FSP (or the actual benefits paid to participants) to the number of persons (or households) who

are eligible for the program (or the total benefits payable if all eligible households participated). The

estimates presented in this paper indicate that in the 50 states and the District of Columbia in

January 1989--

· 59 percent of the eligible individuals participated in the FSP.

· 56 percent of the eligible households participated in the program.

· Participating households received 66 percent of the benefits payable had all eligible

households participated.

METHODOLOGICAL ISSUES

A major difficulty in estimating FSP participation rates stems from the difficulty in estimating the

denominator of the rate: program eligibility cannot be observed and therefore must be approximated

using household survey data. No such survey captures all the characteristics and other data necessary

to replicate the food stamp eligibility and benefit determination process exactly. Underreporting of

income is also common to all household survey, including SIPP. (A complete description of the

limitations of survey data is found in the appendix.) However, SIPP allows a better approximation

of FSP eligibility criteria than surveys like the March Current Population Survey that measure income

on an annual basis and do not measure all determinants of program eligibility. SIPP contains, for

example, detailed monthly data on income and household composition supplemented with measures

of assets and expenses--aH variables used in the actual calculations of FSP eligibility. Furthermore,

more recent SIPP data support better estimates of program eligibility than earlier SIPP data because

1Thisreport compares the January 1989 participation rates with the participation rates for August

1985 (Doyle, 1990) and January 1988 (Trippe and Doyle, 1992). A third report provides estimates

of participation rates for August 1984 (Doyle and Beebout, 1988); however, because the estimation

procedures have been improved substantially over those that yielded the 1984 rates, the 1984

participation rates are not included in the comparisons.

vii
of the continued improvement in the SIPP questionnaire. Specifically, the January 1989 estimates

in this report are derived from a new SIPP survey designed specifically to measure eligibility for

needs-tested programs. None of the earlier estimates of FSP participation rates take advantage of

the newly integrated survey design.

A second source of difficulty in estimating participation rates is the underreporting of program

participation in surveys used to measure program eligibility. Because of the underreporting, we

cannot derive unbiased estimates of both the numerator and denominator of the participation rate

ratios from the same data source. Therefore, this report uses FSP administrative data on beneficiaries

and benefits paid in January 1989, producing accurate measures of the number of participants for the

numerator of the participation rates.

COMPARISON OF PARTICIPATION RATES FOR 1985, 1988, AND 1989

Participation rates change when the rate of growth in the number of participants differs from

the rate of growth in the number of eligibles. Changes in FSP legislation, economic conditions, and

other programs can affect the rate of growth among participants and eligibles, thus changing

participation rates. Since these influences often occur simultaneously, it is difficult to sort out their

separate effects on participation rates. Usually, one of the influences dominates the others, causing

participation rates to change in a particular direction.

The following table shows that FSP participation rates stabilized at about 59 percent among

eligible persons between 1988 and 1989 after declining by about 5 percentage points between 1985

and 1988. Participation rates remained steady between January 1988 and January 1989 largely

because there were no significant program changes. The number of participants and eligibles grew

slightly, but at about the same rate. Despite the growing economy nationally during this period, there

were pockets of recession around the country that may have increased the number of participants and

eligibles in some areas. Furthermore, expansions in Medicaid may have slightly increased the number

of participating households.

Participation rates declined between 1985 and 1988 because the number of eligibles increased

substantially, while the number of participants remained constant. The expansion in the number of

eligibles was due largely to the more generous eligibility criteria granted under the 1985 Food

Security Act (FSA). However, there was little or no change in the number of participants because

only 6 percent of those households that were made eligible under the FSA joined the program. The

lack of participation among the newly eligible under the FSA is not so surprising given the historically

lower-than-average participation rates for the groups most affected by the new eligibility provisions

of the FSA (that is, households with single and elderly persons), the growing economy between 1985

and 1988, and the relatively subtle nature of the expansions.

vIn
COMPARISON OF PARTICIPATION RATES FOR 1985, 1988, AND 1989

Participation Rates (Percent)

August 1985 January 1988 January 1989

Individuals 64.3 59.0' 59.1

Households 59.4 56.0 55.5

Benefits 75.3 66.7 66.0

The table shows that in all three years the benefit participation rate was substantially higher than

both the individual participation rate and the household rate, and that the individual rate was higher

than the household rate. This consistent pattern indicates that households with higher benefit levels,

and thus greater need, are more likely to participate than households with lower benefit levels. It

also implies that larger households are more likely to participate than smaller households.

Changes in Participation Since 1989

FSP caseload data show that the number of FSP participants climbed steadily since spring 1989.

Over 6 and a half million more persons were receiving food stamps in December 1991 than in

JanuaD' 1989. Factors such as the worsening economy suggest that the number of eligible persons

has also risen since 1989. However, we cannot estimate by how much the number of eligibles, and

thus participation rates, increased since 1989 until the SIPP survey data for this time period are

available. The relevant SIPP data for 1991 should be available by mid-1993. If the surge in

participants is coming from the pool of nonparticipating eligibles, or grows at a faster rate than the

eligible population, then FSP participation rates will rise after January 1989.

ESTIMATES OF PARTICIPATION RATES BY SELECTED DEMOGRAPHIC

CItARA(-fl.'RI STICS

Thc f_q,_,vmg , arc highlights of the January 1989 participation-rate estimates across selected

demographic groups: !

· ti:,mhlc children participated in the FSP at higher-than-average rates. For

cx._topic. 73 percent of eligible preschool children and 66 percent of eligible school

ch_i2rcn resided m households that participated in the FSP.

· Ctmversely. thc participation rate for elderly persons was much lower than average

( 2_ percent). Thc rate was higher among elderly who lived alone (32 percent) than

,,.",:,,n,: those v_ho hvcd with others (24 percent).

· .-\m,,m._ thc d_sablcd. 57 percent of the eligible individuals and eligible households

F._ruc_pated. and those who lived alone participated at much higher rates (90

percent) than those who lived with others (44 percent).

ix
· Participation rates for households headed by a single woman with children were

much higher than average (78 percent).

· Households headed by black, non-Hispanic individuals participated at a much

higher rate (77 percent) than households headed by white, non-Hispanic individuals

(46 percent) or Hispanic individuals (51 percent).

ESTIMATES OF PARTICIPATION RATES BY SELECTED ECONOMIC CHARACTERISTICS

The following are highlights of the January 1989 participation-rate estimates across selected

economic groups:

· Participation rates increased as potential benefits rose. Households eligible for the

smallest benefits participate at the lowest rate (32 percent). Rates increased as

potential benefits increased, reaching 83 percent for households eligible for

benefits of 76 percent to 99 percent of the maximum.

· Participation rates were much higher among persons in households whose income

was below the poverty level (74 percent) than for persons in households whose

income was above the poverty level (17 percent). The same was true for

households below and above poverty (72 percent and 14 percent respectively) and

for benefits issued to households below and above poverty (72 percent and 16

percent respectively). Participation rates generally declined as income rose.

· Households with earnings participated at a lower-than-average rate (32 percent),

whereas households that received SSI or public assistance participated at higherthan-average rates (67 and 121 percent, respectively), z

THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPANTS

Approximately 5.7 million of the 12.7 million households eligible for food stamps did not

participate in the program. These 5.7 million households comprised 12.7 million persons eligible for

$478 million in benefits in January 1989. More than half (56 percent) of the eligible nonparticipants

had income above the poverty line; 39 percent were eligible for a relatively small monthly benefit (1

to 25 percent of the maximum allotment). Overall, more than haft of the nonparticipants (56

percent) were households with elderly persons and about 45 percent were households with workers,

with about equal numbers falling above and below the poverty line in both groups. Elderly

nonparticipating households tended to consist of a single individual, while nonelderly nonparticipating

households tended to consist of wage earners below poverty with children. Most of the persons in

eligible nonparticipating households with above-poverty income were eligible for small monthly

benefits ($23 on average in January 1989), and, hence, their lack of participation is not surprising.

2The greater than 100 percent figure among public assistance recipients is due to underreporting

of public assistance income in the survey. This level of sampling error does not occur with other

characteristics reported in the survey, so such an anomalously high participation rate is not found

among other subgroups.

X
I. INTRODUCTION

The Food Stamp Program (FSP) provides assistance to low-income households to help them buy

the food they need to obtain a nutritious diet. A food stamp household is generally defined as a

person who lives alone, or as a group of persons who live together and share food purchases and

meal preparation and whose monthly income and assets fall below specified limits. The assistance

is provided in the form of coupons that can be redeemed for food purchases. The amount of the

coupons is based on the size and income of the household.

Not all households eligible for food stamps participate in the program. The literature on the

program suggests a variety of reasons for nonparticipation (Allin and Beebout, 1989). Some persons

may be unaware of the program, while others may presume that they are not eligible for benefits.

Other persons may be aware of the program and their own eligibility for it, but feel that the benefits

are not worth the effort required to obtain and use them. Still others may not participate due to the

stigma they associate with using food stamps.

Obviously, since some eligible households do not apply for benefits, FSP benefits are not being

used by the entire population targeted by the legislation that established the program. Indeed,

according to conceptual models of the decision to participate in the program, participation should not

be expected to he universal (see Allin and Beebout, 1989). But even if participation will never be

universal, the Congress and other policymakers are interested in the proportion and characteristics

of the eligible population that does participate in the program. They are also interested in the

subgroups of the target population that are most likely to participate in the program, as well as in

the characteristics of persons who are eligible for but do not participate in the program.

This paper is the ninth in a series that has examined current issues on FSP participation. It is

the fourth that provides estimates of rates of participation in the FSP, both among the total eligible

population and among selected subgroups of that population that are of particular interest to
policymakers) The estimates reported in this series are more comprehensive and accurate than most

previous estimates. Previous estimates of FSP participation have varied widely due to differences in

methodologies and data sources, and inadequaci_ with the data sources?

The participation-rate estimates in this series of papers are more accurate than most previous

ones, primarily because the estimates of eligibles on which they are based are derived from data in

the Survey of Income and Program Participation (SIPP). Because eligibility for the FSP cannot be

observed directly, the denominator of the participation rate (the total number of program eligibles

or total potential benefits) must be approximated with household survey data. Relative to the

household surveys used in previous research, such as the Current Population Survey (CPS), SIPP

contains a greater amount of and more detailed information on the household characteristics that FSP

administrators must consider when making actual eligibility determinations. 3 For example, SIPP

contains information on monthly (as opposed to annual) income, monthly household composition,

expenses used to calculate deductions from income, and vehicular assets, thereby significantly

advancing our ability to approximate eligibility status with survey data.

Data for the numerator of the overall participation rate (the number of program participants or

total benefits paid) were derived from the Food Stamp Program Statistical Summary of Operations

(hereafter referred to as Program Operations data) and were adjusted to account for benefits issued

in error in January 1989.4 These administrative data are more accurate than the self-reported survey

data used in some previous studies of FSP participation, because research indicat_ that food stamp

1The first three papers provided estimates of participation rates for-August 1984 (Doyle and

Beebout, 1988), August 1985 (Doyle, 1990) and January 1988 (Trippe and Doyle, 1992). Due to the

substantial methodological improvements made to the estimation procedures since the August 1984

rates, only the August 1985, January 1988, and January 1989 rates are strictly comparable.

2Trippe (1989) reviews the literature on FSP participation rates and estimation techniques.

3The exception is the 1979 Income Survey Development Program (ISDP) Research Test Panel,

the precursor to SIPP.

_"he Food Stamp Program Statistical Summary of Operations is a monthly record of benefits

issued and the caseload served by the Food Stamp Program.

2
receipt issubstantially underreported in household survey data. Because the numerators of the ratios

reported herein are based on administrative counts, they are more reliable estimates of the number

of actual participants and the amount of benefits paid. However, because Program Operations data

do not contain information on subgroups of the participating population, we calculated estimates for

these groups from a sample of food stamp case records from the Integrated Quality Control System

(IQCS) of the U.S. Department of Agriculture. s

Although our SIPP-based estimates represent an improvement over previous results, they are not

without their own sampling and measurement limitations. In particular, the underreporting of public

assistance income and receipt that is common to all household surveys yields unrealistic estimates of

food stamp participation rates among public assistance households. Furthermore, the survey does not

provide all of the information necessary for a precise determination of the food-stamp-eligible unit

in all households. Finally, a number of persons who reported SSI receipt in SIPP appeared to be

ineligible for SSI due to high income or assets, potentially distorting the estimate of pure SSI

households who are automatically eligible for the FSP. As discussed in the appendix, these sampling

and measurement limitations have mixed effects on the estimates of program eligibles and hence the

net result on estimates of participation rates is uncertain. In short, although this analysis represents

a considerable improvement over most previous efforts, perfect statistics on the FSP-eligible

population or on subgroups that participate in the program are unattainable. Further research can

reduce, but not eliminate, the uncertainties in estimation.

The remainder of this report is organized as follows. Chapter 1I summarizes the methodology

and data used to estimate participation rates. Chapter III presents the overall participation rates for

January 1989, the rates disaggregated by selected demographic and economic characteristics, and the

characteristics of those eligibles who did not participate. Chapter IV compares the January 1989

SThe IQCS is a system of ongoing case record reviews that measure payment error rates in the

Food Stamp, Aid to Families with Dependent Children (AFDC), and Medicaid programs. The IQCS

is based on monthly probability samples drawn from all 50 states and the District of Columbia; our

study uses active cases in the January/February 1989 samples.

3
participation rates with the August 1985 and January 1988 participation rates provided in Doyle

(1990) and Trippe and Doyle (1992), respectively. The Appendix describes the technical procedures

used to compute the 1989 participation rates.
H. METHODOLOGY AND DATA

This section describes our methodology for constructing the January 1989 FSP participation rates.

Three rates are introduced and defined, followed by a discussion of how they were computed. The

latter discussion also describes the criteria that F'BP administrators use to make eligibility and benefit

determinations, as well as the model of those criteria that we used to estimate the number of eligibles

with SIPP data.

A. THREE ALTERNATIVE MEASURES OF FSP PARTICIPATION

No single measure of participation can adequately answer all the questions that policymakers

have about FSP participation. The three measures discussed in the literature--the individual rate, the

household rate. and the benefit rate--differ in terms of their magnitude and their advantages and

limitations for answering a given question. Here, we define each measure, specify its potential

usefulness, and explain its application in previous studies.

1. The Individual Participation Rate

Thc individual participation rate is a ratio of the number of persons participating in the FSP to

the number _,f persons eligible for the program. Policy discussions about FSP participation rates

often rtl., c,r. rc.c._rch rc._ults based on the individual rate, whereas discussions about participation

behavior usually rely on a model of the household as the decision-making unit. In some instances,

the ir,,!,, ..t..1 ra:c may bc preferable to the household rate, especially for answering questions about

the part_._pat_n _f a pamcuiar subgroup of the target population. For example, the proportion of

eligible elderly indMduals _ho participate in the FSP is a better indication of the behavioral patterns

of thc cl_'crl_ than is thc proportion of eligible households that contain an elderly member who

particip.'c_

5
2. The Household Participation Rate

The household participation rate is the ratio of the number of food stamp units, or households,

that participate in the program to the number of households eligible for the program. As just noted,

analyses of participation behavior tend to rely on this rate because they assume that the household

is the decision-making unit. The definition of the household as the decision-making unit is derived

from program rules that determine eligibility and benefits for households, not for individuals. The

household rate can differ significantly from the individual rate because larger households are more

likely than one-person households to participate in the FSP.

3. The Benefit Rate

The benefit rate is the ratio of the benefits paid to program participants to the total potential

benefits payable if all program eligibles participated. Although it has not been used extensively in

previous research, the benefit rate may be the best overall measure of how well the FSP is meeting

the target population's need for assistance. The benefit-rate estimates reported herein are generally

higher than the individual- and household-rate estimates, indicating that households with higher

benefit levels, and thus greater need, are more likely to participate than are households with lower

benefit levels.

B. ESTIMATION OF PARTICIPATION RATES

We used adminisirative data derived from three sources to estimate the numerators in the

participation-rate ratios (as described in the Appendix). The first source is the Program Operations

data, which provided the number of persons and households that were issued benefits in January 1989

and the total dollar value of the coupons issued. Second, we used information provided by the Food

and Nutrition Service based on the IQCS to eliminate ineligible participants and erroneous benefits

from the Program Operations data because these ineligible participants and their benefit levels cannot

be captured in the SIPP-based estimates of eligibles. Third, we used information derived from a

6
sample of case records active in January and February 1989 to distribute the adjusted total number

of participating households and persons and their benefits across various demographic and economic

characteristics. _

We used the procedures outlined in the Appendix to develop estimates of the denominators of

the participation-rate ratios from SIPP. In essence, a model of the food stamp eligibility criteria

determined which SIPP respondents belonged in the sample of program eligibles. This model relied

on a simulation procedure whereby we quantified program rules and applied them to each dwelling

unit in the January 1989 SIPP sample. For units determined to be eligible via this simulation, we

estimated their composition and potential benefits. Below, we summarize the criteria that program

administrators use to determine eligibility and benefits, and that we simulate to the extent that the

SIPP data permit.

Eligibility for the FSP is based on a series of rules that define the applicant's need, which is

deemed to be a function of available cash income conditional on unit (household) size, as well as the

assets accessible to the unit.2 The determination of need for each household that applies for FSP

benefits can be disaggregated into four distinct components: (1) income limits, (2) asset limits, (3)

nonfinancial standards, and (4) benefit levels. The parameters of each of these components vary over

time with cost-of-living adjustments and legislative changes to the program. This analysis relies on

the FSP criteria in existence in January 1989, the month corresponding to the administrative and

SIPPdataused. ._

The income test comprises two parts: a net income screen and a gross income screen. Under

the net income screen, the monthly gross income net of allowable expenses must fall below the

IThis sample of cases was developed in the process of preparing an annual report on the

characteristics of food stamp households (U.S. Department of Agriculture, 1991).

_'The discussion that follows is an overview of the regulations that govern FSP eligibility and

benefits. The complete regulations appear in the Code of Federal Regulations (7 CFR, parts 270-

273).

7
monthly federal poverty guidelines, which vary by household size and geographic location. 3 Under

the gross income screen, food stamp units that do not contain elderly or disabled members must also

have gross income below 130 percent of the same poverty guidelines. In January 1989, the program

measured gross income as all cash income received by members of the food stamp household

excluding the earnings of students under age 18, loans, nonrecurring lump-sum payments, and

reimbursements for certain expenses. Net income was defined as gross income less a standard

deduction, an earnings deduction, and deductions for expenses incurred for child care, medical, and

excess shelter costs. 4

Two different asset limits are imposed. In 1989, a food stamp household could have countable

assets (or "resources," as they are called in the administration of the program) of $2,000 or less and

remain eligible for benefits. If the household contained an elderly person, the asset limit was $3,000.

Selected pieces of property, such as thc principal home, adjacent land, most household goods, and

vehicles necessary for producing income or for transporting disabled individuals, are not considered

countable resources, but all other financial and nonfinancial assets are generally included. In most

instances, assets are counted at their equity value as long as they are accessible to at least one

member of the food stamp household. The principal exception is the treatment Of vehicular assets?

Nonfinancial eligibility standards include the definition of the program unit and the characteristics

of the unit (such as the presence of an elderly member) that affect eligibility. In general, food stamp

_Fhe income limits are based on the official monthly poverty guidelines published by the U.S.

Department of Health and Human Services (DHHS), which are adjusted each year to account for

inflation. The income guidelines and other FSP parameters are generally the same for the 48

contiguous states and the District of Columbia and vary slightly for Alaska and Hawaii and the

territories.

al'he medical deduction is allowed only for medical expenses incurred by elderly or disabled

members of the household.

5Vehicles required for work-related travel, and one additional vehicle owned by members of the

food stamp household, are valued at the current Blue Book value, and only the amount that exceeds

$4,500 is considered to be an available resource. Any remaining vehicles owned by members of the

household are subject to both a market-value teat and an equity test. The maximum of market value

less $4,500, and the equity is counted towards the household's assets.

8
benefits are issued to "households," but aspects of the program unit definition distinguish the term

from the Bureau of the Census' designation--namely, a group of individuals who share living

quarters. 6 The food stamp household consists of a person who lives alone, or persons who live

together and share food purchases and meal preparation, with some exceptions for households that

contain elderly individuals who are unable to prepare their own meals. Restrictions are imposed on

the food stamp household to prevent spouses, siblings, and parents with children under age 18 from

forming separate units within a dwelling unit even if they purchase and prepare meals separately. 7

Furthermore, selected individuals within a dwelling unit are excluded from FSP participation. They

include illegal aliens, persons who refuse to comply with work registration requirements, strikers, and

residents of most institutions. The FSP also contains several provisions that require able-bodied

adults to work, seek training in preparation for work, or look for work. Individuals not exempt from

these work registration requirements are prolu'bited from participating in the program if they refuse

to comply. Finally, food stamp households consisting entirely of persons participating in the SSI or

AFDC programs are automatically eligible for food stamps, regardless of their income and asset

holdings.

Households deemed eligible according to these criteria receive benefits that are computed as the

difference between the maximum food stamp benefit for their household size and geographic location

and 30 percent of their net monthly income. 8 In January 1989, the maximum food stamp benefit

in the continental United States was $300 for a family of four. Households consisting of only one

6Groups of individuals who share living quarters are referred to as "dwelling units" or "Census

households." The latter term is significant in this analysis because the dwelling unit is commonly the

interview unit used by the Census Bureau to collect survey data on the U.S. population. Specifically,

as noted in the "Introduction,' the dwelling unit is the interview unit for SIPP.

7The Stewart B. McKinney Homeless Assistance Act (P.L. 100-77) relaxed these restrictions for

certain households. This Act grants separate household status to parents of minor children who live

with siblings or parents (the grandparents of children) if they purchase and prepare food separately.

s'Uae maximum food stamp benefit in 1989 was equal to 100.65 percent of the Thrifty Food Plan

for the preceding June for a family of four, adjusted for the size of the unit according to economies

of scale.

9
or two people whose benefit computation is less than $10 in coupon value are issued a minimum

benefit of $10.

The January 1989 SIPP data contain more of the information needed to determine FSP eligibility

than ever before. This is because the January 1989 SIPP data contain, for the first time, a set of

specially-designed questions focused on determining program eligibility. The newly designed

"eligibility module _ represents an improvement over previous SIPP data because (1) it contains most

of the information that was omitted in previous SIPP files that is needed to estimate eligibility; and

(2) almost all of the eligibility information is collected simultaneously for the same group of persons,

and thus does not have to be integrated across time. The Appendix discusses the SIPP eligibility

module in more detail.

10
III. RESULTS

Over 7 million households in the 50 states and the District of Columbia participated in the Food

Stamp Program in January 1989 (Table 171.1). Based on the estimates prepared from SIPP, 12.7

million households were eligible for the program in that same month. Thus, the overall household

participation rate was 56 percent. The overall individual rate was higher: 18.3 million individuals of

31.0 million eligible individuals, or 59 percent, participated in the FSP.

The Food Stamp Program issued $927 million in benefits in January 1989, which is 66 percent

of the benefits to which eligible households were entitled. This percentage is consistent with the

finding (shov,_ later) that households entitled to higher benefits participated at higher rates than

those entitled to lower benefits.

Thc fact that the benefit rate was higher than the individual rate, which in turn was higher than

the household rate, implies that, among other factors, both the size of the household and its potential

benefit influence the decision to participate. The influence of household size and other demographic

characteristics on the tendency to apply for benefits is outlined in Section A; the influence of

potential bcnefits and other economic characteristics is discussed in Section B. Section C discusses

the charactcristic.s of eligible households that did not participate in the FSP in January 1989.

A. I'AR]'ICIP_,TION RATES BY SELECTED DEMOGRAPHIC CHARACTERISTICS

J

Table III2 presents household participation rates disaggregated by the size of the eligible

housch,/;2 M,_xt cligiblc households were relatively small, as were most participating households.

Yet thc' pan,ctpatJon rate tended to be higher for larger households, with single-person households

particlpat_nC at a rate that was 26 percentage points lower than three-person households in January

1989. Pa::,. ;?at_,,n r.,tcs peak for households that contain three persons, and decline with household

11
TABLE m.1

INDIVIDUAL, HOUSEHOLD, AND BENEFIT

PARTICIPATION RATES: JANUARY 1989

Participation

Participants Eligibles Rate

Individuals (in Thousands) 18,344 31,041 59.1%

Households (in Thousands) 7,037 12,689 55.5

Benefits (in Thousands) $927,391 $1,405,636 66.0

AverageHouseholdSize 2.6 2.5

Average per-Capita Benefit $50.6 $45.3

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for ineligible participants and benefits issued in error. Estimates

roi' eligibles were derived from tabulations prepared with the January 1989 analysis file

developed by MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains

a sample of 22,040 households and 2,843 households eligible for food stamps.

12
TABLE m.2

HOUSEHOLD PARTICIPATION RATES BY

HOUSEHOLD SIZE: JANUARY 1989

Number of Number of Household

Household Size Participating Households Eligible Households Participation

(number of persons) (in Thousands) (in Thousands) Rate

1 2,298 5,144 44.7 %

2 1,591 2,660 59.8

3 1,336 1,901 70.3

4 937 1,361 68.8

5 486 834 58.2

6+ 388 788 49.3

Total 7,037 12,689 55.5

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for ineligible participants. Counts of participants were distributed

across subgroups of the population based on a sample of 10,514 food stamp case

records from the IQCS for January and February 1989. Estimates for eligibles _¢re

derived from tabulations prepared with the January 1989 analysis file developed by

MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of

22,040 households and 2,843 households eligible for food stamps.

13
sizes of more than three persons. Nonetheless, rates for all household sizes of more than three

persons are higher than the rates for single-person households.

Table III.3 presents individual participation rates disaggregated by selected demographic

characteristics. The table shows that the FSP was serving a large majority of children in eligible

households in January 1989. Almost three-fourths of eligible preschool children (that is, children

under age 5) resided in households that participated in the program. Among school-age children, this

rate was 66 percent. Among all eligibles, females participated at a slightly higher rate than males (60

percent versus 57 percent).

The participation rate for elderly individuals (29 percent) was much lower than both the overall

rate for individuals (59 percent) and the rate for adults ages 18 to 59 (60 percent). Participation

rates for elderly persons are consistently lower than rates for other persons because elderly persons

tend to live in smaller households, have higher per-capita incomes, and receive smaller monthly

benefits than others--all characteristics associated with low participation rates. Furthermore, the

participation rate for elderly persons living alone (32 percent) was lower than the participation rate

for other adults living alone (84 percent). Martini (1992) examined which of the two effects--living

alone or being elderly--was the more important determinant of the low participaiion rate among

elderly who live alone, and found that both characteristics had a large independent impact on the

rate. The participation rate for disabled individuals (57 percent) was only slightly lower than the

overall rate for eligible individuals and adults.

Among elderly and disabled persons, participation rates were higher for those who lived alone

(32 percent and 90 percent) than for those who lived with others (24 percent and 44 percent). This

finding may suggest that elderly and disabled persons who live with others have greater am to

outside resources that reduce their likelihood of participating.

Participation rates were slightly higher for persons living inside metropolitan areas (60 percent)

than for persons living outside metropolitan areas (57 percent).

14
TABLE III.3

INDIVIDUAL PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARAC'I'ERISTICS: JANUARY 1989

Number of Number of

Participating Eligible Individual

Individuals Individuals Participation

(in Thousands) (in Thousands) Rate

Elderly Age 60 or Older 1,427 5,000 28.5 %

Living alone 948 3,004 31.5

Living with others 480 1,996 24.0

Disabled under Age 60 680 1,187 57.3

Livingalone 302 336 89.9

Living with others 378 852 44.4

Children under Age 18 9,098 13,372 68.0

Preschool 3,065 4,176 73.4

School-age 6,032 9,196 65.6

Adults Ages 18 to 59 (includes disabled 7,539 12,668 59.5

adults)

Living alone (not disabled) 1,028 1,222 84.1

Gender

Male 7,342 12,823 57.3

Female 11,002 18,218 60.4

Metropolitan Status a

Insidemetropolitanarea 13,162 21,866 60.2

Outside metropolitan area 5,182 9,175 56.5

Total 18,344 31,041 59.1

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for ineligible participants. Counts of participants were distributed

across subgroups of the population based on a sample of 10,514 food stamp case

records from the IQCS for January and February 1989. Estimates for eligibles were

derived from tabulations prepared with the January 1989 analysis file developed by

MPR from SIPP, I987 and 1988 panels. The SIPP analysis file contains a sample of

22,040 households and 2,843 households eligible for food stamps.

aEstimates of the number of eligibles were adjusted by an inflation factor to compensate for the

subsampling of the metropolitan population in SIPP. The adjustment factors are published in Table

5 of the technical documentation of the SIPP 1988 Panel (U.S. Department of Commerce, 1991).

The non-metropolitan eligible population is computed as the difference between the total population

and the metropolitan population.

15
Table lII.4 presents household participation rates by selected demographic characteristics. As

the table shows, there is a wide range in participation rates among groups. As with individual rates,

the household rates show that households containing elderly persons were less likely to participate

in the program than average. Households containing disabled persons were slightly more likely to

participate than average. Only 29 percent of the eligible households that contained an elderly

member participated, while 57 percent of the households that contained a disabled member

participated in January 1989.

Among households with children, the participation rate was 70 percent, which is much higher

than the overall household rate (56 percent). The participation rate among single male-headed food

stamp households with children (57 percent) was considerably lower than the participation rate among

single female-headed households with children (78 percent). However, it should be noted that the

single male-headed rate was based on a relatively small sample. Participation rates are slightly higher

among households residing inside metropolitan areas than among those residing outside metropolitan

areas.

Food stamp participation rates vary considerably by race and ethnicity. More than three-fourths

of the eligible households headed by a black, non-Hispanic individual participated in the FSP in

January 1989, compared with only 46 percent of the eligible households headed by a white, nonHispanic individual. Hispanic households participated at a rate of 51 percent.

Table II1.5 presents benefit participation rates by selected demographic characteristics. While

the overall benefit participation rate (66 percent) was higher than the overall household rate (56

percent), within most subgroups shown, the benefit rates were about the same as the corresponding

household rates. Hence, overall, households that were eligible for higher benefits (needier

households) participate at higher rates than do households eligible for lower benefits (less needy

households). However, for many of the subgroups, including households with elderly, children, or

single female parents, the expected benefit amount does not affect the likelihood of participation.

16
TABLE III.4

HOUSEHOLD PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARA .C?ERISTICS: JANUARY 1989

Number of Number of

Participating ' Eligible Household

Households Households Participation

(in Thousands) (in Thousands) Rate

Household Contains:

Elderly Age 60 or Older 1,291 4,451 29.0 %

DisabledunderAge60 640 1,115 57.4

Children under Age 18 4,216 6,010 70.1

ChildrenAges5to 17 3,165 4,644 68.2

SingleFemaleAdultwith 2,718 3,507 77.5

Children

Single Male Adult with Children 109 192 56.7

Twoor MoreAdultswith 1,389 2,296 60.5

Children a

White non-Hispanic Head 3,283 7,146 45.9

Black non-Hispanic Head 2,653 3,452 76.9

Hispanic Head 890 1,763 50.5

Metropohtan Status?

Inside metropolitan area 5,122 9,051 56.6

Out_lJc mctropohtan area 1,915 3,639 5Z6

Total' 7,037 12,689 55.5

SOL'R(?.' C,,uv.I, f,,r r,art,cipants are from the Food Stamp Program Statistical Summary of Operations,

adjusted for mehgible participants. Counts of participants were distributed across subgroups

of the population based on a sample of 10,514 food stamp case records from the IQCS for

Januar_ and February 1989. Estimates for eligibles were derived from tabulations prepared

_,lh thc Januar_ 1989 analysis file developed by MPR from SIPP, 1987 and 1988 panels. The

SIPP anal_L_ file contains a sample of 22,040 households and 2,843 households eligible lot

food stamp_

aIncludc_ b(_th hou._eholds in which the gender of the household head is unknown and femaleheaded L, u.ch,,ld_ thai conta,n two or more adults.

bEsttrna:c, L,: thc number o[ eligibles were adjusted by an inflation factor to compensate for the subsampling

of thc mci: '_htan populatton tn SIPP. The adjustment factors are published in Table 5 of the technical

docurncnlat_, ,n ('.[ thc SIPP 1q,";,";Panel (U.S. Department of Commerce, 1991). The non-metropolitan eligible

populat,m ts or,reputed as the difference between the total population and the metropolitan population.

CCatci.,nc, d,, ntq sum to total because households may exhibit more than one of the characteristics listed.

17
TABLE Ili.5

BENEFIT RATES BY SELECTED DEMOGRAPHIC

CHARACTERISTICS .OF THE HOUSEHOLD:

JANUARY 1989

Benefits Paid to Potential Benefits

Participating for Eligible

Households Households Benefit

(in Millions) (in Millions) Rate

Household Contains:

Elderly Age 60 or Older $66.0 $214.1 30.8 %

Disabled under Age 60 54.7 103.5 52.8

Children under Age 18 750.2 1,048.0 71.6

Children Ages 5 to 17 595.5 848.6 70.2

Single Female Adult with 452.5 585.6 77.3

Children

Single Male Adult with Children 17.6 26.3 67.0

Two or More Adults with 280.1 433.5 64.6

Children a

White non-Hispanic Head 397.7 668.2 59.5

Black non-Hispanic Head 365.7 443.0 82.6

HispanicHead 130.7 244.9 53.4

Metropolitan Status: b

Inside metropolitan area 669.3 1,011.0 66.2

Outsidemetropolitanarea 258.1 394.6 65.4

Total 927.4 1,405.6 66.0

SOURCES: Counts for panidpants are from the Food Stamp Program Statistical Summary of Operations,

adjusted for benefits issued in error. Counts of participants were distn'buted across subgroups

of the population based on a sample of 10,514 food stamp case records from the IQCS for

January and February 1989. Estimates for eligibles were derived from tabulations prepared

with the January 1989 analysis file developed by MPR from SIPP, 1987 and 1988 panels. The

SIPP analysis _e contains a sample of 22,040 households and 2,843 households eligible for

food stamps.

alncludes both households in which the gender of the household head is unknown and female-headed

households that contain two or more adults. Benefit rates were almost identical to household rates

for single female-headed and male-headed households.

bEstimates of the number of eligibles were adjusted by an inflation factor to compensate for the subsampling

of the metropolitan population in SIPP. The adjustment factors are published in Table 5 of the technical

documentation of the SIPP 1988 Panel (U.S. Department of Commerce, 1991). The non-metropolitan eligible

population is computed as the difference between the total population and the metropolitan population.

18
The benefit rates were substantially higher than the household rates for only two groups: (1)

households headed by white non-Hispanics (14 percentage points higher), and (2) households that

contained a single male adult with children (10 percentage points higher). For these two groups,

benefit levels probably have a greater influence on their participation decisions than they do on the

decisions of other households. However, because the sample size for eligible households headed by

a single male with children was small, the statistical reliability for this group is low,

The benefit rate was lower than the household rate for only one group: households that contain

a disabled member under age 60 (5 percentage points lower). However, this f'mding is not too

surprising since the decision to participate in the FSP of many households containing disabled

members is made jointly with their decision to participate in the SSI program. Hence, they would

participate in the FSP regardless of their expected food stamp benefit. Furthermore, households in

which all members receive SSI are automatically eligible for food stamps.

B. PARTICIPATION RATES BY SELECTED ECONOMIC CHARACTERISTICS

Table Ill.6 presents household participation rates disaggregated by the level of potential benefits

as a percentage of the maximum allotment. The estimates support research which shows that the

decision to participate in the FSP is influenced by the level of benefits for which a household is

eligible. 1 In January 1989, households eligible for the smallest benefits (benefits of between 1

percent and 25 percent of the maximum allotment, which is up to 25 dollars in benefits for

households with 4 persons) had the lowest participation rate (32 percent). Participation rates

increased as potential benefits rose, reaching 83 percent for households eligible for benefits of 76

percent to 99 percent of the maximum.

The only exception to this pattern is a decline in the rate for households entitled to the

max/mum benefit allotment. As will be shown in Chapter IV, the unusually low participation rate for

1Allin and Beebout (1989) review the research on the relationship between benefit levels and FSP

participation.

19
TABLE 111.6

HOUSEHOLD PARTICIPATION RATES BY MONTHLY BENEFITS

AS A PERCENTAGE OF THE M,_(IMUM FSP ALLOTMENT:

JANUARY 1989

Number of Number of

Monthly Benefit Level Participating Eligible Household

as a Percentage of Households Households Participation

Maximum Allotment a (in Thousands) (in Thousands) Rate

1-25% 1,032 3,232 31.9 %

26-50 1,315 2,573 51.1

51-75 1,835 2,520 72.8

76-99 1,501 1,800 83.4

100 1,353 2,564 52.8

Total 7,037 12,689 55.5

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for inelign'bleparticipants. Counts of participants were distributed

across subgroups of the population based on a sample of 10,514 food stamp case

records from the IQCS for January and February 1989. Estimates for eligibles were

derived from tabulations prepared with the January 1989 analysis file developed by

MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of

22,040 households and 2,843 households eligible for food stamps.

aThe max/mum allotment varies by household size. The maximum allotment for a family of 4 in

January 1989 was $300.

2O
households eligible for the maximum benefit was also found in estimates for 1988 and 1985. In those

estimates, it was assumed that the low participation rate was associated with measurement or

classification problems of eligible households with zero gross income. However, in the 1989 estimate,

it appears that most of the households eligible for the maximum benefit had positive gross income

and high expenses which reduced their net income to zero.2 Hence, although there may be some

measurement or classification problems causing the low participation rate for households eligible for

the maximum benefit, the zero gross income problem may not be a major factor in 1989.

Table 111.7shows that eligible individuals in households whose income was below the poverty

level participated in the program at much higher rates (74 percent) than did individuals who lived in

households whose income was above the poverty level (17 percent). Similarly, 72 percent of

households in poverty participated, receiving 72 percent of the benefits which would have been issued

had all poor households participated (Tables 111.8and 111.9). The higher participation rates for

households in poverty is not surprising since they are eligible for higher benefits than are households

with incomes above poverty. For example, persons in eligible households in poverty were eligible for

$20 on average in January 1989, while persons in households whose income was below the poverty

level were eligible for $54 on average.

As expected, participation rates declined as income increased in January 1989. For example,

participation rates for individuals in households with zero income were 88 percent in January 1989,

and declined as income rose, reaching 17 percent for those in households whose incomes were above

the poverty line. Similar patterns were found for households and for.potential benefit levels.3

Studies of participation rates in other programs, such as SSI, have also found that participation rates

2Over 60 percent of the households eligible for the maximum benefit in January 1989 had positive

gross income and high expenses relative to their income. Only about 43 percent of these households

participate in the FSP.

'_l'he only exception to this pattern was a slightly lower participation rate (4 percentage points

lower) for households with zero income than for households whose incomes were between 1 and 50

percent of the poverty level.

21
TABLE 111.7

INDIVIDUAL PARTICIPATION RATES BY THE

RATIO OF THE GROSS INCOM_ OF THE INDIVIDUAL'S FOOD

STAMP UNIT TO THE MONTHLY FEDERAL POVERTY LEVEL:

JANUARY 1989

Number of Number of

Income as a Participating Eligible Individual

Percentage of Individuals Individuals Participation

Poverty (in Thousands) (in Thousands) Rate

Total < 100 17,032 23,167 73.5 %

0 1,084 1,230 88.1

1-50 6,618 8,219 80.5

51-100 9,331 13,718 68.0

Total > 100 1,311 7,873 16.7

Total 18,344 31,041 59.1

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for ineligible participants. Counts of participants were distributed

across su.bgroups of the population based on a sample of 10,514 food stamp case

records from the IQCS for January and February 1989. Estimates for eligibles were

derived from tabulations prepared with the January 1989 analysis file developed by

MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of

22,040 households and 2,843 households eligible for food stamps.

.22
TABLE m.8

HOUSEHOLD PARTICIPATION RAT_ BY THE RATIO OF THE

GROSS INCOME OF THE FOOD STAMP UNIT TO THE MONTHLY

FEDERAL POVERTY LEVEL: JANUARY 1989

Number of Number of

Income as a Participating Eligible Household

Percentage of Households Households Participation

Poverty (in Thousands) (in Thousands) Rate

Total_;100 6,519 9,030 72.2%

0 532 647 82.2

1-50 2,224 2,573 86.5

51-100 3,763 5,811 64.8

Total> 100 518 3,659 14.2

Total 7,037 12,689 55.5

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for ineligible participants. Counts of participants were distn'buted

across subgroups of the population based on a sample of 10,514 food stamp case

records from the IQCS for January and February 1989. Estimates for eligibles were

derived from tabulations prepared with the January 1989 analysis file developed by

MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of

22.040 households and 2,843 households eligible for food stamps.

23
TABLE III.9

BENEFIT RATES BY THE RATIO OF THE GROSS INCOME OF THE

FOOD STAMP UNIT TO THE MONTHLY FEDERAL POVERTY LEVEL:

JANUARY 1989

Benefits Paid to Potential Benefits

Income as a Participating for Eligible

Percentage of Households Households Benefit

Poverty (in Millions) (in Millions) Rate

Total < 100 $903.1 $1,251.4 72.2 %

0 87.7 99.6 88.1

1-50 439.0 558.8 78.6

51-100 376.4 593.0 63.5

Total > 100 24.2 154.2 15.7

Total 927.4 1,405.6 66.0

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for benefits issued in error. Counts of participants were

distributed across subgroups of the population based on a sample of 10,514 food stamp

case records from the IQCS for January and February 1989. Estimates for eligibles

were derived from tabulations prepared with the January 1989 analysis file developed

by MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample

of 22,040 households and 2,843 households elig_le for food stamps.

24
declin e as family income increases. For example, based on 1985 SIPP data, Shiels et. al. (1990) found

that the rate of participation among elderly persons eligible for SSI declined from 84 percent for

those with no income, to a low of 26 percent for tl_ose whose monthly income was $500 or more.

Table III. 10 presents household participation rates among those with earnings, SSI, public

assistance, and unemployment compensation. The estimated participation rate for households with

earnings was much lower than the overall rate (32 percent versus 56 percent) in January 1989.

Recipients of unemployment compensation also participated at a lower rate (46 percent) than the

total eligible population. However, because the sample size for eligible households with

unemployment compensation was small, the statistical reliability of these estimates is low.

The household participation rate for food stamp households that received SSI payments--67

percent--exceeded the overall participation rate by over 11 percentage points. Households in both

the numerator and the denominator of this participation rate exclude persons in states where cash

is issued through the SSI program in lieu of food stamps (California and Wisconsin in January 1989).

Households that received SSI income and contained elderly persons participated in the FSP at

a much lower rate than households that received SSI income and did not contain elderly persons (58

percent versus 83 percent). This finding is not surprising, since households with elderly persons tend

to participate in the FSP at much lower rates than other households.

The estimates for households that receive public assistance, especially those that receive AFDC,

exceeded 100 percent. These unrealistic rates are due primarily to the underreporting of AFDC

receipt in SIPP (the number of AFDC recipients in SIPP was only 79 percent of an independent

estimate derived from administrative data), as discussed in the Appendix. Nonetheless, other

multivariate analyses have found a strong positive relationship between participation in the FSP and

participation in public assistance programs (see Anin and Beebout, 1989).

25
TABLE In. lo

HOUSEHOLD PARTICIPATION RATES BY SE{.F_CTED

SOURCES OF INCOIV_: JANUARY 1989

Number of Number of

Participating Eligible Household

Households Households Participation

Source of Income (in Thousands) (in Thousands) Rate

EarnedIncome 1,383 4,277 32.3%

SSI 1,401 2,093 67.0

Elderly ia the unit 789 1,351 58.4

Noelderlyintheunit 612 741 82.6

Public Assistance a 3,640 3,009 121.0

AFDC 2,899 2,381 121.7

Other welfare 791 748 105.7

UnemploymentCompensation 157 343 45.6

Total 7,037 12,689 55.5

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for inelig_le participants. Counts of participants were distributed

across subgroups of the population based on a sample of 10,514 food stamp case

records from the IQCS for January and February 1989. Estimates for eligibles were

derived from tabulations prepared with the January 1989 analysis file developed by

MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of

22,040 households and 2,843 households eligible for food stamps.

_Public assistance refers to Aid to Families with Dependent Children (AFDC), General Assistance

(GA), and local means-tested programs, such as Emergency Assistance.

26
C. THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPANTS

The preceding sections focused on househo!ds that participated in the Food Stamp Program.

This section focuses on households that were eligible for the FSP but did not participate.

In January 1989, about 5.7 million of the 12.7 million households eligible for the FSP were not

participating, as shown in Table III. 11. These households tended to have relatively high incomes and

were entitled to relatively small benefits. Among all eligible nonparticipating households--

. More than one-half had incomes above the poverty level.

· Almost 40 percent were eligible for a relatively small monthly benefit--1 percent

to 25 percent of the maximum ($20 on average).

As shown earlier in this paper and in other research (Doyle, 1990), those who are eligible for

lower benefits tend to participate in the FSP at lower-than-average rates. Thus, these results are not

surprising. These characteristics of nonparticipating eligibles also serve as further evidence that the

program is targeted effectively at those whore need is comparatively greater.

Most nonparticipating households contained either an elderly member (two-thirds of whom lived

alone) or a working member (most of whom had children) in January 1989. These characteristics also

are consistent with the findings in this paper that participation among households with elderly (29

percent) and earners (32 percent) is below average. Most nonparticipating households reside in

metropolitan areas (69 percent).

More than half of the eligible nonparticipating households (56 percent) had income above the

poverty level, but about 44 percent had income below the poverty level. 'Overall, about 21 percent

of all nonparticipating households were eligible for the maximum allotment. In previous estimates

(for 1985 and 1988) it was assumed that most of the nonparticipating households eligible for the

maximum allotment were households with zero gross income--a group with measurement and

classification problems. However, only about 10 percent of the nonparticipating households eligible

for the maximum benefit in 1989 have zero gross income. Most of the nonparticipating households

27
TABLE III. 11

THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING HOUSEHOLDS

ABOVE AND BELOW POVERTY: JANUARY 1989

Percent Distribution of Eligible Nonparticipating Households a

Below Poverty Above Poverty Total

Benefit Level as a Percentage of

Maximum Allotment

1-25% 3.5 % 35.4 % 38.9 %

26-50 8.1 14.2 22.3

51-75 8.8 3.3 12.1

76-99 4.5 0.8 5.3

100 19.5 1.9 21.4

Total 44.4 55.6 100.0

Composition

ElderlyPresent 25.5 30.4 55.9

Living alone 15.5 21.0 36.4

Living with others 10.0 9.4 19.5

Nonelderly Households with

Earnings 23.6 21.0 44.6

With children 17.3 14.0 31.3

Without children 6.3 7.0 13.3

Metropolitan Status

Inside metropolitan area 27.6 41.8 69.5

Outsidemetropolitanarea 16.8 13.7 30.5

Total 44.4 55.6 100.0

Eligible Nonparticipating

Persons (in thousands) 6,135 6,562 12,697

Households (in thousands) 2,512 3,141 5,653

Benefits (in millions) $348 $130 $478

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of Operations,

adjusted for ineligible participants. Counts of participants were distributed across subgxoups

of the population based on a sample of 10,514 food stamp case records from the IQCS for

January and February 1989. Estimates for eligibles were derived from tabulations prepared

with the January 1989 analysis file developed by MPR from SIPP, 1987 and 1988 panels. The

SIPP analysis file contains a sample of 22,040 households and 2,843 households eligible for

food stamps.

NOTE: Eligible nonparticipants are computed as the difference between eligibles and participants.

apercentage may not sum to 100 due to rounding error.

28
eligible for the maximum benefit (almost 75 percent) have positive gross incomes and relatively high

expenses that make them eligible for the maximum benefit. For reasons that are not clear, many of

the eligible households with high expenses chose not to participate. Table III.12 shows the

characteristics of those nonparticipating households in poverty that were eligible for the maximum

benefit.

Table 111.13 shows the overall demographic and economic characteristics of eligible

nonparticipating households in January 1989. Overall, about half of the eligible nonparticipating

households consisted of a single adult, and 56 percent contained elderly member(s). Just under onethird contained children, and over two-thirds were headed by a white non-Hispanic individual. The

eligible nonparticipating households with children (32 percent) were almost evenly divided into those

headed bx a single female (14 of 32 percent) and those headed by two or more adults (16 of 32

percent). Only 2 percent of the eligible nonparticipating households with children were headed by

a single male.

29
TABLE III. 12

THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS BELOW POVERTY THAT ARE ELIGIBLE FOR

TI-[E MAX]]xffLrM FOOD STAMP BENEFIT: JANUARY 1989

Eligible Nonparticipating Households Below Poverty

that are Eligible for Maximum FSP Benefit

Population Distribution

(in Thousands) of Households

Composition

Elderly Present 409 37.8 %

Livingalone 264 24.4

Livingwithothers 145 13.4

NonelderlyHouseholdswith Earnings 234 21.6

With children 102 9.5

Withoutchildren 132 12.2

Nonelderly Households without Earnings 438 40.5

Withchildren 369 34.1

Withoutchildren 69 6.4

Income as a Percentage of Poverty a

0 115 10.7

1-50 601 55.6

51-100 365 33.8

Metropolitan Status

Inside metropolitan area '747 69.1

Outsidemetropolitanarea 334 30.9

Total Households 1,081 100.0

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of

Operations, adjusted for ineligible participants. Counts of participants were distributed

across subgroups of the population based on a sample of 10,514 food stamp case records

from the IQCS for January and February 1989. Estimates for eligibles were derived

from tabulations prepared with the January 1989 analysis file developed by M.PR from

SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of 22,040

households and 2,843 households eligible for food stamps.

NOTE: Eligible nonparticipants are computed as the difference between eligibles and

participants.

'Percentages may not sum to totals due to rounding error.

30
TABLE III.13

DEMOGRAPHIC AND ECONOMIC CHARACTERISTICS OF ELIGIBLE

NONPARTICIPATING HOUSEHOLDS: JANUARY 1989

Population Distribution

(in Thousands) of Households

Household Size a

1 2,846 50.4%

2 1,070 18.9

3 564 10.0

4 424 7.5

5 349 6.2

6+ 400 7.1

Household Contains: b

Elderly 3,160 55.9

Elderly living alone 2,060 36.4

Disabled 475 8.4

Disabledunderage60 35 0.6

Children under age 18 1,794 31.7

Children ages 5 to 17 1,478 26.1

Single female with children 790 14.0

Stnglemalewithchildren 83 1.5

Two or more adults with children 907 16.0

Single nonelderly and nondisabled adult 198 3.5

White non-Hispanic head 3,910 69.2

Black non.Hispanic head 837 14.8

Hispanichead 886 15.7

Income as a Percentage of Poverty a

Total _<100% 2,512 44.4

0 115 2.0

1-50 348 6.2

51-100 2,048 36.2

Total > 100% 3,141 55.6

Household Income Includes: b

Earnings 2,895 51.2

SSI 692 12.2

Unemployment compensation 187 33

Metropolitan Status

Inside metropolitan area 3,927 69.5

Outside metropolitan area 1,726 30.5

Total Households 5,653 100.0

SOURCES: Counts for participants are from the Food Stamp Program Statistical Summary of Operations, adjusted for

ineligible participants. Counts of participants were distributed acro_ subgroups of the population based on

a sample of 10,514 food stamp case records from the IQCS for January and February 1989. Estimates for

eligibles were derived from tabulations prepared with the January 1989 analysis file developed by MPR from

SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of 22,040 households and 2,843

households eligible for food stamps.

NO'IT_: Eligible nonparticipants are computed as the difference between eligibles and participants.

apercentages may not sum to totals due to rounding error.

bpercentages do not sum to 100 because households may exhibit more than one of the characteristics listed. Note that the

elderly and the disabled categories are not mutually exclusive.

31

IV. CHANGES IN PARTICIPATION RATES FROM 1985 TO 1989

Persons interested in FSP policy often wish to know whether participation rates have risen or

declined over time. While it is unreasonable to expect 100 percent participation among the eligible

population, knowing how the rate of participation has changed over time allows policymakers to

understand the program's relative suc.c.ess at reaching the eligible population. This chapter examines

changes in participation rates across three points in time: August 1985 (based on Doyle, 1990),

January 1988 (based on Trippe and Doyle, 1992), and January 1989 (based on this report). It also

discusses the major reasons for the observed changes in the rates. Although it is difficult to make

broad generalizations about trends based only on three points in time, it is possible to understand the

short-term changes in the rates.

Participation rates change when the rate of growth in the number of participants differs from

the rate of growth in the number of eligibles. Changes in FSP legislation, economic conditions, and

other programs affect the rate of growth among participants and eligibles, thus effecting changes in

participation rates. Since these influences often occur simultaneously, it is difficult to sort out their

separate effects on participation rates. Usually, one of the influences dominates the others, causing

participation rates to change in a particular direction. Sometimes, however, different influences work

in opposite directions, cancelling out any single effect on the rates.

We used a consistent data base and methodology to derive the participation rates for all three

years. Hence, the three rates are directly comparable. 1 Specifically, we derived all three

participation rates from FSP administrative counts of participants for the numerator and from SIPPbased estimates of eligibles for the denominator.

l'I'he SIPP file used to produce the January 1989 rates contains more information necessary for

determining program eligibility, thus improving estimates on the number of eligible households.

33
A. CHANGES IN AGGREGATE FSP PARTICIPATION RATES

Participation rates in the FSP declined slightly between August 1985 and January 1988, but

remained constant between January 1988 and January 1989. As shown in Table IV.I, participation

rates for individuals fell by 5 percentage points between 1985 and 1988, but remained at about 59

percent between 1988 and 1989. Similarly, rates for households fell by about 3 percentage points

from 1985 to 1988, but remained at about 56 percent from 1988 to 1989. Finally, rates of benefit

receipt as a percentage of total potential benefits fell by almost 9 percentage points from 1985 to

1988, but remained at between 67 and 66 percent between 1988 and 1989.

Participation rates declined between August 1985 and January 1988 because the number of

eligibles increased substantially, while the number of participants remained constant. However,

participation rates remained constant between January 1988 and January 1989 because neither the

number of eligibles nor the number of participants changed much from January 1988. The reasons

for the shift in rates between 1985 and 1988 and for the steady rates between 1988 and 1989 are

described in more detail in Section IV. C.

Table IV. 1 shows that the benefit participation rate in all three years was substantially higher

than both the individual participation rate and the household rate, and that the individual rate was

higher than the household rate. This consistent pattern across time indicates that households with

higher benefit levels, and thus greater need, are more likely to participate than households with lower

benefit levels. It also implies that larger households are more likely to participate than smaller

households. This finding is consistent with other research (for example: Doyle, 1990; Allin and

Beebout, 1989; and Ross, 1988).

B. CHANGES IN PARTICIPATION RATES BY DEMOGRAPHIC AND ECONOMIC

SUBGROUPS

In this section, we discuss how participation rates for subgroups of the eligible population have

changed relative to participation rates for the total eligible population between 1985 and 1989.

34
TABLE IV. 1

COMPARISON OF PARTICIPATION RATES FOR 1985, 1988, AND 1989

A_)gtJXt19._ January 1988 January 1989

I':_t_c_pan_s I I_gible_ I';tTt_c_p:m_n Participants Eligibles Participation Participants Eligibles Participation

(m !h<_u_nd,,) (m Ihou_nd,,) R:ltc (in Thousands) (in l_ou._lnds) Rate (in Thousands) (in Thousands) Rate

Indrvmtl uaIx 18,560 _,884 64.3% 18,286 30,973 59.0% 18,344 31,041 . 59.1%

I!ouseholds 6,894 11,604 59.4 6,882 12,292 56.0 7,037 12,689 55.5

Benefits $807,265 $1,072,262 75.3 $890,158 $1,334,779 66.7 $927,391 $1,405,636 66.0

l_an SOURCE: January 1989 counts for participants are from the Food Stamp Program Statistical Summary of Operations, adjusted for ineligible

participants and benefits issued in error. Estimates for eligibles were derived from tabulations prepared with the January 1989 analysis

file developed by MPR from SIPP, 1987 and 1988 panels. The SIPP analysis file contains a sample of 22,040 households and 2,843

households eligible for food stamps. August 1985 values and rates are from Table 1 of Doyle (1990), and January 1988 values and rates

are from Table IV. 1 of Trippe and Doyle (1992).
Although the absolute participation rates of some subgroups are much larger or smaller than those

of the total population, the direction of the change in the rates among most subgroups over time is

consistent with the direction of the change among the total population. These comparisons are

discussed below.

1. Changes among Demographic Subgroups

Participation rates among most subgroups of the eligible population declined slightly between

August 1985 and January 1988, just as overall participation rates fell during this time period (Table

IV.2). Participation rates for two subgroups, households containing single persons and households

containing two or more adults with children, fell slightly more than average (by 5 percentage points

and 8 percentage points, respectively, compared to 3 percentage points overall). While declines in

the rates among these two groups are higher than average, they are not surprising given that

households with single persons and households with two or more adults with children were among

those exhibiting the largest increases in new eligibles under the 1985 FSA (see Section IV.C). Three

types of households shown in Table IV.2 exhibited an increase in participation rates between 1985

and 1988: (1) households with disabled persons under age 60, (2) households with single female

adults with children, and (3) households with single male adults with children.

Between January 1988 and January 1989, participation rates changed very little among many of

the subgroups, just as they changed very little among the total population. For example, participation

rates for households with children, single persons, and white non-Hispanic heads remained constant

between 1988 and 1989. However, participation rates for households containing elderly persons and

households containing two or more adults with children continued to decline, while participation rates

for households containing disabled persons under age 60 and single parents continued to rise.

The drop in participation rates (by 6 percentage points) for households containing elderly

persons between 1988 and 1989 is largely due to a substantial (11 percent) increase in the number

of eligible households containing elderly persons combined with a small decrease in the number of

36
TABLE IV.2

COMPARISON OF HOUSEHOLD PARTICIPATION RATES BY

SELECTED DEMOGRAPHIC CHARACTERISTICS:

AUGUST 1985,JANUARY 1988,AND JANUARY 1989

Demographic Characteristics August 1985 January 1988 January 1989

Household Contains:

Elderly age 60 or Older 37.3% 35.0% 29.0%

Disabled under age 60 46.7 55.2 57.4

Children under age 18 73.9 71.3 70.1

Children ages 5 to 17 NA 68.3 68.2

Singleperson 49.8 45.0 44.7

Single female adult with children 74.8 75.5 77.5

Singlemaleadultwithchildren 45.9 55.8 56.7

Two or more adults with children a 75.3 66.8 60.5

White non-Hispanic head 48.9 46.9 45.9

Black non-Hispanic head 77.1 76.0 76.9

Hispanichead 54.8 54.2 50.5

Total 59.4 56.0 55.5

SOURCES: January 1989 rates are from Table III.4 of this report. August 1985 rates are from Table 2 and

Table 4 of Doyle (1990), and January 1988 rates are from Table IV.3 of Tfippe and Doyle

(1992).

aThis catego D' includes both households in which the gender of the household head is unknown and femaleheaded households that contain two or more adults.

Note: Changes in rates between 1988 and 1989 may reflect changes in the SIPP questionnaire used to

gather the data. See, for example, page 36 for a discussion of reasons for the change in participation

rates for households containing elderly persons.

37
participating households with elderly persons. There are three factors contributing to the rise in the

number of eligible households. First, the total number of low-income households (households with

incomes less than 185 percent of the poverty level) containing elderly persons increased between 1988

and 1989 based on SIPP data (by about 4 percentage points). Second, the proportion of incomeeligible households containing elderly persons that passed the asset test in the SIPP data increased

between 1988 and 1989 (from 61 percent to 65 percent). These first two factors account for about

9 percentage points of the 11 percent increase. The remaining 2 percentage points of the increase

in the number eligible households containing elderly persons may be due to the increase in the

number of eligible households receiving the medical deduction (from 8.2 percent to 13.8 percent) in

the SIPP data between 1988 and 1989. The increase in the proportion of households receiving the

medical deduction and passing the asset test may in part be attributed to the change in the SIPP

questionnaire design in 1989. The design change, which included the new eligibility module in the

1989 SIPP, resulted in more direct measures of deductible expenses and changes in measures of

vehicular assets (see Appendix). Thus, the overall decrease in the participation rate for the elderly

is due to a combination of actual changes among this population and changes in the design of the

SIPP questionnaire. The next estimates of participation rates will help determine whether the trend

of falling rates among elderly households is a measurement issue or is actually happening in the

population, since these estimates will again be based on the expanded SIPP information.

In all three years, participation rates among households with elderly persons, single persons, and

white non-Hispanic heads are lower than overall participation rates. This pattern is consistent with

results found in earlier research (see Trippe and Doyle, 1992). Conversely, in all three years,

participation rates among households with children, single female adults with children, and black nonHispanic heads are consistently higher than overall rates.

38
2. Changes among Economic Subgroups

Participation rates among most economic subgroups shown in Table IV.3 declined slightly

between August 1985 and January 1988, just as overall rates fell during this time period. For

example, participation rates among households with income in poverty, earnings, or public assistance

declined by 3 to 5 percentage points between 1985 and 1988. However, participation rates among

households with SSI income increased between 1985 and 1988 (by 9 percentage points). The increase

in rates among households with SSI income is driven largely by the increase in rates among

%

households containing disabled persons as shown in Table IV.2.

Overall participation rates did not change between January 1988 and January 1989 (from 56.0

percent to 55.5 percent). However, rates among some economic subgroups did change. In fact,

participation rates among many of the subgroups in 1989 moved back to levels close to their 1985

rates. For example, participation rates for households with income ia poverty or public assistance

(rates that declined between 1985 and 1988) moved back up in January 1989 to levels close to the

August 1985 rates. Similarly, participation rates for households with SSI income (rates that increased

between 1985 and 1988) moved back down in January 1989 to levels close to the August 1985 rates.

In 1985, households with SSI income and elderly in the units were more likely to participate in

the FSP than households with SSI income and no elderlyin the unit. In 1988 and 1989, this pattern

reversed: SSI households with no elderly in the unit were more likely to participate than households

with elderly in the unit. The higher FSP participation rates for SSI households containing no elderly

in the unit in 1988 and 1989 may be due to changes in the SSI program causing an increase in the

proportion of noneidefiy SSI recipients over the proportion of elderly SSI recipients, with little or

no change in the proportions of elderly and nonelderly SSI eligibles (U.S. Department of Health and

Human Services, 1987-1989, and conversations with Social Security Administration staff).

Participation rates by monthly benefit levels as a percentage of the maximum allotment show a

consistent pattern of increase in all three years as the monthly benefit level rises to 99 percent of the

39
TABLE IV.3

COMPARISON OF HOUSEHOLD PARTICIPATION RATES

BY SELECTED ECONOMIC CHARACTERISTICS:

AUGUST 1985, JANUARY 1988, AND JANUARY 1989

Economic Characteristic August 1985 January 1988 January 1989

Monthly Benefit Level as a

Percentage of Maximum Allotment

1-25% 30.0% 29.9% 31.9%

26-50% 58.3 61.5 51.1

51-75% 86.0 68.7 72.8

76-99% 89.1 91.0 83.4

100% 64.3 50.5 52.8

Income as a Percentage of Poverty

Total< 100% 74.6 70.2 72.2

0 69.0 70.0 82.2

1-50 92.7 78.5 86.5

51-100 67.2 66.5 64.8

Total > 100 14.8 16.8 14.2

Source of Income

Earned income 36.8 33.9 32.3

SSI: 65.7 75.0 67.0

Elderly in the unit 66.6 70.3 58.4

No elderly in the unit 64.1 82.6 82.6

Public assistance: 115.5 110.5 121.0

AFDC 118.5 112.5 121.7

Other welfare 97.4 98.9 105.7

Unemployment compensation 75.6 46.4 45.6

Total 59.4 56.0 _ 55.5

SOURCES: January 1989 rates are from Tables III.6, III.8, and IIL10 of this report. August 1985 rates are

from Table 2 and Table 4 of Doyle (1990), and January 1988 rates are from Table IV.4 of

Trippe and Doyle (1992).

NOTE: Changes in rates between 1988 and 1989 may reflect changes in the SIPP questionnaire used to

gather the data.

4O
maximum. However, the rates in all three years drop by 25 to 41 percentage points when potential

benefits rise from 76 to 99 percent of the maximum allotment to 100 percent of the maximum.

As expected, participation rates in all years were much higher for households with income below

the poverty level than for households with income above th.e poverty level. Participation rates for

households in poverty were 14 to 17 percentage points higher than average, while rates for

households not in poverty were 39 to 45 points lower than average. Participation rates were

consistently lower than average for households with earnings (ranging from 22 to 23 percentage

points lower than average).

3. Changes Among Eligible Non-participating Households

Table IV.4 shows that the distribution of eligible households that did not participate in the FSP

has follo,_ed a consistent pattern in all three years. That is, the largest proportion of eligible

nonparticipating households in 1985, 1988, and 1989 were households that contained elderly persons

(about half), white non-Hispanic heads (over two-thirds), with incomes over the poverty level (over

half), earnings (about half), or were eligible for small benefits (one-third to one-half were eligible for

1 to 25 percent of the maximum benefit allotment). As expected, these household types tended to

have Iow ct-than-average participation rates in all three years.

Alth(mch thc overall distribution of nonparticipating households is consistent over the three

years, there _crc so,mc ._mall variations over the time period. For example, for some subgroups, the

proportion of eligible nonparticipating households changed after implementation of the 1SA in 1988,

but rcturncJ t:_ l,-vcl_ close to those of 1985 in 1989. For example, the proportion of eligible

nonpart,czpatmg households _ith elderly declined slightly in 1988 but increased in 1989. Similarly,

the pr_,p,,rt_,,n of mmparlicipating households with incomes above the poverty level declined slightly

in 19,_,_..nj In_rcasc,J in 19S9 to a level slightly above that of 1985. On the other hand, eligible

nonpart_p._:zng housch_ld_ v,_th disabled persons have been dropping steadily since 1985 (and

partic,pat:_m rates fi_r this group have been increasing since 1985).

41

f
TABLE W.4

COMPARISON OF THE DEMOGRAPHIC AND ECONOMIC

CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING HOUSEHOLDS:

AUGUST 1985, JANUARY 1988, AND JANUARY 1989

Pe,-_nt Distribution of Eligible Nonparticipating Households

August 1985 January 1988 January 1989

Household Contains: a

Elderly age 60 or older 52.7 % 48.0 % 55.9 %

Elderly living alone 32.4 29.6 36.4

Disabled under age 60 11.5 9.4 8.4

Disabled living alone 3.7 2.1 0.6

Children under age 18 30.5 31.3 31.7

Children ages 5 to 17 NA 27.6 26.1

Single person 49.6 49.5 50.4

Single female with children 17.1 15.1 14.0

Single male with children 2.4 1.8 1.5

Two or more adults with children 11.0 14.4 16.0

Single nonelderly and nondisabled adult NA 8.1 3.5

White non-Hispanic head 73.2 68.9 69.2

Black non-Hispanic head 15.8 14.8 14.8

Hispanic head 12.4 13.8 15.7

Income as a Percent of Poverty

Total < 100% 46.7 49.7 44.4

0 4.5 3.8 2.0

1-50 3.9 10.2 6.2

51-100 :383 35.7 36.2

Total > 100% 53.4 50.3 55.6

Benefit as a Percentage of Maximum Allotment

1-25% 54.8 43.1 38.9

26-50% 19.5 15.7 223

51-75% 5.8 15.2 12.1

76-99% 3.8 2.6 5.3

100% 16.2 23.4 21.4

Household Income Includes:

Earnings 49.3 51.1 51.2

SSI

Unemployment compensation 141.

.43 83..84 12.2 3.3

Total Households 100.0 100.0 100.0

Eligible Nonparticipating

Per,om (in thousands) 10,323 12,686 12,697

Households (in thousands) 4,711 5,410 5,652

Benefits (inmillions) $265 $445 $478

SOURCES: January 1989 percentages are from from Tables III.11 and 1II.13 of this report. August 1985 percentages were derived from

Table 12 of Doyle (1990) and January 1988 perce_atages are from Tables III.Il and Ill.13 of Doyle and Trippe (1992).

NOTE: Eligible nonparticipants are computed as the difference between eligibles and participants.

Changes in percents between 1988 and 1989 may reflect changes in the SIPP questionnaire used to gather the data.

apercentages do not sum to 100 bemuse households may exhibit more than one of the characteristics listed.

NA = Th_,e values were not produced in the August 1985 estimates.

42
C. REASONS FOR CHANGES IN FSP PARTICIPATION RATES FROM 1985 TO 1989

As discussed, participation rates declined between August 1985 and January 1988 but remained

steady between January 1988 and January 1989. This section examines the major reasons for the

decline in participation rates between 1985 and 1988 and for the stability of the rates between 1988

and 1989. It also examines the reasons for any particularly large or unexpected changes in rates

among certain subgroups. Specifically, we discuss how the major legislative, economic, and other

program changes affected the number of participants and eligibles between 1985 and 1989, thus

effecting the changes in rates. We also discuss any possible effects that the improvement in the SIPP

data have on participation rates.

1. Changes In Food Stamp Program Legislation

The decline in participation rates between 1985 and 1988 was due largely to an expansion in the

number of eligibles induced by legislation passed by Congress, combined with little or no change in

the number of participants. The most substantial expansions in the number of FSP eligibles were due

to the more generous eligibility criteria introduced under the 1985 Food Security Act (FSA),

implemented in 1986. Among other changes, the 1985 FSA (1) granted automatic eligibility to

households in which all members receive AFDC or SSI; (2) raised the dollar amount of countable

assets that could be owned by households without elderly persons and by households with elderly

living alone and still qualify for food stamps; and (3) raised the earnings deduction rate. All of these

!

changes were modeled in the 1988 SIPP eligibility model, thus increasing the total number of

eligibles. Thc 1987 Stewart B. McKinney Homeless Assistance Act introduced minor expansions in

eligibility and in participation by encouraging homeless persons to obtain food stamp eligibility and

bcnefits.

As discussed in Trippe and Doyle (1992), the more generous eligibility criteria introduced under

the 1985 FSA increased the number of total eligible households by 7 percent in January 1988.

However, the participation rate for the newly eligible households was very low--only 6 percent,

43
compared with 56 percent for all eligible households. Thus, although the FSA legislation expanded

eligibility for the FSP, most of those who became eligible did not participate. In addition, the

economy was expanding between 1985 and 1988, further reducing the number of participants.

Most of the newly eligible households were made eligible by the expanded asset provisions,

particularly for households that contained single elderly persons. About 40 percent of the newly

eligible households contained single elderly persons. Slightly over half of the newly eligible

households did not contain elderly; most of them contained children. Thus, it is not surprising that

the largest declines in participation rates between 1985 and 1988 were among households that

contained elderly persons, single persons, and two or more adults with children.

For several reasons it is also not surprising that most of the newly eligible households did not

participate in the year and a half after the new provisions were implemented: (1) households

containing elderly, single persons or two parents have historically participated at much lower-thanaverage rates and have received lower-than-average benefits; (2) while the impact of the provisions

was immediately reflected in estimates of the size of the eligible population, the more generous

eligibility criteria were relatively subtle (thus, awareness of the changes may not have been very

widespread among the newly-eligible population); and (3) the economy was still expanding between

1985 and 1988, thus creating an environment in which those eligible for small benefits were less likely

to seek assistance.

Between January 1988 and January 1989, the FSP program changed very little, and the number

of eligibles and participants increased only slightly. The 1988 Hunger Prevention Act legislated minor

additional expansions in eligibility and benefit levels, which, among other changes: (1) increased the

dependent care deduction from $160 per household to $160 per dependent; (2) expanded the

definition of disabled; and (3) excluded advanced EITC payments as income. The data base allowed

us to model only the expansion in the dependent care deduction in simulating the number of eligibles.

However, we found no noticeable increase in the number of eligible households with dependents due

44
to this change in legislation. The Hunger Prevention Act may have had some influence on the

increase in the number of participants in January 1989, but most of the effect on participants is

probably seen after 1989.

2. Changes in the Economy

The economy grew steadily between August 1985 and January 1988 and continued to grow

through January 1989. For example, the national unemployment rate declined from 7.1 percent in

August 1985 to 5.8 percent in January 1988 and to 5.4 percent in January 1989. Similarly, the poverty

rate declined from 14.0 percent in 1985 to 13.0 percent in 1988 and to 12.8 percent in 1989. The

economy did not begin to weaken at the national level until early 1990.

In general, during a growing economy, the number of FSP eligibles and participants may decline

both because more persons find jobs and increase their income, thus becoming ineligible for food

stamps, and because fewer eligibles choose to participate in the program. Thus, the growing economy

between 1985 and 1988 may have reduced the number of participants. However, any downward

pressure on the number of eligibles from the growing economy was swamped by the expansionary

effects of the 1985 FSA, as discussed earlier.

Despite the continued strong economy between January 1988 and January 1989, the number of

eligible and participating households increased slightly (by between 2 and 3 percent) during that time.

The slight increase in participants during a period of economic growth may be explained in part by

s

factors identified by McConnell (1991). MeConnell found that certain areas of the country

experienced a deteriorating economy as early as 1988. For example, most of the New England states

felt the effects of a recession during fiscal year 1988.

In summary, the overall impact of the economy on participation rates between 1985 and 1989

was probably very small. The impact of the expansionary program changes implemented under the

1985 FSA probably swamped most of the effects of the growing economy on the number of eligibles

45
between 1985 and 1988, and the pockets of recession and growth in the Medicaid program probably

reversed any decline in the number of participants and eligibles between 1988 and 1989.

3. Changes in the Medicaid Program

In addition to changes in FSP legislation and shifts in the economy, changes in other programs

that are closely associated with the FSP may also affect the number of participants and eligibles. For

example, expansions to the Medicaid program initiated in the late 1980s may have increased the

number of participants in the FSP.

Medicaid expansions during the late 1980s may have brought more people to the FSP by

encouraging newly eligible Medicaid recipients to join the FSP. Legislative changes in the Medicaid

program included raising the income eligibility threshold, and encouraging states to increase their

outreach programs and streamline their application processes. The result of these changes was to

strengthen the link between participation in the Food Stamp and Medicaid programs. According to

research conducted by McCormell (1991), many of the newly eligible Medicaid recipients were already

eligible for food stamps but did not apply for food stamps until they applied for Medicaid.

McConnell estimated that the increase in the number of Medicaid households accounts for about 40

percent of the total increase in the number of households that entered the FSP between FY 1987

and FY 1990.

4. Changes in the SIPP Questionnaire

As discussed in the Appendix, changes in the SIPP questionnaire design in 1989 may have

contributed to the increase in the number of eligible households containing elderly persons, and the

consequent drop in participation rates among households with elderly between 1988 and 1989. These

changes include more complete medical expense information and changes in the collection of

vehicular assets.

46
D. PROGRAM GROWTH SINCE JANUARY 1989

FSP caseload data show that the number of FSP participants has been climbing steadily since

spring 1989. More than 6 million more people were receiving food stamps in December 1991 than

in January 1989. Such factors as a weak economy suggest, that the number of eligible persons has

also risen since 1989. However, until the SIPP survey data for this time period are available, we

cannot estimate by how much the number of eligibles increased since 1989. Due to changes in the

Census Bureau's schedule for administering topical questions on program eligibility for the SIPP data

needed to estimate participation rates, the next available estimate of food stamp eligibility will be for

January 1992. These data should be available by mid-1993. If the surge in participants is coming

from the pool of previously nonparticipating eligibles, or grows at a faster rate than the eligible

population, then FSP participation rates will rise from 1989.

E. CONCLUSIONS

This chapter has examined the major changes in participation rates between August 1985 and

January 1988, and between January 1988 and January 1989. The downward shift in participation rates

between August 1985 and January 1989 was due to two major factors: (1) expansions in the eligible

population brought about by the more generous eligibility criteria implemented under the Food

Sec urit_ Act of 19_5; combined, with (2) the lack of participation among the newly eligible under the

1985 FS._' .\ duc- t_ thc historically lower-than-average participation rates for the groups most affected,

the relatrvelv subtle nature of the expansions, and the growing economy. The decline in participation

ratcs _._ grca_c._: among subgroups of the population that exhibited the greatest increase in newly

eligiblc:_ hc_useholds with elderly and single persons.

P._:x:cl?atic_n rates remained steady between January 1988 and January 1989, largely because

there v,crc n,_ significant program changes. The number of participants and eligibles grew slightly,

but a' a._ut thc same ratc The total number of eligible and participating individuals increased by

less than I percent, and the total number of eligible and participating households grew by between

47
2 and 3 percent. Despite the growing economy nationally during this period, there were pockets of

recession around the country that may have exerted upward pressure on the number of participants

and eligibles in some areas. Furthermore, expansions in Medicaid may have increased the number

of participating households slightly.

The surge in the number of participants since spring 1989 may increase the participation rate

after 1989, particularly if the growth in the participants comes from a pool of previously

nonparticipating eligibles.

48
REFERENCES

Allin, Susan, and Harold Beebout. "Determinantsof Participation in the Food Stamp Program: A

Review of the Literature." In Current Perspectives on Food Stamp Program Participation.

Alexandria, VA: Food and Nutrition Service, U.S. Department of Agriculture, 1989.

Burns, F. "Findings of a Case-by-Case Study of Families and Unrelated Individuals with Income

Below $500 in 1971 (March 1972 CPS)." (Memo.) Washington, D.C.: Bureau of the Census,

U.S. Department of Commerce, 1974.

Czajka, John L. _Determinants of Participation in the Food Stamp Program: Spring 1979." Report

prepared for the Food and Nutrition Service, U.S. Department of Agriculture. Washington,

D.C.: Mathematica Policy Research, Inc., 1981.

Doyle, Pat. "Food Stamp Program Participation Rates: August 1985." In Current .Perspectives on

Food Stamp Program Partic_ation. Alexandria, VA: Food and Nutrition Service, U.S.

Department of Agriculture, 1990.

Doyle, Pat, and Harold Beebout. "Food Stamp Program Participation RatesF In Current Perspectives

on Food Stamp Program Participation. Alexandria, VA: Food and Nutrition Service, U.S.

Department of Agriculture, 1988.

Doyle, Pat, and Robert Dalrymple. _I'he Impact of Imputation Procedures on Distributional

Characteristica of the Low Income Population. _ In Proceedings of the Bureau of the Census

Annual Research Conference IIL Washington, D.C.: Bureau of the Census, U.S. Department

of Commerce, 1987.

Landa, Cady. "Implications of Food Stamp Program Unit Rules: Evidence from SIPP. _ Report

prepared for the Food and Nutrition Service, U.S. Department of Agriculture. Washington,

D.C.: Mathematica Policy Research, Inc., 1987.

Martini, Alberto. "Participation in the Food Stamp Program: A Multivariate Analysis. In Current

Perspective on Food Stamp Program Participation. Alexandria, VA: Food and Nutrition Service,

U.S. Department of Agriculture, 1992.

Mathematica Policy Research, Inc.. 'Survey of Income and Program Participation 1987 Panel Wave

7 and 1988 Panel Wave 4 January Eligibility File Technical Description of the Production of the

Person Month and January Eligibility Files." Report prepared for the Food and Nutrition

Sen-icc, U.S. Department of Agriculture. Washington, D.C.: Mathematica Policy Research, Inc.,

1992.

McConnell, Sheena. 'The Increase in Food Stamp Participation Between 1989 and 1990: A Report

to Congress. _ Alexandria, VA: Food and Nutrition Service, U.S. Department of Agriculture,

1991.

Ross, C. "The Food Stamp Program: Eligibility and Participation." Washington, D.C.:

Congressional Budget Office, 1988.

49
Shiels, John F., Burl S. Barnow, Katherine A. Chanrette, and Jill M. Constantine. "Elderly Persons

Eligible For and Participating in the Supplemental Security Income (SSI) Program." Vienna,

VA: Lewin/ICF, 1990.

Trippe, Carole. "Estimating Rates of Participation in the Food Stamp Program: A Review of the

Literature. _ In CurrentPerspectiveson Food Stamp Program Participation. Alexandria, VA:

Food and Nutrition Serv/ce, U.S. Department of Agriculture, 1989.

Trippe, C., and Pat Doyle. "Food Stamp Program Participation Rates: January 1988." In Current

Perspectives on Food Stamp Program Participation. Alexandria, VA: Food and Nutrition

Services, U.S. Department of Agriculture, 1992.

U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis and Evaluation.

"Characteristics of Food Stamp Households: Summer 1989." Alexandria, VA: Food and

Nutrition Service, U.S. Department of Agriculture, 1991.

U.S. Department of Commerce, Bureau of the Census. MEconomicCharacteristics of Households in

the United States: Fourth Quarter 1984.N CurrentPopulation Repons, series P-70, no. 6.

Washington, D.C.: U.S. Government Printing Office, 1986.

U.S. Department of Commerce, Bureau of the Census. "Survey of Income and Program Participation

(SIPP) 1988 Panel, Wave 4 Rectangular Core and Topical Module Microdata File Technical

Documentation." Washington, D.C.: The Bureau, 1991.

U.S. Department of Health and Human Services, Social Security Administration. NSocialSecurity

Bulletin, Annual Statistical Supplement, 1987, 1988, 1989._ Washington, D.C.: U.S. Government

Printing Office, 1987, 1988, 1989.

5O
APPENDIX

TECHNICAL PROCEDURES USED TO COMPUTE PARTICIPATION RATES

IN JANUARY 1989

As noted in the text, we derived the participation rates in this study by comparing administrative

data on program participation with survey data on program eligibles. This appendix provides detailed

information on how we constructed the numerators and the denominators.

A. USING ADMINISTRATIVE DATA TO ESTIMATE THE NUMBER OF PARTICIPANTS

One reason for the disparities in previous estimates of FSP participation rates (as noted earlier)

is that household survey respondents report their own participation--data that are known to be

substantially underreported. For example, the U.S. Department of Commerce (1986) estimated that,

on average, 92 percent of the households that received food stamps from October to December 1984

reported receiving food stamps (representing 84 percent of total food stamp benefits) in the SIPP

data during that period.

The estimates of the numerator in the rates reported in the text are based on administrative data

derived from three sources. The first source is the Program Operations data, which contain

information on the number of persons and households that are issued benefits and the total dollar

value of the coupons issued for January 1989. The Program Operations statistics are presented by

state, allowing us to adjust the totals to estimate the caseload residing in the 50 states and the District

of Columbia. the population reflected in SIPP.

Thc second data source is the Integrated Quality Control System (IQCS). We used this source

to adjux' thc }'rt,gram Operations statistics to eliminate ineligible participants and erroneous benefits

which could not be captured in the SIPP-based estimates of eligibility. The number of participating

hou.,c.h, '.,I', :n I--Y 1'_ I'rt,gram Operations data was adjusted downward by 2.37 percent to eliminate

ineliglblc hou._cholds. Similarly, total benefits reported in the Program Operations data were adjusted

to correct t{_rerroneous benefit payments to ineligible households and for under and over payments

to chg_b',c hou.schol&$ (ncr rcduction of 4.73 percent.)

53
The third data source is a sample of food stamp case records from the January. and February

1989 IQCS samples. We used the sample of case records to calculate the distribution of persons,

households, and benefits across various demographic and economic characteristics.

B. USING SIPP TO ESTIMATE THE NUMBER OF ELIGIBLES

We used a multi-step process to derive our estimates of the FSP-eligible population in January

1989. First, using SIPP data, we developed an analysis file that reflected the U.S. population as of

January 1989. We then used this file to simulate program eligibility, a process whereby we quantified

the program rules defined in the Chapter II and applied them to each dwelling unit in the data base.

For each dwelling unit we also estimated its composition, eligibility status, and potential benefits.

Section B. 1 summarizes how we developed the analysis file, and section B.2 assesses the outcome of

the eligibility simulation.

1. Developing the Analysis File

SIPP is a nationally representative longitudinal survey of adults in the United States that provides

detailed monthly information on income, program participation, and wealth. It is a multipanel

longitudinal survey to which replacement panels are added each year. Each panel contains

information on persons in a longitudinal sample followed for a period of two years or more. The

longitudinal sample consists of adults age 15 or older who reside in a cross-sectional sample of

dwelling units in the United States. These adults, along with other individuals with whom they

resided, are interviewed every four months. In each round of interviewing (or %'ave'), a core

questionnaire collects information on each of the four months preceding the interview date. In most

waves, the monthly core questions are supplemented with questions on a variety of topical issues that

vary from wave to wave. Because the interviewing process is staggered, the reference period that is

covered in any given wave is not the same for all sample members.

54
Although the survey is longitudinal, it is designed to support cross-sectional estimates for Census

households that reside in the 50 states and the District of Columbia. For this analysis, we derived

cross-sectional estimates of food stamp-eligible households from Wave 7 of the 1987 panel and Wave

4 of the 1988 Panel. We adjusted the sample weights to allow us to base eligibility estimates on

combined panels. Although the two waves were independent samples of the U.S. population, their

reference periods overlapped. That is, they sampled the population in the month of January, making

their reference periods comparable with the administrative data used for the denominator. Together,

the two waves provide a relatively large sample size (22,040 households).

The 1987 Panel Wave 7 and the 1988 Panel Wave 4 represent the first time that the Census

Bureau administered a set of topical questions in SIPP focused on determining program eligibility.

Until this time, information on deductible expenses, disability and assets was imbedded in a series of

topical modules administered in different waves. Thus, the information had to be integrated across

time and with the core. This integration presented conceptual and operational problems in

developing food stamp eligibility measures in previous participation rate estimates, as discussed in the

Appendix of Trippe and Doyle (1992).

The newly designed eligibility module meant that we no longer had to integrate shelter and child

care expenses and asset information across time because they were all collected simultaneously in the

neg' eligibi]i%' module. Also, we no longer had to impute out-of-pocket medical expenses because

this information was collected in the new topical module. Finally, we no longer had to impute the

sharing of shelter expenses among household members because this was now collected. Hence, the

new waves contain most of the information needed to estimate food stamp eligibility: measures of

monthly income; monthly Census household composition; assets, medical, child care, and shelter

expanses; and disability status.

The more complete medical expense information and changes in the collection of vehicular assets

ma)' have contributed to the unexpectedly large increase in the number of eligible households

55
containing elderly persons, as discussed in Chapter IV. The estimated proportion of eligible

households receiving the medical deduction increased from 8.2 percent in January 1988 to 13.8

percent in January 1989, and the amount of the estimated average medical deduction among eligible

households more than doubled, from $7.58 to $18.28. Higher medical deductions are likely to

increase the number of eligible elderly because their resulting net incomes are likely to be lower.

The proportion of households with elderly passing the asset test increased from 61 percent to 65

percent in 1989.

Although the two waves contain most of the information needed to estimate food stamp

eligibility, there were three operational problems to address in building the file due to the design of

the eligibility topical module: (1) the topical module omitted questions on vehicular equity; (2) some

individuals were present in the sample in January but not at the time of the interview; for those

persons no information was collected on vehicles or deductible child care and shelter expenses; and

(3) questions on reasons for receiving government transfers needed to determine food stamp disability

status were not administered in the topical module. We corrected for these omissions as follows:

· We imputed vehicular equity for all cars reported by the members of the

January sample.

· For those adults who were present in January but not present at the time of the

interview, we imputed vehicular assets, equity, and deductible child care and shelter

expenses.

· We merged selected data from Wave 1 in each panel to the person

extracts in order to more accurately determine food stamp disability status.

A report by Mathematica Policy Research, Inc. (1992) provides more detail on how we developed

the analysis file used to simulate the FSP.

56
2. An Assessment of the Eligibility Simulation

The procedure used to estimate the eligible population was designed to replicate the eligibility

determination process for each household on the SIPP analysis file as closely as possible. In other

words, we applied the program eligibility and benefit criteria outlined earlier to each household as

if it had actually applied for food stamps.

The newly designed eligibility module contains more information on the var/abica nex.ezsary for

determining FSP eligibility and benefits than ever before. The additional information on deductible

expenses, disability, and assets--aH in the same wave--means that many of the measurement problems

of the previous SIPP files have been solved. However, some problems remain. All the simulation

procedures described earlier cannot perfectly replicate the eligibility and benefit determination

process mandated in the legislation, despite the improvements in the SIPP data, and the adjustments

and enhancements that we made to the data. The specific discrepancies are as follows.

· Unit definition. Because SIPP does not me,azure the complete set of characteristics

that are used to determine a food stamp unit (especially information on which

dwelling-unit members customarily purchase and prepare food together), the

simulated food stamp household is not the same as the unit determined by the food

stamp caseworker. For this study, we used the reported program unit composition

in Census households that reported FSP benefits to simulate the food stamp

household. In other dwelling units with cash assistance, the food stamp household

was equal to the cash assistance unit plus any spouses or related children under age

18 in the dwelling. In all other dwelling units, the simulated food stamp household

was the same as the Census household. Landa (1987) and Doyle and Dalrymple

(1987) discuss using SIPP to construct food stamp households.

· Countable assets. We used the financial, nonfinancial, and vehicular assets reported

in SIPP to estimate countable assets according to program rules. However, SIPP

does not explicitly provide all the measures necessary for this purpose, such as cash

on hand and vehicular equity.

· Gross income. The measure of gross income used in this study is close to, but not

precisely the same as, gross income reported to the food stamp caseworker. First,

survey data on income and program participation, such as the data collected in

SIPP, tend to be underreported. For example, the number of AFDC recipients in

SIPP was only 79 percent of an independent estimate derived from administrative

data; the number of recipients of unemployment compensation was 101 percent of

the benchmark; and the number of recipients of veterans' benefits was 80 percent

of the benchmark (U.S. Department of Commerce, 1986). Second, the definition

57
of income for purposes of food stamp eligibility is not precisely the same as income

measured in SIPP. For example, the Food Stamp Program counts net selfemployment earnings averaged over a period of up to one year, whereas SIPP

measures self-employment draw. Third, as noted earlier, unit composition

simulated with SIPP data differs from thecaseworker's determination of the food

stamp household, and, hence, aggregated income for the food stamp household may

differ as well.

· Net income. Estimates of net income are more accurate in this file than in previous

files because out-of-pocket medical expenses were collected for the first time

(rather than imputed), and deductible expenses were collected at the same time as

other eligibility information. Nonetheless, the measure of net income for this file

is not exactly the same as net income measured by the caseworker because the

SIPP definitions of shelter and dependent-care expenses differ slightly from the

FSP definitions. For example, utility expenses are not disaggregated by use

(heating, cooling, telephone) which affects the application of the standard utility

allowance.

· Disability status. We relied on reported disability and reported income receipt as

specified under the program to determine disability. Reporting and measurement

errors in SIPP may somewhat distort the number of disabled individuals identified

in this manner.

· Measurement error. Several forms of nonsampling errors affect the eligibility

simulation, including the underreporting of income and program participation noted

earlier, and the mlsclassification of benefit and income types. Of particular concern

is the existence of persons who report participation in SSI or public assistance

programs at the same time that they report income or assets in excess of the

eligibility limits for those programs (that is, "seemingly-ineligible" participants).

Table A. 1 shows the possible bias due to each of these measurement and reporting errors. The

net result on estimates of the number of eligibles is uncertain. Underreporting of gross income will

bias the estimates of eligible households upward, since more households will appear to have met the

income limits than actually did. Also, under the automatic eligibility provision of the Food Security

Act of 1985, households comprised entirely of "seemingly-ineligible' SSI or public assistance

participants are treated as eligible for food stamps even though their income and assets exceed food

stamp eligibility limits. To the extent that the income or asset measure of these seemingly ineligibles

(as opposed to the participation measure) is correct, the number of food stamp eligible households

is overstated.

58
TABLE A. 1

FACTORS THAT AFFECT THE SIMULATION OF FOOD STAMP

ELIGIBILITY WITH. SIPP, AND THE

DIRECTION OF THE BIAS

Effect on Estimates of

SourceofError theNumberofEligibles

Unit Definition Underestimate

CountableA._sets Overestimate

Gross Income

Underrcporting Overestimate

Definition Underestimate

Programparticipation Underestimateof eligibles

underreporting and misreporting participating in other programs

NetIncome Unknown

Disability Status Underestimate

Measurement Error Unknown

Incomistencies between income and program Overestimate

participation

59
On the other hand, the imprecise measures of some types of expenses may bias the measurement

of net income upward, thus reducing the estimate Ofthe number of eligible hou.sch_>lds. Fin._I15',the

underrepresentation of some groups of individuals biases the estimates of eligiblcs dov.nward. As

illustrated earlier, the SIPP data seem to significantly underrepresent households that receive public

assistance. These households form a large portion of the eligible and participating populations. Thus,

some of the participation-rate estimates for these households exceed 100 perccnt.

Doyle (1990) analyzes the impact of selected measurement and reporting crrors on measures of

food stamp eligibility.

6O