(,_ CurrentPerspectiveson FoodStampProgramParticipation

UnitedStates

FoodStampProgram

:Analysis ,-'

and ParticipationRates:

"- January1988
CurrentPerspectivesonFoodStampProgramParticipation

Titlesin this series:

FoodStampProgramParticipationRates

(November1988) PatDoyleandHaroldBeebout

FoodStampProgramParticipationRatesAmongthePoverty

Population,1980-1987

(November1988) CaroleTrippeand HaroldBeebout

Determinantsof Participationinthe FoodStampProgram:

A Review of the Literature

(November1989) SusanAllinandHaroldBeebout

EstimatingRatesof Participationin theFoodStampProgram:

A Reviewof theLiterature

(November1989) CaroleTrippe

FoodStampProgramParticipationRates:

August1985

(April 1990) PatDoyle

TheEffectsof FoodStampsonFoodConsumption:

A Reviewof theLiterature

(October1990) ThomasM, Fraker

FoodStampProgramParticipationRates:

January1988

( February1992) CaroleTrippeandPat Doyle
.(_ United States Food and 3101 Park Center Drive

Department of Nutrition Second Floor

Agriculture Service Alexandria,VA22302

Food Stamp Program

ParticipationRates:

January 1988

CaroleTrippeandPatDoyle

Aproductof

MathematicaPolicyResearchI,nc.

600MarylandAvenue,S.W.

Suite550

Washington,DC20024

February 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, Steven Carlson, and Bruce Klein

of the Food and Nutrition Service for their technical guidance and review. Among the many MPR

staff who contributed, we thank Bob Cohen, $ulie Sykes, Josh Rozen, Eugene McKay, and Esther

Miller, who conducted the computer programming, and Harold Beebout, Julie Sykes, and Esther

Miller, who provided technical review and thoughtful comments on early drafts of the report. We

also thank Jayne Holman for her help preparing and reviewing tables, Tom Good for his editing, and

Sharon Clark, Chiquita Payne, and Sheana Carter for their formatting and typing skills, and their

patience.

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

FOREWORD .......................................................... vii

EXECUTIVESUMMARY................................................ xi

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

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

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

1. The Individual Participation Rate ............................ 5

2. The Household ParticipationRate ........................... 6

3. The Benefit Rate ........................................ 6

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

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

Pu PARTICIPATION RATES BY SELECTED DEMOGRAPHIC

CHARAC'_RISTICS ....................................... 11

B. PARTICIPATION RATES BY SELECTED ECONOMIC

CHARACTERISTICS ....................................... 20

C. THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPANTS .... 28

IV COMPARISONS OF AUGUST 1985 AND JANUARY 1988

PARTICIPATIONRATES ...................................... 35

Pu CHANGES IN AGGREGATE PARTICIPATION RATES

BETWEEN 1985 AND 1988 .................................. 36

1. Major Reasons for the Shift in FSP Participation

Rates between 1985 and 1988 ............................... 38

2. Other Influences on FSP Participation Rates ................... 39

3. Changes in FSP Participation Since 1988 ...................... 40

B. IMPACT OF THE FSA ON DISAGGREGATED

PARTICIPATIONRATES ................................... 40

1. Subgroups of the Eligible Population Affected to the

Greatest Extent byThe FSA ................................ 41

2. The Impact of the FSA on the Change in Disaggregate

Participation Rates from 1985 to 1988 ........................ 43

3. Change in the Distribution of Eligible Nonparticipating

Households between 1985and 1988 .......................... 47

C. SUMMARY............................................... 49

*°°

HI
CONTENTS (continued)

Chapter Page

REFERENCES........................................................ 51

APPENDIX TECHNICAL PROCEDURES USED TO COMPUTE PARTICIPATION

RATES AND TO ESTIMATE THE IMPACT OF THE 1985 FSA ..... 53

A. USING ADMINISTRATIVE DATA TO ESTIMATE THE NUMBER OF

PARTICIPANTS............................................ 55

B. USING SIPP TO ESTIMATE THE NUMBER OF ELIGIBLES ........ 56

1. Developing the Analysis File ................................. 56

2. An Assessment of the Eligibility Simulation ..................... 58

C. TECHNICAL PROCEDURES USED TO ASSESS THE IMPACT OF

THE FOOD SECURITY ACT ON FOOD STAMP PROGRAM

PARTICIPATION RATES .................................... 61

iv
TABLES

Table Page

HI. 1 INDIVIDUAL, HOUSEHOLD, AND BENEFIT PARTICIPATION

RATES: JANUARY 1988 ..................................... 12

III.2 HOUSEHOLD PARTICIPATION RATES BY HOUSEHOLD

SIZE: JANUARY 1988 ....................................... 13

IH.3 INDIVIDUAL PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: JANUARY 1988 ........... 15

111.4 HOUSEHOLD PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: JANUARY 1988 ........... 17

m.5 BENEFIT RATES BY SELECTED DEMOGRAPHIC

CHARACTERISTICS OF THE HOUSEHOLD: JANUARY 1988 ...... 19

llI.6 HOUSEHOLD PARTICIPATION RATES BY MONTIqLY

BENEFrrs AS A PERCENTAGE OF THE MAXIlvlLrM

FSP ALLOTMENT: JANUARY 1988 ........................... 21

III.7 INDIVIDUAL PARTICIPATION RATES BY THE RATIO

OF GROSS INCOME OF THE INDIVIDUAL'S FOOD

STAMP UNIT TO THE MONTHLY FEDERAL POVERTY

LEVEL: JANUARY 1988 ..................................... 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 1988 ............................................ 23

III.9 BENEFrr RATES BY THE RATIO OF THE GROSS

INCOME OF THE FOOD STAMP UNIT TO THE MONTHLY

FEDERAL POVERTY LEVEL: JANUARY 1988 .................. 24

III.10 HOUSEHOLD PARTICIPATION RATES BY SELECTED

SOURCES OF INCOME: JANUARY 1988 ....................... 27

III. 11 CHARAC"rERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS ABOVE AND BELOW POVERTY:

JANUARY 1988 ............................................ 30

111.12 THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS BELOW POVERTY THAT ARE ELIGIBLE

FOR THE MAXIivlUM FOOD STAMP BENEFIT:

JANUARY 1988 ............................................ 31
TABLES (continued)

Table Page

III. 13 DEMOGRAPHIC AND ECONOMIC CHARACTERISTICS

OF ELIGIBLE NONPARTICIPATING HOUSEHOLDS:

JANUARY 1988 ............................................ 32

IV. 1 COMPARISON OF PARTICIPATION RATES BETWEEN

1985 AND 1988 REFLECTING THE IMPACT OF THE

1985 FOOD SECURYrY ACT .................................. 37

IV.2 CHARACI'ERISTICS OF HOUSEHOLDS BECOMING

NEWLY ELIGIBLE UNDER THE 1985 FOOD SECURITY ACT ..... 42

IV.3 COMPARISON OF HOUSEHOLD PARTICIPATION

RATES BY SI_.T.FCT. ED DEMOGRAPHIC CHARACTERISTICS:

AUGUST 1985 AND JANUARY 1988 ........................... 44

IV.4 COMPARISON OF HOUSEHOLD PARTICIPATION

RATES BY SELECTED ECONOMIC CHARACTERISTICS:

AUGUST 1985 AND JANUARY 1988 ........................... 45

IV.5 COMPARISON OF THE DEMOGRAPHIC AND ECONOMIC

CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSEHOLDS: AUGUST 1985 AND JANUARY 1988 ............. 48

A. 1 FACTORS THAT AFFECT THE SIMULATION OF FOOD

STAMP ELIGIBILITY WITH SIPP, AND THE DIRECTION

OF THE BIAS .............................................. 60

A.2 THE INCREMENTAL IMPACT OF THE MAJOR PROVISIONS

OF THE FOOD SECURrrY ACT .............................. 63

vi
FOREWORD

The Food and Nutrition Service publishes periodic reports on Food Stamp Program (FSP)

participation rates to help understand the extent to which food stamp benefits reach the intended

recipients. Food Stamp Program Participation Rates: January 1988, the latest in the series, shows a

small but noticeable decline in the participation rates between August 1985 and January 1988. The

likely reasons behind this drop offer some interesting insights into the interaction between changes

in eligibility rules and participation in the program.

IMPORTANCE OF PROGRAM PARTICIPATION RATES

The participation rate is the ratio of the number of individuals or households participating in a

program to the number of those eligible for the program. The rate of participation in a public

assistance program is a valuable measure of the program's overall performance. Although it is highly

unlikely that any assistance program could achieve 100 percent participation among all those who are

eligible for benefits, the participation rate can provide insights for policy makers who are concerned

with reaching specific target populations. For example, comparisons of the overall participation rate

with the rates for subsets of the eligible population can indicate the program's relative ability to reach

these groups.

EFFECTS OF LEGISLATIVE CHANGES ON PARTICIPATION RATES

The Food Stamp Program participation rate can change as the number of persons participating

in or the number of persons eligible for the program change. The number eligible for benefits shifts

periodically as Congress expands or restricts eligibility rules. The numbers of participants and

eligibles also fluctuate with changing economic conditions.

Legislative changes to the FSP implemented in May 1986 under the authority of the Food

Security Act (FSA) of 1985 made the program more generous by expanding the number of individuals

eligible to receive food stamps. Among other changes, the FSA granted automatic food stamp

eligibility to households in which all members receive Aid to Families with Dependent Children or

Supplemental Security Income, and raised the dollar amount of countable assets that households with

no elderly and households of elderly living alone could own and still qualify for food stamps. Newly

available data for 1988 enable us to examine the effect of these expansions on FSP participation

rates.

CHARACTERISTICS OF NEW ELIGIBLES

The combined changes implemented in 1986 made an estimated 1.9 million more people, residing

in 865,000 households, eligible for food stamps in 1988. The vast majority of the newly eligible were

made eligible by the new asset provisions. In January 1988, 40 percent of newly eligible households

consisted of elderly individuals who lived alone. A little over haft consisted of households with no

elderly, most of whom contained children and received earnings. Less than haft of the newly eligible

population had income below the poverty level. Thus, the increase in the eligible population was

concentrated largely among single elderly persons, nonelderly with earnings and children, and

vii
households whose income was above poverty. The following table shows the breakdown of new

ehgibles by these characteristics and by their rates of program participation in January 1988.

Newly Participation Rates Among

Eligible Households Newly Eligible Households

Households with:

Elderly 49% 6%

Livingalone 40% 6%

Livingwithothers 9% 6%

Nonelderly 51% 7%

Withchildren 33% 7%

With earnings 28% 8%

Income above poverty level 52% 8%

Total 100% 6%

All told, only seven percent of newly eligible indivMuals participated in the Food Stamp Program in

January 1988 (compared to 59 percent of all eligible individuals).

Historically, households eligible for relatively Iow benefits and households that contain elderly

members and wage earners have participated in the FSP at lower-than-average rates. In this light,

it is less surprising that so few of those made eligible by the FSA had joined the FSP in the year and

a half between the 1986 implementation of FSA changes and January 1988. Economic expansions

from 1986 to 19gg--and the accompanying reductions in the unemployment and poverty rates--may

also have created an environment in which those eligible for small benefits were less inclined than

usual to seek public assistance.

OVERALL EFFECTS OF RESPONSES TO THE FOOD SECURITY ACT

The increase in eligibles brought about by the FSA has had a series of consequences, ultimately

ending in a marked decrease in the overall FSP participation rate:

· Very few of those made newly eligible by the FSA changes joined the program

between implementation of the changes and January 1988.

· Since so few new people joined the program, the overall number of participants

remained relatively steady from August 1985 to January 1988. The number of

participating individuals declined by about one percent from 1985 to 1988, while

the number of eligible individuals increased by seven percent.

viii
· Since the program participation rates reflect the ratio of participants to eligibles,

the increase in the number of eligibles combined with the lack of change in the

number of participants reduced the overall participation rates for January 1988.

The following table summarizes the actual participation rates in August 1985 and

January 1988 and the expected rates in January 1988 had pre-FSA program rules

still been in effect.

August 1985 January 1988 January 1988

Actual Actual Pre-FSA

Individuals 64% 59% 63%

Households 59% 56% 60%

Nearly all of the decline in the Food Stamp Program participation rates can be attributed to low

participation among those made newly eligible under the FSA. The rates in January 1988 would have

been almost the same as those in August 1985 if pre-FSA program rules had been in effect in 1988.

CONCLUSION

The decline in FSP participation rates resulting fxom the Food Security Act of 1985 demonstrates

how sensitive program participation rates are to participation among newly eligible groups. However,

since participation among new eligibles also varies over time, it is important to realize that the 1985-

1988 drop in participation rates may stabilize or reverse in the future. The number of FSP

participants has been climbing steadily since the spring of 1989, and there were over six million more

people receiving food stamps in December 1991 than in January 1988. If these new participants are

coming from the pool of previously nonparticipating eligibles, participation rates will rise. The Food

and Nutrition Service expects to have participation rates for this critical time of expanded caseloads

by late 1993.

Office of Analysis and Evaluation

Food and Nutrition Service, USDA

February 1992

ix
EXE_ SUMMARY

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

its target population, as well as which subgroups are more or less likely to participate in the program.

This report is the third in a series of reports that provides estimates of FSP participation, and is based

on more accurate data on eligibles and participants than have previously been available. It is also

the first report following the enactment and implementation of the Food Security Act of 1985, which

was the first in a series of recent legislative actions which expanded eligibility for the FSp. 1

The FSP participation rate is the 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 1988--

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

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

· Participating households received 67 percent of the benefits payable had all eligible

households participated.

COMPARISON OF JANUARY 1988 AND AUGUST 1985 PARTICIPATION RATES

Participation rates declined slightly between 1985 and 1988 due to the lack of an immediate

response to the more generous eligibility criteria introduced under the 1985 Food Security Act (FSA),

implemented in May 1986. As shown in the following table, the FSA accounts for almost all of the

decline in participation rates among persons and households. La the absence of the FSA, the January

1988 household participation rate would have been almost identical to the August 1985 rate (59.8

percent compared with 59.4 percent). 2 The more generous eligibility criteria increased the number

of total eligible households by 7 percent, but increased the number of participating households only

by less than 1 percent. Hence, the participation rate among the newly eligible households was very

low--only 6 percent, compared with a participation rate of 56 percent among all eligible households.

1The other legislation that expanded FSP eligibility includes the 1987 Stewart McKinney

Homeless Assistance Act (PL 100-77), the 1988 Hunger Prevention Act (PL 100435), and the Food,

Agriculture, Conservation, and Trade Act of 1990 (FACT). These program changes affected a

relatively small group of households.

2Similarly, the individual participation rate would also have been almost identical (63 percent in

January 1988 under pre-FSA rules, compared with 64 percent in August 1985), and the benefit rate

would have been much closer under the pre-FSA rules (71 percent, compared with 75 percent).

xi
IMPACT OF THE 1985 FOOD SECURITY ACT ON FSP PARTICIPATION RATES

IN JANUARY 1988

Participation Rates (Percent)

January 1988

January 1988 January 1988 August 1985 Implicit Rate Among

(Actual) (Simulated Pre-FSA) (Actual) Newly Eligible

Individuals 59.0% 62.5% 64.3% 6.6%

Households 56.0 59.8 59.4 6.1

Benefits 66.7 70.7 75.3 6.9

Similarly, the participation rate among newly eligible persons and among benefits to newly eligible

households was only 7 percent. Therefore, the FSA legislation expanded eligibility for the FSP, but

most of those who became eligible did not participate, thus lowering participation rates overall

The provisions of the FSA that affected the greatest number of households were those that

raised the asset limits, particularly for households that contained single elderly persons. About 40

percent of the newly eligible households were comprised of single elderly persons (only 21 percent

of all eligible households contained single elderly persons). Thus, participation rates among

households containing elderly and single persons declined more than among other groups. However,

in the absence of the FSA, participation rates among these and many other subgroups of the eligible

population would have increased or remained about the same as in 1985.

Changes in Participation since 1988

FSP caseload data show that participation in the FSP has risen substantially since 1988,beginning

in the third quarter of fiscal year 1989 (FY89.3). Between FY89.2 and FY90.2, participation in the

FSP increased by over 1 million persons. Since FY90.2, participation has continued to rise, reaching

25 million in December 1991. If forthcoming data show that the subsequent increase in the number

of eligibles is less than the observed increase in the number of participants since 1988, then the

participation rate will rise.

ESTIMATES OF PARTICIPATION RATES BY SELECTED DEMOGRAPHIC

CHARACTERISTICS

The January 1988 participation-rate estimates vary considerably across selected demographic

groups:

xii
· Regardless of the participation measure used (individual, household, or benefit),

preschool children and school-age children participated at higher-than-average

rates. For example, the individual rates were 75 percent for preschoolers and 67

percent for school children. The benefit rate for households with school children

was 71 percent, compared with an overall benefit rate of 67 percent.

· However, among the elderly, only 34 percent of eligible individuals participated,

although the rate was higher among those who lived alone (38 percent), and was

still higher among those who received Supplemental Security Income (SSI) (70

percent).

· Among the disabled, 55 percent of the eligible individuals and eligible households

participated, receiving 59 percent of the benefits payable had participation been

100 percent.

· Among households headed by a single woman with children, approximately 76

percent participated.

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

higher rate (76 percent) than households headed by white, non-Hispanic individuals

(47 percent) or Hispanic individuals (54 percent).

ESTIMATES OF PARTICIPATION RATES BY SELECTED ECONOMIC CHARACTERISTICS

The January 1988 participation-rate estimates also vary among eligible individuals and households

with different economic characteristics:

· Participation rates generally varied inversely with income. That is, participation

rates declined as income rose. Individuals and households in poverty participated

at considerably higher rates (72 percent and 70 percent, respectively) than

individuals and households overall (59 percent and 56 percent, respectively).

· Participation rates were greater among those who were eligible for larger benefits;

the household rates ranged from 30 percent for monthly benefits of 1 percent to

25 percent of the maximum allotment to 91 percent for monthly benefits of 76

percent to 99 percent of the maximum allotment.

· Households with earnings had a lower-than-average participation rate (34 percent),

whereas households that received SSI or public assistance participated at higherthan-average rates (75 and 111 percent, respectively). 3

3The greater than 100 percent figure among public assistance recipients is due to measurement

and sampling errors in the data.

oo°

Xlll
THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPANTS

Approximately 5.4 million of the 12.3 million households eligible for food stamps did not

participate in the program. These households comprised 12.7 million persons eligible for $445 million

in benefits. About haft of the eligible nonparticipants had an income above the poverty line; 43

percent were eligible for a monthly benefit of 1 to 25 percent of the maximum allotment. The

nonparticipants comprised roughly four equal groups: households with elderly persons, both above

and below the poverty line, and households with workers, both above and below the poverty line.

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

nonparticipating households tended to consist of the working poor with children. Most of the persons

in eligible nonparticipating households with incomes above poverty were eligible for small monthly

benefits ($17 on average in January 1988), and, hence, their lack of participation is not surprising.

xiv
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. 1 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, the FSP is not serving 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 be universal (see All/n and Beebout, 1989). But even ff 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 seventh in a series that have examined current issues on FSP participation. It

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

1Allin and Beebout (1989) review the literature.

1
population and among selected subgroups of that population that are of particular interest to

poUcymakers. 2 It is the first paper in the series to examine the influence of the 1985 Food Security

Act (FSA) on participation rates. The 1985 FSA was the first and the most major of a number of

legislative changes that expanded eligibility and increased benefits under the FSP in the late 1980s

and early 1990s. Other expansive changes included the 1987 Stewart McKinney Homeless Assistance

Act (PL 100-77), the 1988 Hunger Prevention Act (PL 100-435), and the Food, Agriculture,

Conservation, and Trade Act of 1990 (FACT).

This paper finds that the lack of response to the more generous eligibility criteria of the 1985

FSA, implemented in May 1986, caused a downward shift in participation rates between 1985 and

1988. Only a small proportion (6 percent) of the newly eligible households chose to apply for and

participate in the program. In the absence of the FSA, overall participation rates in 1988 would have

been almost the same as in 1985. In fact, among many subgroups of the eligible population,

participation rates would be even higher in 1988 than in 1985 in the absence of the FSA.

The estimates in this series of papers are more accurate than most previous ones, primarily

because the estimates of eligibles in this series are based on the Survey of Income and Program

Participation (SIPP).3 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 on the basis of 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

2The first two papers provided estimates of participation rates for August 1984 (Doyle and

Beebout, 1988) and August 1985 (Doyle, 1990). Due to the substantial methodological improvements

made to the estimation procedures since the August 1984 rates, only the August 1985 and the

January 1988 rates are strictly comparable.

3Trippe (1989) reviews the literature on FSP participation rates and estimation techniques.

2
when making actual eligibility determinations. 4 For example, SIPP contains information on monthly

(as opposed to annual) income, monthly household composition, most of the 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 1988. 5 These administrative data are more accurate than the self-reported survey

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

receipt is substantially 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, Program Operations data do not

contain information on subgroups of the participating population. Estimates for these groups were

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

(IQCS) of the U.S. Department of Agriculture. 6

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 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 to determine the food-stamp-eligible unit precisely in all

4The exception to this comparison is the 1979 Income Survey Development Program Research

Test Panel (ISDP), the precursor to SIPP.

5The Food Stamp Program Statistical Summary of Operations is a monthly record of benefits

issued and the caseload served by the Food Stamp Program.

6The IQCS is a system of ongoing case record reviews designed to 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;

this study uses active cases in the January/February 1988 samples.

3
households. Finally, a number of persons who reported SSI receipt in SIPP appeared to be ineligible

for SSI due to high income or assets, causing potential problems in the estimate of pure SSI

households who are automatically eligible for the FSP under the provisions of the 1985 1SA. In

short, although this analysis represents a considerable improvement over most previous efforts, perfect

statistics on the ISP-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 II summarizes the methodology

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

January 1988, the rates disaggregated by selected demographic and economic characteristics, and the

characteristics of those eligibles who did not participate. Chapter IV compares the January 1988

participation rates with the August 1985 participation rates provided in Doyle (1990), and assesses

the impact of the 1985 Food Security Act (ISA) on participation rates. The Appendix describes the

technical procedures used to compute participation rates and to assess the impact of the 1985 ISA

on participation rates.

4
H. METHODOLOGY AND DATA

This describes our methodology for constructing the January 1988 FSP participation rates. Three

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

discussion also describes the criteria that FSP 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

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

the number of persons eligible for the program. Policy discussions about FSP participation rates

often rely on research results 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 individual rate may be'preferable to the household rate, especially for answering questions about

the participation of a particular subgroup of the target population. For example, the proportion of

eligible elderly individuals who participate in the FSP is a better indication of the behavioral patterns

of the elderly than is the proportion of eligible households that contain an elderly member who

participates.
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. ,aa 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 signdicantly fi.om 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 households with lower

benefit levels.

B. ESTIMATION OF PARTICIPATION RATES

We used administrative data der/red from three sources to estimate the numerators in the

participation rate ratios (as described in the Append/x). The first source is the Program Operations

data, which provided the number of persons and households that were issued benefits in January 1988

and the total dollar value of the coupons issued. We adjusted these data to eliminate ineligible

participants and erroneous benefits as determined from the IQCS. Finally, we distributed the

adjusted total number of participating households and persons and their benefits across various

6
demographic and economic characteristics according to information derived from a sample of case

records active in January and February 1988.1

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 SIPP sample in January 1988. For units determined to be eligible via this simulation, we

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

adminl.qtrators use to determine eligibility and benefits.

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 legislated changes in the program. This analysis relies on the

FSP criteria in existence in January 1988, the month corresponding to the administrative and SIPP

data used.

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

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

federal poverty guidelines, which vary by household size and geographic location. 3 Under the gross

1This 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, 1990).

2The discussion that follows is an overview of the regulations that govern FSP eligibility and

benefits. The complete regulations appear in the Code of FederalRegulations(7 CFR parts 270-273).

Doyle and Beebout (1988) provide more in-depth summary of those regulations.

3The income limits are based on the official monthly poverty guidelines published by the U.S.

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

(continued...)

7
income screen, food stamp units that do not contain elderly or disabled members must also have gross

incomes below 130 percent of the same poverty guidelines. In January 1988, the program measured

gross income, 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 shelter costs.4

Two different asset limits are imposed. In 1988, a food stamp household could have countable

assets (or "resources, Mas 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 the 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 fair market 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.5

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

benefits are issued to _households,Mbut aspects of the program unit definition distinguish the term

3.(...continued)

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.

4The 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 test and an equity test. The maximum of market value,

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

8

I
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 prohibited 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 1988, the maximum food stamp benefit

in the continental United States was $290 for a family of four. Households of size one or two whose

benefit computation is less than $10 in coupon value are issued a minimum benefit of $10.

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 a separate household status for parents of minor children who

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

separately.

8The maximum food stamp benefit in 1988 was equal to the Thrifty Food Plan for a family of

four, adjusted for the size of the unit according to economies of scale.

9
m. RESULTS

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

Food Stamp Program in January 1988 (Table III. l). Based on the estimates prepared from SIPP, 12.3

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 estimates indicate that approximately $1.33 billion in coupons would have been issued to

food stamp participants had the participation rate in January 1988 been 100 percent. The FSP issued

67 percent of those benefits. This percentage is consistent with the finding (shown later) that

households entitled to higher benefits participated at higher rates than those entitled to lower

benefits.

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

the household rate, implies that, in addition to 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 Ag the

influence of potential benefits and other economic characteristics is discussed in Section B. Section

C discusses the characteristics of eligible households that did not participate in the FSP in January

1988.

A. PARTICIPATION RATES BY SELECTED DEMOGRAPHIC CHARACTERISTICS

Table Ill.2 presents household participation rates disaggregated by the size of the eligible

household. Most eligible households are relatively small, as are most participating households. Yet

the participation rate tended to be higher for larger households, with single-person households

participating at a substantially lower rate (45 percent) than all eligible households (56 percent).

11
TABLE 1TI1.

INDIVIDUAL, HOUSEHOLD, AND BENEFIT

PARTICIPATION RATES: JANUARY 1988

Participation

Participants Eligibles Rate

Individuals (1,000) 18,286 30,973 59.0%

Households (1,000) 6,882 12,292 56.0

Benefits (1,000) $890,158 $1,334,779 66.7

Average Household Size 2.7 2.5

Average per-Capita Benefit $48.7 $43.1

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

Operations, adjusted for benefits issued in error. Estimates for eligibles were derived

fi.om tabulations prepared with the January 1988 analysis file developed by MPR from

SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of 18,870

households and 2,431 households eligible for food stamps.

12
TABLE 1/1.2

HOUSEHOLD PARTICIPATION RATES BY

HOUSEHOLD SIZE: JANUARY 1988

Number of Number of

Participating Eligible Household

Household Size Households Households Participation

(number of persons) (1,000) (1,000) Rate

1 2,188 4,867 45.0%

2 1,478 2,421 61.1

3 1,291 1,913 67.5

4 941 1,435 65.6

5 520 809 64.3

6 + 463 847 54.6

Total 6,882 12,292 56.0

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 11,012 food stamp

case records from the IQCS for January and February 1988. F_,stimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed

by IV[PR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

13
Other research supports the finding that FSP participation generally increases with the size of

the eligible household. For example, Allin and Martini (forthcoming) used the August 1985 SIPP

to perform a multivariate analysis of the relationship between household characteristics and FSP

participation, and found a 20 percentage point increase ia predicted participation rates between oneand three-person households in August 1985.1

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 1988. 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

67 percent. Females participated at a slightly higher rate than males (60 percent versus 58 percent).

The participation rate for elderly individuals (34 percent) was much lower than both the overall

rate for individuals (59 percent) and the rate for adults ages 18 to 59 (57 percent). The participation

rate for disabled individuals (55 percent) was slightly lower than the overall rate for eligible

individuals and adults. Allin and Martini found similar results among elderly in the multivariate

analysis: the participation rate for households that contained elderly persons was 14 percentage

points lower than the overall rate for households. However, they found the participation rate for

households that contained disabled members was 12 percentage points higher than the overall rate

for households.

Among elderly and disabled persons, participation rates are higher for those who live alone (38

percent and 69 percent) than for those who live with others (27 percent and 49 percent). The higher

participation rates for elderly who live alone is surprising, given that overall participation rates for

all single-person households are lower than average. This finding may suggest that elderly and

IAllin and Martini conducted multivariate analyses of the relationship between the demographic

and economic characteristics of households and FSP participation. They present participation rates

computed two ways: predicted participation rates, computed on the basis of the coefficients of the

participation equation with August 1985 SIPP; and univariate participation rates, computed as the

number of self-reporting participating households divided by the estimated number of eligible

households from the August 1985 SIPP.

14
TABLE 111.3

INDIVIDUAL PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: JANUARY 1988

Number of Number of

Participating Eligible Individual

Individuals Individuals Participation

(1,000) (1,000) Rate

Elderly Age 60 or Older 1,516 4,524 33.5%

Living alone 1,009 2,626 38.4

Living with others 507 1,897 26.7

Disabled under Age 60 657 1,187 55.3

Living alone 253 368 68.6

Livingwithothers 404 819 49.4

Children under Age 18 9,298 13,375 69.5

Preschool 3,126 4,176 74.8

School-age 6,172 9,199 67.1

Adults Ages 18 to 59 7,439 13,073 56.9

Livingalone(notdisabled) 909 1,347 67.5

Gender

Male 7,468 12,851 58.1

Female 10,802 18,121 59.6

Total 18,286 30,972 59.0

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

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

distributed across subgroups of the population based on a sample of 11,012 food stamp

case records from the IQCS for January and February 1988. Estimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

15
disabled persons who live with others have greater access to outside resources that reduce their

likelihood of participating. This finding is consistent with SSI participation rates among elderly

individuals eligible for SSI that were derived from March 1988 CPS data, but contradicts the results

based on 1985 SIPP data. Based on March 1988 CPS data, Shiels et al. (1990) found that elderly

individuals who live independently were more than twice as likely as elderly who lived in the home

of others to participate in the SSI program (56 percent versus 25 percent). However, based on 1985

SIPP, they found that the participation rate among elderly individuals who lived alone was lower than

among those who lived in the home of others (50 percent versus 8I percent).

Although the FSP participation rate among elderly who live alone is higher than among elderly

who live with others, the rate among the elderly who live alone (38 percent) is substantially lower

than the rate among the total population of eligibles who live alone (45 percent), as shown in Tables

111.2 and II1.3. Allin and Martini examined which of the two effects--living alone or being elderly--

was the more important determinant of the Iow participation rate among elderly who live alone.

When they separated the two effects, they found that living alone had the larger effect. But being

elderly still had a large effect on the rate. Hence, persons who live alone have a low propensity to

participate in the F"SP,independent of whether they are elderly. To a lesser extent, persons who are

elderly, independent of the number of persons with whom they live, have a low propensity to

participate in the FSP.

Table 111.4presents household participation rates by selected demographic characteristics. These

rates also show that households containing elderly or disabled persons are less likely to participate

in the program than average. Only 35 percent of the eligible households that contained an elderly

member participated, and 55 percent of the households that contained a disabled member

participated. Among households with children, the participation rate was 71 percent, which is much

higher than the overall household rate (56 percent). The participation rate among single maleheaded food stamp households with children (56 percent) was considerably lower than the partici16
TABLE I//.4

HOUSEHOLD PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: JANUARY 1988

Number of Number of

Participating Eligible Household

Households Households Participation

Household Contains (1,000) (1,000) Rate

ElderlyAge60or Older 1,395 3,989 35.0%

Disabled under Age 60 625 1,132 55.2

Children under Age 18 4,215 5,909 71.3

Children Ages 5 to 17 3,225 4,719 68.3

Single Female Adult with Children 2,524 3,342 75.5

Single Male Adult with Children 120 216 55.8

Two or More Adults with Children a 1,570 2,351 66.8

Whitenon-HispanicHead 3,286 7,014 46.9

Blacknon-HispanicHead 2,527 3,325 76.0

HispanicHead 886 1,633 54.2

Total 6,882 12,292 56.0

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 11,012 food

stamp ease'records from the IQCS for January and February 1988. Estimates for

eligibles were derived from tabulations prepared with the January 1988 analysis file

developed by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file

contains a total of 18,870 households and 2,431 households eligible for food stamps.

aIncludes both households in which the gender of the household head is unknown and femaleheaded households that contain two or more adults.

17
pation rate among single female-headed and two-parent households with children (76 and 67 percent,

respectively). However, it should be noted that the single male-headed rate is based on a relatively

small sample.

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 1988, compared with only 47 percent of the eligible households headed by a white, nonHispanic individual. Hispanic households participated at a rate of 54 percent.

Allin and Martini's multivariate participation rates showed a much smaller gap (5 percentage

points) between black and white households, and showed almost no gap between Hispanic and white

households. Thus, holding other household characteristics (such as income) constant generates

smaller differences in participation rates by race and ethnicity than are indicated in Table 1TI'.4.

Most of the benefit rates shown in Table 111.5 are greater than the corresponding household

rates in Table 111.4, implying that, within most subgroups, households that are eligible for higher

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

benefits (less needy households). The benefit rates were substantially higher than the household rates

for the following groups:

· Households that contain an elderly member (5 percentage points higher than the

household rate for the elderly)

· Households that contain two or more adults with children (9 percentage points

higher than the corresponding household rate)

· Households headed by white non-Hispanics (13 percentage points higher than the

corresponding household rate)

In addition to implying that the FSP is serving needier households, these differences in the benefit

and household rates imply that benefit levels have a greater influence on the participation decisions

of households that contain elderly members, two parents with children, and white non-Hispanic heads

than they do on the decisions of other households.

18
TABLE 111.5

BENEFIT RATES BY SELECTED DEMOGRAPHIC

CHARACTERISTICS OF THE HOUSEHOLD:

JANUARY 1988

Benefits Paid to Potential Benefits

Participating for Eligible

Households Households Benefit

Household Contains (1,000,000) (1,000,000) Rate

Elderly Age 60 or Older $71.1 $177.7 40.0%

Disabled under Age 60 57.8 98.6 58.6

Children under Age 18 732.9 998.4 73.4

Children Ages 5 to 17 591.9 831.6 71.2

Single Female Adult with Children 402.6 556.9 72.3

Single Male Adult with Children 16.8 29.8 56.4

Two or More Adults with Children a 313.5 411.6 76.2

White non-Hispanic Head 393.4 656.8 59.9

Blacknon-HispanicHead 338.7 412.1 82.2

Hispanic Head 131.4 220.0 59.7

Total 890.2 1,334.7 66.7

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 11,012 food stamp

case records from the IQCS for January and February 1988. Estimates for eliglq)les

were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

aIncludes 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.

19
The benefit rate was lower than the household rate only for one group: households that contain

a single female adult with children (3 percentage points lower). However, this finding is not

unexpected, because the decision of many of these single-female-parent families to participate in the

FSP may be made jointly with or secondarily to their decision to participate in the AFDC program.

Hence, they would participate in the FSP regardless of their expected food stamp benefit. Moreover,

households in which all members receive AFDC are automatically eligible for food stamps.

B. PARTICIPATION RATES BY SELECTED ECONOMIC CHARACTERISTICS

Table 1_I.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. 2 In January 1988, households eligible for the smallest benefits (benefits of between 1

percent and 25 percent of the maximum allotment) had the lowest participation rate (30 percent).

In general, participation rates increased as potential benefits rose, reaching 91 percent for households

eligible for benefits of 76 percent to 99 percent of the maximum. The exception to this pattern is

a decline in the rate for households entitled to the maximum benefit allotment. This group of

households eligible for the maximum benefit includes a large proportion of households with zero

income--a group that may be subject to measurement or classification problems, as discussed below.

Table ITl.7 shows that eligible individuals in households whose income was below the poverty

level participated in the program at much higher rates (72 percent) than did individuals who lived

in l_ouseholds whose income was above the poverty level (19 percent). Similarly, 70 percent of

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

had all poor households participated (Tables III.8 and III.9).

2Allin and Beebout (1989) review the research on the relationship between benefit levels and

FSP participation.

20

I
TABLE 111.6

HOUSEHOLD PARTICIPATION RATES BY MONTHLY BENEFITS

AS A PERCENTAGE OF THE MAXIMUM FSP ALLOTMENT:

JANUARY 1988

Number of Number of

Monthly Benefit Level Participating Eligible Household

as a Percentageof Households Households Participation

Maximum Allotment (1,000_ (1,000) Rate

1-25% 993 3,324 29.9%

26.50 1,355 2,203 61.5

51-75 1,808 2,631 68.7

76-99 1,436 1,578 91.0

100 1,290 2,555 50.5

Total 6,882 12,292 56.0

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

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

distn'buted across subgroups of the population based on a sample of 11,012 food stamp

case records from the IQCS for January and February 1988. Estimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

21
TABLE ITr.7

INDIVIDUAL PARTICIPATION RATSS BY THE

RATIO OF THE GROSS INCOME OF THE INDIVIDUAL'S FOOD

STAMP UNIT TO THE MONTHLY FEDERAL POVERTY LEVEL:

JANUARY 1988

Number of Number of

Incomeas a Participating Eligible Individual

Percentageof Individuals Individuals Participation

Poverty (1,000) (1,000) Rate

Total < 100 16,843 23,510 71.6%

0 1,007 1,418 71.0

1-50 6,110 7,891 77.4

51-100 9,725 14,201 68.5

Total> 100 1,443 7,463 19.3

Total 18,286 30,973 59.0

SOURCES: Counts for participants were derived 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 11,012 food

stamp case records from the IQCS for January and February 1988. Estimates for

eligibles were derived from tabulations prepared with the January 1988 analysis file

developed by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains

a total of 18,870 households and 2,431 households eligible for food stamps.

22
TABLE 111.8

HOUSEHOLD PARTICIPATION RATES BY THE RATIO OF THE

GROSS INCOME OF THE FOOD STAMP UNIT TO THE MONTHLY

FEDERAL POVERTY LEVEL: JANUARY 1988

Number of Number of

Income as a Participating Eligible Household

Percentage of Households Households Participation

Poverty (1,000) (1,000) Rate

Total < 100 6,333 9,022 70.2%

0 477 682 70.0

1-50 2,020 2,574 78.5

51-100 3,836 5,766 66.5

Total > 100 549 3,270 16.8

Total 6,882 12,292 56.0

SOURCES: Counts for participants were derived 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 11,012 food

stamp case records from the IQCS for January and February 1988. Estimates for

eligibles were derived from tabulations prepared with the January 1988 analysis file

developed by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains

a total of 18,870 households and 2,431 households eligible for food stamps.

23
TABLE III.9

BENEPTF RATES BY THE RATIO OF THE GROSS INCOME OF THE

FOOD STAMP UNIT TO THE MONTHLY FEDERAL POVERTY LEVEL:

JANUARY 1988

Benefits Paid to Potential Benefits

Income as a Participating for Eligible

Percentage of Households Households Benefit

Poverty (1,000,000) (1,000,000) Rate

Total _..<100 $864.3 $1,205.7 71.7%

0 78.6 109.3 72.0

1-50 400.1 514.1 77.8

51~100 385.6 582.3 66.2

Total > 100 25.9 129.1 20.0

Total 890.2 1,334.8 66.7

SOURCES: Counts for participants were derived 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 11,012 food

stamp case records fxom the IQCS for January and February 1988. Estimates for

eligibles were derived from tabulations prepared with the January 1988 analysis file

developed by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains

a total of 18,870 households and 2,431 households eligible for food stamps.

24
All three rates (individuals, households, and benefits) were 77 to 79 percent for households

whose income was between 1 and 50 percent of the poverty level, and declined rapidly as income

increased, reaching a low of 17 to 20 percent among households whose incomes were above the

poverty level. Households and persons in the highest-income class were eligible only for small

amounts of assistance; thus, their low participation rate is not surprising. Persons in eligible

households whose incomes were above the poverty Ievel were eligible for $17 on average in January

1988, while persons in households whose incomes were below the poverty level were eligible for $51

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

participation rates decline as family income increases. For example, Shiels et al. (1990) found that

based on 1985 SIPP, the rate of participation among elderly persons eligible for SSI declined to a low

of about 26 percent for those whose monthly countable income was $500 or more.

Individuals in eligible households that did not receive cash income participated at a rate of 71

percent. Similarly, households that did not receive any income participated at a rate of 70 percent,

and their benefit rate was 72 percent.

A priori, one would expect that households that do not receive any income would participate at

the highest rates. Table 111.8 shows that participation among the zero-income households is 9

percentage points lower than the rate among households whose income is between 1 and 50 percent

of the poverty level (but 14 percentage points higher than the average rate). Studies based on other

surveys have also found unusually low rates among zero-income households. For example, Czajka

(1981), using the 1979 Income Survey Development Program (ISDP), found that the univariate

participation rate among zero-income households was 38 percentage points lower than the rate

among households whose income was 1 to 50 percent of the poverty level (and 26 points lower than

the average rate).

Allin and Martini's findings exhibited the same pattern. Using 1985 SIPP, Allin and Martini

found that the univariate participation rate among zero-income households was 43 percentage points

25
below the rate among households whose income was between 1 and 50 percent of the poverty level

(and 19 percentage points below the average). When they controlled for the effects of other

characteristics, they found the same but less extreme pattern. The rate for zero-income households

was 18 percentage points below the rate among households whose income was between 1 and 50

percent of the poverty level (and 4 percentage points below the average). Because no household can

exist on zero income for a long per/od of time, and since studies have shown that measurement

problems are prevalent in the zero-income group, the eligible units with zero income probably include

households that are subject to some form of reporting or measurement error. 3 Hence, the zeroincome households are overrepresented, which biases the participation rate estimates downward.

Another reason that participation rates are unusually low among this group is that some households

may have zero income for a very short period of time (one or two months). Dur/ng a short period

of economic distress, households may be less likely to seek benefits because they may be able to draw

on savings or receive help from friends or relatives.

Table 1II.10 presents household participation rates among those with earnings, SSI, public

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

earnings is much lower than the overall rate (34 percent versus 56 percent). 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.

3Selected studies have shown that households classified as zero income often represent

measurement or classification problems rather than households with no source of economic support,

and that is why they do not seem to behave in the expected manner. In a case-by-case study of

families with annual reported income below $500 in the March 1972 CPS, Bums (1974) found that

although most had low incomes, approximately 70 percent represented some type of conceptual or

measurement problem. For example, approximately 28 percent of the families or indMduals

represented special living arrangements, support for which was provided from outside the household

or payment in kind. In another study using matched CPS and Internal Revenue Service (IRS) tax

data, the families with zero CPS wage or salary income had reported an average income of $3,911

to the IRS (Herriot and Spiers, 1975).

26

I
TABLE m. 10

HOUSEHOLD PARTICIPATION RATES BY SELECTED

SOURCES OF INCOME: JANUARY 1988

Number of Number of

Participating Eligible Household

Households Households Participation

Source of Income (1,000'} ( 1,000] Rate

EarnedIncome 1,419 4,182 33.9%

SSI 1,431 1,910 75.0

Elderly in the unit 836 1,188 70.3

Noelderlyin theunit 596 722 82.6

Public Assistance a 3,448 3,120 110.5

AFDC 2,710 2,408 112.5

Otherwelfare 777 786 98.9

Unemployment Compensation 158 340 46.4

Total 6,882 12,292 56.0

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 11,012 food stamp

case records f_om the IQCS for January and February 1988. Estimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

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

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

27
The household participation rate for food stamp households that received SSI payments--75

percent--exceeded the overall participation rate by 19 percentage points. Households in both the

numerator and the denominator of this participation rate exclude persons who receive SSI in cashout

states, in which cash is issued through the SSI program in lieu of food stamps.

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

a much higher rate--70 percent--than all households with elderly (35 percent, from Table 4).4 The

higher FSP participation rate for SSI households that contain elderly persons may be due to the Iow

participation rate of those who were not poor enough to qualify for SSI. Such individuals are also

entitled to small food stamp benefits.

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 82 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 Allin and Martini,

forthcoming; and ,A!lin and Beebout, 1989). For example, Allin and Martini found that households

that receive public assistance are almost three times more likely to participate in the FSP than

households that do not.

C. THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPANTS

The prec._ing sections focused on households that participated in the Food Stamp Program.

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

4Shiels et al. (1990) estimated that the rate of SSI participation by elderly individuals eligible for

the SSI program was 61 percent, based on 1985 SIPP data on eligibles and program data on the

number of participants. This rate is considerably higher than the rate of FSP participation by elderly

individuals eligible for food stamps (34 percent, from Table 3).

28

l
In January 1988, about 5.4 million of the 12.3 million households eliglq>le for the FSP were not

participating (see Table III. 11). These households tended to have relatively high incomes and were

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

· About half had incomes above the poverty level.

· 43 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; and Allin and Martini,

forthcoming), those who are eligible for lower benefits tend to participate in the FSP at lower-thanaverage 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 whose 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). These characteristics also are consistent

with the findings in this paper that participation among households with elderly (35 percent) and

earners (34 percent) is below average. Although a relatively large proportion of eligible

nonparticipants had income above the poverty level, about half had income below the poverty line,

and about half of those were eligible to receive the maximum allotment. Overall, about a quarter

of all nonparticipants were eligible for the maximum monthly benefit. Table 111.12 shows the

characteristics of those nonparticipating households in poverty eligible for the maximum benefit. Most

of these nonparticipating poor households were nonelderly households without earnings (53 percent),

and most of these were without children (30 percent of 53 percent). Most of these nonparticipants

were single nonelderly persons who tend to have very low participation rates.

Table III. 13 shows the overall demographic and economic characteristics of eligible

nonparticipating households. Overall, almost half of the eligible nonparticipating households

29
TABLE III.11

CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING HOUSEHOLDS

ABOVE AND BELOW POVERTY: January 1988

Percent Distribution of Eligible Nonparticipating Households a

Below Poverty Above Poverty Total

Benefit Level as a Percentage of

Maximum Allotment

1-25% 7.2% 35.9% 43.1%

26-50 6.3 9.4 15.7

51-75 12.0 3.2 15.2

76-99 1.7 0.9 2.6

100 22.6 0.8 23.4

Total 49.7 50.3 100.0

Composition

Elderlypresent: 21.4 26.6 48.0

Livingalone 12.4 17.3 29.6

Livingwithothers 9.0 9.3 18.3

Nonelderly households with earnings: 25.0 20.3 45.3

Withchildren 16.3 15.0 31.2

Withoutchildren 8.8 5.3 14.1

Other 3.3 3.4 6.7

Total 49.7 50.3 100.0

Eligible Nonparticipating:

Persons(thousands) 6,667 6,020 12,687

Households(thousands) 2,689 2,721 5,410

Benefits (millions) $341 $103 $445

SOURCE: 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 11,012 food stamp

case records from the IQCS for January and February 1988. Estimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

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

participants.

apercents may not sum to 100 due to rounding error.

30
TABLE m.12

THE CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING

HOUSE_IOLDS BF_LOW POVERTY THAT ARE ELIGIBLE FOR

MAXIMUM FOOD STAlV[P BENEFIT: JANUARY 1988

Eligible Nonparticipating Households Below Poverty

that are Eligible for Maximum FSP Benefit

Population (1,000) Distribution of Households

Composition

Elderly present: 366.3 30.0

Living alone 268.8 22.0

Living with others 97.5 8.0

Nonelderly householdswithearnings: 210.5 17.2

Withchildren 61.3 5.0

Withoutchildren 149.3 12.2

Nonelderly householdswithout earnings 644.3 52.8

Withchildren 277.5 22.7

Withoutchildren 366.8 30.0

Income as a Percentage of Poverty a

0 204.7 16.8

1-50 649.3 53.2

51-100 367.2 30.1

Total Households 1,221.2 100.0

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

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

d/stn'buted across subgroups of the population based on a sample of 11,012 food stamp

case records from the IQCS for January and February 1988. Estimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of

18,870 households and 2,431 households eligible for food stamps.

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

participants.

apercents may not sum to totals due to rounding error.

31
TABLE I11.13

DEMOGRAPHIC AND ECONOMIC CH.ARA_RISTI_ OF ELIGIBLE

NONPARTICIPATING HOUSEHOLDS: January 1988

Population (1,000) Distribution of Households

Household Size a

1 2,679 49.5%

2 943 17.4

3 622 11.5

4 494 9.1

5 289 5.3

6+ 384 7.1

Household Contains: b

Elderly 2,594 48.0

Elderlylivingalone 1,603 29.6

Disabled 507 9.4

Disabledunderage60 112 2.1

Childrenunderage18 1,693 31.3

Childrenages5 to 17 1,494 27.6

Singlefemalewithchildren 817 15.1

Singlemalewithchildren 95 1.8

Twoor moreadultswithchildren 781 I4.4

Singlenonelderlyand nondisabledadult 438 8.1

White non-Hispanic head 3,727 68.9

Black non-Hispanic head 798 14.8

Hispanichead 748 13.8

Income as a Percentage of Poverty a

Total _< 100% 2,689 49.7

0 205 3.8

1-50 554 10.2

51~100 1,930 35.7

Total > 100% 2,721 50.3

Household Income Includes: b

Earnings 2,763 51.1

SSI 478 8.8

Unemployment compensation 182 3.4

Total Households 5,410 100.0

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

Operations, adjuste, d for benefits issued in error. Counts ot participants were dism'buted

across subgroups of the population based on a sample of 11,012 k/od stamp case records

trom the IQCSfor January and February 1988. Estmaates for eligibles were derived from

tabulationsprepared with the January 1988 analysis file develoL__,d by MPR from SIPP,

1986 and 1987 panels. The SIPP analysis file contains a total of 18,870 households and

2,431 households eligible for food stamps.

NOTE: Eli_'ble nonparticipants are computed as the difference between eligibles and

participants.

apercents may not sum to totals due to rounding error.

bpercents do not sum to 100 became households may exhibit more than one of the characteristics

listed. Note that the elderly and the disabled categories are not mutually exclusive.
consisted of a single adult, just under one-third contained children, and over two-thirds were headed

by a white non-Hispanic individual The eligible nonparticipating households with children (31

percent) were almost evenly divided into those headed by a single female (15 of 31 percent) and

those headed by two or more adults (14 of 31 percent). Only 2 percent of the eligible

nonparticipating households with children were headed by a single male.

Only 4 percent of the eligible nonparticipating households reportedly had no income, and may

have been subject to some form of measurement error. Very few received unemployment

compensation (relatively few eligible households receive this source of income), while 9 percent

received SSI.

33
IV. COMPARISONS OF AUGUST 1985 AND JANUARY 1988

PARTICIPATION RATES

Those interested in FSP policy often wish to know whether participation rates have changed over

time. This chapter compares the participation rates in August 1985 as derived by Doyle (1990) with

the participation rates in January 1988, as derived in this report. Because the same procedures were

used to estimate the 1985 and 1988 participation rates, the rates are directly comparable.

Fluctuations in participation rates can be caused by changes in FSP legislation, the economy, or

other programs--changes that affect the size and demographic characteristics of the eligible and

participating population. For example, changes in FSP legislation that expand eliga'bility requirements

may increase the number of eligibles immediately as more persons meet the financial eligibility

criteria. The number of participants may also increase, but only to the extent that potential new

recipients learn about the changes and decide to apply for food stamps. Changes in the economy can

also affect the participation rate. For example, a recovering economy may reduce the number of

eligibles as persons obtain jobs or increase their purchasing power. The number of participants may

also decline, but because the participation rate among those who lose their eligibility in a recovering

economy tends to be low (they tend to be at the margin of financial eligibility) the decline in the

number of participants is usually less than the decline in the number of eligibles. Finally, since most

food stamp recipients participate in other social welfare programs, changes in the eligibility

requirements or benefit levels of other programs can also affect FSP participation rates.

Between 1985 and 1988, Congress passed several pieces of legislation that contained provisions

to expand the size of the eligible population. The Food Security Act (FSA) of 1985, implemented

in May 1986, was the most major of the legislative changes that expanded eligibility under the FSP.

In addition to the 1985 FSA, the 1987 Stewart B. Mcldnney Homeless Assistance Act (PL 100-77),

the 1988 Hunger Prevention Act (PL 100-435), and the 1990 FACT legislated smaller expansions in

35
eligibility and benefit levels and facilitated application procedures. 1 In addition to legislative changes

between 1985 and 1988, the national economy was recovering from the recession of the early 1980s,

and Medicaid began expansions whose likely effect was to increase participation in the FSP.

This chapter shows that participation rates declined slightly between 1985 and 1988 due to the

lack of an immediate response to the more generous eligibility criteria introduced under the 1985

Food Security Act. Below, we examine the overall change in participation rates between August 1985

and January 1988, and examine the major reasons for the change. We then discuss the characteristics

of those newly eligible that caused the change in participation rates, and examine the change in

participation rates among demographic and economic subgroups of the eligible population. Finally,

we examine changes in the characteristics of program eligibles who did not participate in the program

and summarize the chapter.

A. CHANGES IN AGGREGATE PARTICIPATION RATES BETWEEN 1985 AND 1988

The total number of eligibles increased between August 1985 and January 1988 while the total

number of participants remained relatively constant, thus lowering participation rates (Table IV.l).

The number of eligible persons increased fi'om 28.9 million to 31.0 million (by 7 percent) while the

number of participants declined slightly, from 18.6 million to 18.3 million Coy about 1 percent).

Similarly, the number of eligible households increased by 6 percent while the number of participating

households changed by less than 1 percent. Finally, benefits that would have been issued had

participation among the eligibles been 100 percent increased by 24 percent, while the benefits actually

received by participants increased by 10 percent. The increase in the total number of eligibles

combined with the very slight change in the total number of participants lowered the participation

rate between 1985 and 1988 from 64.3 percent to 59.0 percent for individuals, from 59.4 percent to

56.0 percent for households, and from 75.3 percent to 66.7 percent for total potential benefits.

1Of the three additional legislative changes, only the 1987 Stewart B. McKinney Homeless

Assistance Act was implemented between August 1985 and January 1988, and it affected a relatively

small group of households.

36

I
TABLE IV. 1

COMPARISON OF PARTICIPATION RATES BETWEEN 1985 AND 1988,

REFLECTING THE IMPACT OF THE 1985 FOOD SECURITY ACT

January 1988

August 1985 January 1988 January 1988 Implicit Participation Rate

(Actual) 0mre-FSA) (Actual) Among Newly Eligible

Participants Eligibles Participation Participants Eligibles Participation Participants Eligibles Participation Participation

(1,000) (1,000) Rate (1,000) (1,000) Rate (1,000) (1,000) Rate Rate

Individuals 18,560 28,884 64.3% 18,158 29,039 62.5% 18,286 30,973 59.0% 6.6%

Households 6,894 11,604 59.4 6,829 11,426 59.8 6,882 12,292 56.0 6.1

Benefits $807,265 $1,072,262 75.3 $878,477 $1,241,738 70.7 $890,158 $1,334,779 66.7 6.9'

c.o SOURCE: January 1988 counls for participants are from the Food Stamp Program Statistical Summary of Operations, adjusted for benefits issued in error. Estimates for eligibles

were derived from tabulations prepared with the January 1988 analysis file developed by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total

of 18,870 households and 2,431 households eligible for food stamps. August 1985 values and rates were derived from Table 1 of Doyle (1990).

NOTE: The implicit participation cate among the newly eligible persons and households under the FSA was computed as the ratio of the newly participating in January 1988 to

the newly eligible in January 1988. Newly eligible persons and households were computed as the difference between the number of actual and pro-FSA eligibles in January

1988. Similarly, newly participating persons and households were computed as the difference between the number of actual and pre-FSA participants in January 1988.

aThe benefit participation rate among newly eligible households was computed as the ratio of benefits issued lo newly participating households in January 1988 ($4,629,000), to potential benefits

issued to newly eligible households in January 1988 ($67,479,033). Estimates of benefits to newly participating and newly eligible households were derived from special tabulations from thc

Winter IQCS file and the January 1988 SIPP analysis file.
1. Major Reasons for the Shift in FSP Participation Rates between 1985 and 1988

The major reason for the downward shift in participation rates between 1985 and 1988 was a lack

of participation among those who were made eligible by the more generous eligibility criteria

introduced under the 1985 Food Security Act. Among numerous other changes, the 1985 FHA-

· Granted automatic eligibility to households in which all members receive AFDC

or SSI

· Separated the shelter and child care deduction limits

· Increased the asset limit for households that do not contain elderly members (from

$1,500 to $2,000)

· Raised the asset limit for households in which elderly were living alone (from

$1,500 to $3,000) 2

· Raised the earnings deduction rate (from 18 percent to 20 percent)

To examine the influence of the 1985 FSA on the January 1988 participation rates, we simulated

the number of eligibles and participants in 1988 in the absence of the FSA eligibility changes and

compared the results with the number of actual eligibles and participants (the Appendix provides

details on the methodology). That is, we asked, "What would the participation rates be in January

1988 ff the pre-FSA rules were still in effect?" We also asked, "What is the participation rate among

those who became eligible under the FSA?"

The results showed that Iow participation rates among those made eligible by the FSA accounts

for almost all of the decline in participation rates among persons and households. As shown in Table

IV.l, participation rates in January 1988 would have been almost the same as the August 1985 rates

had the pre-FSA rules remained in effect. The January 1988 household participation rate would have

been 59.8 percent in the absence of the FSA (compared with 59.4 percent in August 1985), and the

January 1988 person participation rate would have been 62.5 percent (compared with 64.3 percent

2Formerly, only households that contained elderly members and two or more persons could

qualify for the higher limit.

38

I
in 1985). As also shown in Table IV.l, the more generous eligibility criteria increased the number

of eligible households by 866,000, or almost 8 percent, but increased the number of participating

households only by 53,000 or less than 1 percent. Hence, the participation rate among newly eligible

households was very Iow--only 6 percent, compared with a participation rate of 56 percent among all

eligible households. We found similarly low participation rates among newly eligible individuals (7

percent) and potential benefits (7 percent). Thus, the FSA legislation expanded eligibility for the

FSP, but most of those who became eligible did not participate, generating an overall decline in

participation rates.

2. Other Influences on FSP Participation Rates

Although the 1985 FSA was the major influence on the change in participation rates between

1985 and 1988, changes in the economy and changes in other social programs may have also

influenced the rates. Between August 1985 and January 1988, the national economy was recovering

from the recession of the early 1980s. The seasonally adjusted national unemployment rate declined

steadily during this period, from 7.1 percent in August 1985 to 5.8 percent in January 1988. Similarly,

the poverty rate declined from 14.0 percent in 1985 to 13.1 percent in 1988. However, other

measures paint a less rosy picture of the economy, at least in some areas of the country. For

example, most of the New England states felt the effects of a recession as early as FY88. A rise in

unemployment ia these states was offset by a decline in unemployment in most other states, resulting

in an overall decline. Moreover, prices were rising nationwide between 1985 and 1988. In particular,

prices for food-at-home rose by 17 percent between 1985 and 1988. 3 Hence, although the

traditional national measures of the economy indicate a recovery during this period, the economic

status of many low-income households may have declined between 1985 and 1988. Hence, the overall

impact of the economy on the participation rates is not clear.

3price increases are based on the change ia the annual Consumer Price Index for Urban

Consumers (CPI-U) for all items and for food at home from the April 1986 and the April 1989

Monthly Labor Review.

39
Expansions in the Medicaid program may have also influenced the change in FSP participation

rates. Medicaid expansions during the late 1980s increased the number of Medicaid recipients and

encouraged Medicaid recipients to join the FSP. McConnell (forthcoming) estimated that the

number of Medicaid-recipient households that entered the FSP increased by about 56 percent

between FY87 and FY90. The increase in Medicaid recipients who joined the FSP may have

dampened the observed decline in the participation rate.

3, Changes in FSP Participation Since 1988

While data on the change in the number of eligibles since 1988 are not yet available, FSP

caseload data show that the number of participants began to increase in the third quarter of fiscal

year 1989 (FY89.3). Between FY89.2 and FY90.2, participation in the FSP increased by over 1

million persons (over 5 percent), reaching 20 million in March 1990 for the first time since early 1985.

FSP participation has increased even more rapidly since FYg0.2, reaching 25 million in December

1991. Corson and McConnell (1990) and McConnell (forthcoming) analyzed the reasons behind the

increase in FSP participation between FY89.2 and FY90.2 and found that, while no one factor could

have been the sole determinant of the increase, two factors explain a large proportion of the total

increase. First, changes in the Medicaid program brought more persons into the Medicaid program

and encouraged Medicaid recipients to join the FSP. Second, increases in the unemployment rate

and the number of working poor in certain areas of the country increased participation in those areas

(such as the Middle Atlantic and New England states). If forthcoming data show that the subsequent

increase in the number of eligibles is less than the observed increase in the number of participants

since 1988, then the participation rate will rise.

B. IMPACT OF THE FSA ON DISAGGREGATED PARTICIPATION RATES

As stated earlier, the minimal response to the more generous eligibility criteria of the 1985 FSA

lowered overall participation rates. In this section, we discuss the impact of the FSA on participation

40
rates among subgroups of the eligible population. First, we describe which subgroups of the eligible

population in 1988 were affected to the greatest extent by the provisions of the la'SA. Second, we

discuss the resulting impact of the FSA on disaggregated participation rates, comparing the rates

across the demographic and economic characteristics of the eligible population between August 1985

and January 1988. Finally, we describe the change in the distribution of the eligible nonparticipating

population between 1985 and 1988.

1. Subgroups of the Eligible Population Affected to the Greatest Extent by The FSA

Of the five major provisions of the FSA listed in Section ,4.1, the two provisions that raised the

asset limits affected the greatest number of households and thus had the greatest impact on

participation rates. Appendix Table A.2 shows that 48 percent of the newly eligible households were

made eligible by the increase in the asset limit on nonelderly households from $1,500 to $2,000, and

37 percent were made eligible by the increase in the asset limit on single elderly households from

$1,500 to $3,000. Hence, almost 90 percent of the newly eligible households were made eligible by

the higher asset provisions. Appendix Table A.2 also shows that 30 percent of the newly eligible

households were made eligible by the automatic eligibility criterion for households in which all

members receive AFDC or SSI. 4 Only 4 percent were made eligible by the higher earnings

deduction. 5

The characteristics of the newly eligible households reflect those households on which the FSA

had the greatest impact. As shown in Table IV.2, 40 percent of newly eligible households are elderly

who live alone (compared with 21 percent among all eligible households). Elderly who live with

others account only for 9 percent of the newly eligible population. Households that contain

nonelderly members represent a smaller group among the newly eligible (51 percent) than among all

'*Asdiscussed in the Appendix the simulation probably overestimates the impact of the automatic

eligibility provision.

5Households could have been made eligible by more than one provision. Hence, the sum of the

impact of individual provisions is greater than the total impact.

41
TABLE IV.2

CHARACTERISTICS OF HOUSEHOLDS BECOMING NEWLY

ELIGIBLE UNDER THE 1985 FOOD SECURITY ACT

Participation Rate Among

January 1988 January 1988 January 1988

Total Eligible Households Newly Eligible Houaeholds Newly Eligible Households

Number Number

Households with: (1,000) Percent (1,000) Percent Percent

Elderly 3,989 32.6% 428 49.4% 5.5%

Living alone 2,626 2lA 348 40.2 5.5

Living with others 1,363 11.2 80 9.3 5.8

Receiving public assistance 182 1.5 20 2.3 7.2

Nonelderly 8,302 67.4 438 50.6 6.7

With children 5,676 46.2 283 32.7 6.7

Receiving public aaaiatance 2,938 24.0 155 12.3 10.3

With earnings 3,814 31.0 244 28.2 7.6

Single person 4,867 40.4 468 54.0 4.7

Income above poverty 3,270 26.1 452 52.2 8.5

level

Income below poverty 9,022 73.9 414 47.8 3.6

level

Total 12,292 100.0 866 100.0 6.1

SOURCE: January 1988 estimates for eligibles were derived from tabulations prepared with the January 1988 analysis file developed

by MPR from snaP, 1986 and 1987 panels. The SIPP analysis file contains a total of 18,870 households and 2,431

households eligible for food stamps.

NOTE: The participation rate among the newly eligible households under the FSA was computed aa the ratio of the newly

participating and their benefits in January 1988 to the newly eligible and their benefits in January 1988. Newly eligible

households were computed aa thc difference between the number o[ actual and pre-FSA eligibles in January 1988. Newly

participating households were computed aa the difference between the number of actual and prc-FSA participants in January

1988.

42
eligibles (67 percent). However, among newly eligible households that contain nonelderly members,

most have children (33 percent of 51 percent) and receive earnings (28 percent of 51 percent), but

do not receive public assistance (12 percent of 52 percent receive public assistance). Furthermore,

the income of about half of the newly eligible population was greater than the poverty level (52

percent, compared with 26 percent among all eligibles). Hence, the increase in the eligible

population is concentrated largely among single elderly persons, nonelderly with earnings and

children, and households whose income is above the poverty level.

As shown in Table IV.2, participation rates among all groups of newly eligible households are

uniformly low-between 4 and 10 percent (compared with 56 percent among all eligible households).

The highest participation rates among newly eligible households are among those that contain

nonelderly members who receive public assistance (10 percent), and the lowest rates are among

households whose income is below the poverty level (4 percent). Hence, the provisions of the FSA

increased newly eligible households that comprise single elderly, that contain nonelderly with earnings

and children, and whose income is above the poverty level, and all these groups had very low

participation rates. Below, we discuss the impact of the FSA on the change in participation rates

among different subgroups.

2. The Impact of the FSA on the Change in Disaggregate Participation Rates from 1985 to 1988

Tables IV.3 and IV.4 compare household participation rates in 1985 and 1988 by the

demographic and economic characteristics of households and show the impact of the FSA on the

change in rates. The second column in Tables IV.3 and IV.4 shows what the participation rates of

each of the subgroups would have been in the absence of the FSA. The last two columm show the

percentage change in participation rates between 1985 and 1988 (1) due to the provisions of the FSA,

and (2) in the absence of the provisions of the FSA.

In the absence of the FSA, FSP participation rates among many subgroups would have increased

between 1985 and 1988, as shown in the last column in Table IV.3. For example, participation rates

43
TABLE IV.3

COMPARISON OF HOUSEHOLD PARTICIPATION RATES BY SELECTED

DEMOGRAPHIC CHARACTERISTICS: AUGUST 1985 AND JANUARY 1988

Percent Change in Participation Rates

August 1985 January 1988 January 1988 Percent Change Percent Change

Demographic Characteristic (Actual) (Pre-FSA) (Actual) Overall Due to FSA in the Absence of FSA

Household Contains:

ElderlyAge60or Older 37.3% 38.5% 35.0% -6.2% -9.1% 3.2%

DisabledunderAge60 46.7 61.1 55.2 18.2 -9.7 30.8

ChildrenunderAge18 73.9 74.9 71.3 -3.5 -4.8 1.4

SinglePerson 49.8 49.2 45.0 -9.6 -8.5 -1.2

Single Female Adult

_1 withChildren 74.8 77.5 75.5 1.0 -Z6 3.6

SingleMaleAdultwithChildren 45.9 62.8 55.8 21.6 -11.1 36.8

Two or More Adults with Children a 75.3 72.1 66.8 -11.3 -7.4 -4.2

Whitenon-HispanicHead 48.9 51.5 46.9 -4.1 -8.9 5.3

Black non-Hispanic Head 77.1 77.8 76.0 -1.4 -Z3 0.9

HispanicHead 54.8 55.4 54.2 -1.1 -2.2 1.1

Total 59.4 59.8 56.0 -5.7 -6.4 0.7

SOURCES: January 1988 rates were derived from Table 4 of this report. August 1985 rates were derived fxom Table 2 and Table 4 of Doyle (1990).

NOTE: The percent change in participation rates due to the FSA is the percent change between pre-FSA rates and actual rates in January 1988. The

percent change in participation rates/n the absence of the FSA is the percent change between actual rates in 1985 and pre-FSA rates in 1988.

alncludes both households in which the gender of the household head is unknown and female-headed households that contain two or more adults.
TABLE IV. 4

COMPARISON OF HOUSEHOLD PARTICIPATION RATES

BY SELECI_D ECONOMIC CHARACTERISTICS:

AUGUST 1985 AND JANUARY 1988

Percent Change in Participation Rates

August 1985 January 1988 January 1988 Percent Change Percent Change

Economic Characteristic (Actual) (Pre-FSA) (Actual) Overall Due to FSA in the Absence of FSA

Monthly Benefit Level As

A Percent of Maximum Allotment

1-25 % 30.0% 32.1% 29.9% -0.3% -6.9% 7.0

26-50% 58.3 62.8 61.5 5.5 -2.1 7.7

51-75% 86.0 77.0 68.7 -20.1 -10.8 -10.5

76-99% 89.1 97.0 91.0 Z 1 -6.2 8.9

100% 64.3 53.0 50.5 -21.5 -4.7 -17.6

Income as a Percentage of Poverty

Total < 100% 74.6 73.4 70.2 -5.9 -4.4 -1.6

0 69.0 73.1 70.0 -1.4 -4.2 5.9

1-50 92.7 81.9 78.5 -15.3 -4.2 -11.7

51-100 7.2 69.6 66.5 -1.0 -4.5 3.6

Total > 100 14.8 18.1 16.8 13.5 -7.2 22.3

Source of Income

Earned income 36.8 35.7 33.9 -7.9 -5.0 -3.0

SSI: 65.7 82.2 75.0 14.2 -8.8 25.1

Elderly in the unit 66.6 77.9 70.3 5.6 -9.8 17.0

No elderly in the unit 64.1 89.4 82.6 28.9 -7.6 39.5

Public assistance: 115.5 114.7 110.5 -4.3 -3.7 -0.7

AFDC 118.5 117.6 112.5 -5.0 -4.3 -0.8

Other welfare 97.4 101.0 98.9 1.5 -2.1 3.7

Unemploymentcompensation 75.6 52.2 46.4 -38.6 -11.1 -31.0

Total 59.4 59.8 56.0 -5.7 -6.4 0.7

SOURCES: January 1988 rates were derived from Table 4 of this report. August 1985 rates were derived from Table 2 and Table 4 of Doyle (1990).

NOTE: The percent change in participation rates due to the FSA is the percent change between pre-FSA rates and actual rates in January 1988. The percent

change in participation rates/n the absence of the FSA is the percent change between actual rates in 1985 and pre-FSA rates in 1988.
among households that contain elderly members and households that contain children would have

increased (by 3 percent and 1 percent, respectively) in the absence of the FSA instead of decreasing

(by 6 percent and 4 percent). In other words, the more generous provisions of the FSA were

responsible for all of the decline in participation rates among households that contain elderly or

children. Similarly, almost all of the decline in the participation rates of single-person households can

be attributed to the FSA, which increased the number of eligible single persons whose assets were

high and participation rates were low. In the absence of the FSA, the participation rate among

single-person households would have declined only about 1 percent, instead of almost 9 percent.

Participation rates among other subgroups increased between 1985 and 1988 despite the more

generous provisions of the P-SA. For example, participation rates among households that contain

disabled persons (under age 60) increased by 18 percent overall. In the absence of the FSA, the rates

would have increased even more. Similarly, the participation rates of households comprised of single

male adults with children were higher in 1988 than in 1985, but the participation rate would have

been even higher in the absence of the FSA (however, because the sample size of this latter group

was very small, the results should be viewed w/th caution).

Table IV.4 shows that the FSA also had a large influence on participation rates according to the

economic characteristics of eligible households. For example, in the absence of the FSA,

participation rates for households that receive small benefits (1 to 25 percent of the max/mum

allotment) would have increased by 7 percent (rather than not changing at all). For households that

receive large benefits (between 76 and 99 percent of the maximum allotment), participation rates

would have increased by 9 percent in the absence of the FSA (rather than by only 2 percent).

However, for households that receive between 51 and 75 percent of the maximum allotment, and for

those at the maximum allotment, participation rates would have declined anyway, due to other factors.

These factors may have included a worsening economy (and lower incomes) for some low-income

households, despite an improving economy overall, as discussed earlier.

46
The provisions of the FSA accounted for most of the decline in participation rates among

households whose income was less than the poverty level Ia the absence of the FSA, participation

rates among households in poverty would have declined by less than 2 percent (rather than by 6

percent). The participation rates of households whose income was greater than the poverty level

increased, but would have increased even more in the absence of the FSA. Among households with

earnings and households with public assistance, most of the decline in rates is due to the FSA.

Participation rates among households with earnings would have declined only by 3 percent (rather

than by 8 percent), and the rates for households that receive public assistance would have changed

by less than 1 percent in the absence of the FSA. Participation rates among SSI households would

have increased to an even greater extent in the absence of the FSA. Finally, the large decline in the

participation rates of households that received unemployment compensation, was largely due to

factors other than the FSA, but because the sample size of this group is very small the results must

be viewed with caution. Overall, participation rates would have remained about the same (at about

60 percent) had the FSA not been passed, and the rates among most groups would have increased

or changed very little in the absence of the FSA.

3. Change in the Distribution of Eligible Nonparticipating Households between 1985 and 1988

As shown in Table tv.5, the distribution of eligible households that did not participate in the FSP

did not change much between 1985 and 1988. As in 1985, a relatively large proportion of eligible

households that did not participate in 1988 contained elderly persons (48 percent), had high incomes

(50 percent), or were eligible for small benefits (43 percent).

The distribution of newly eligible nonparticipating households is also simfiar to the distribution

of total eligible nonparticipating households in both 1985 and 1988. However, several groups of

newly eligible households in 1988 show a slightly higher proportion of nonparticipants, reflecting the

types of groups that were affected to the greatest extent by the FSA. For example, the proportion

of nonparticipating newly eligible households that contained elderly persons who lived alone is about

47
TABLE IV.5

COMPARISON OF THE DEMOGRAPHIC AND ECONOMIC

CHARACTERISTICS OF ELIGIBLE NONPARTICIPATING HOUSEHOLDS:

AUGUST 1985 AND JANUARY 1988

Percent Distribution of Eligible Nonparticipating Households

January 1988

August 1985 January 1988 NewlyEligible

Household Contains b

Elderly 5Z7% 48.0% 49.7%

Elderly living alone 32.4 29.6 40.4

Disabled 11.5 9.4 14.1

Disabled living alone 3.7 2.1 4.8

Children under age 18 30.5 31.3 35.7

Single person 49.6 49.5 54.8

Singlefemalewithchildren 17.1 15.1 10.8

Singlemalewithchildren 2.4 1.8 3.0

Twoor moreadultswithchildren 11.0 14.4 22.0

White non-Hispanic head 73.2 68.9 83.4

Black non-Hispanic head 15.8 14.8 9.7

Hispanichead 12.4 13.8 4.7

Income as a Percent of Poverty

Total < 100% 46.7 49.7 49.1

0 4.5 3.8 3.7

1-50 3.9 10.2 13.3

51-100 38.3 35.7 32.2

Total > 100% 53.4 50.3 50.9

Benefit as a Percent of

Maximum Allotment

1 - 25% 54.8 43.1 31.8

26-50% 19.5 15.7 5.2

51 - 75% 5.8 15.2 34.9

76-99% 3.8 2.6 12.1

100% 16.2 23.4 16.0

Household Income Includes b

Earnings 49.3 51.1 30.6

SSI 14.4 8.8 21.2

Unemployment compensation 1.3 3.4 4.9

TotalHouseholds 100.0 100.0 100.0

Eligible Nonparticipating:

Persons (thousands) 10,323 12,686 1,806

Households (thousands) 4,711 5,410 813

Benefits(millions) $265 $445 $63

SOURCES: January 1988percents were derived Rom Table 13 of this report. August 1985 percents were

derived from Table 12 of Doyle (1990). January 1988 newly eligibles are based on tabulations

prepared with the January 1988 analysis file developed by MPR from SIPP, 1986 and 1987

panels. The SIPP analysis file contains a total of 18,870 households and 2,431 households

eligible for food stamps.

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

abPercents may not sum to totals due to rounding error. Percents do not sum to IiX) because households may extfibit more than one of the characteristics listed. Note

that the elderly and the disabled categories are not mutually exclusive.

48

I
40 percent, compared with 30 percent among all eligible nonparticipating households. This difference

reflects the large FSA-induced increase in single elderly eligibles whose participation rates were low

(shown earlier in Table IV.2). Similarly, newly eligible households that contained children, that

comprised single persons, and that were headed by white non-Hispanic persons show a slightly larger

proportion of nonparticipants than among all eligible households in 1988.

The distribution of newly eligible nonparticipating households by household income level is also

very similar to the income-level distribution among all eligible nonparticipating households in both

1985 and 1988. However, the proportion of nonparticipants eligible to receive 51 to 75 percent of

the maximum benefit allotment is higher among newly eligibles than among all eligibles in 1988.

C. SUMMARY

This chapter has shown that the lack of response to the expansionary provisions of the FSA

caused the decline in overall participation rates between 1985 and 1988. In the absence of the FSA,

overall participation rates in 1988 would have remained at about the same level as they were in 1985.

The FSA provisions to raise the asset limit had the greatest impact on the eligible pool of households,

and thus participation rates. In particular, households containing single elderly persons, or nonelderly

persons with earnings and children (but no public assistance) had the greatest increase in new

eligibles as a result of the FSA provisions. Because these newly eligibles had uniformly low

participation rates, overall participation rates declined. However, in the absence of the FSA,

participation rates among many of these subgroups would have increased.

49
REFERENCES

Allin, Susan, and Harold Beebout. "Determinants of 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.

Allin, Susan, and Alberto Martini. "A Multivariate Analysis of Participation in the Food Stamp

Program." Report prepared for the Food and Nutrition Service, U.S. Department of Agriculture.

Washington, D.C.: Mathematica Policy Research, Inc., forthcoming.

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. "Simulation of Two Plans to Assign Fixed Food Stamp Benefits to Persons with SSI."

Memorandum to Diana Perez, Food and Nutrition Service, U.S. Department of Agriculture.

Washington, D.C. Mathematica Policy Research, July 9, 1991.

Doyle, Pat. "Food Stamp Program Participation Rates: August 1985." In Current Perspectives on

Food Stamp Program Participation. Alexandria, VA: Food and Nutrition Service, U.S.

Department of Agriculture, 1990.

Doyle, Pat, and Harold Beebout. "Food Stamp Program Participation Rates." 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. "The Impact of Imputation Procedures on Distributional

Characteristics of the Low Income Population." In Proceedings of the Bureau of the Census

Annual Research Conference III. Washington, D.C.: Bureau of the Census, U.S. Department

of Commerce, 1987.

Doyle, Pat, Esther Miller, and Jim Sears. "Program Participation Patterns Among Persons With

Dlsabilitiesf Report prepared for the Assistant Secretary for Planning and Evaluation,

Department of Health and Human Services. Washington, D.C.: Mathematica Policy Research,

Inc., 1990.

Doyle, Pat, and Carole Trippe. '_Validation of the Food Stamp Microsimulation Model." Report

prepared for the Food and Nutrition Service, U.S. Department of Agriculture. Washington,

D.C.: Mathematica Policy Research, Inc., 1989.

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.

51
Mathematica Policy Research, Inc. "Survey of Income and Program Participation 1986 Panel Wave

7 and 1987 Panel Wave 4 August Eli_bility File Technical Specification." Report prepared for

the Food and Nutrition Service, U.S. Department of Agriculture. Washington, D.C.:

Mathematica Policy Research, Inc., 1991.

Shiels, John F., Burt 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 CurrentPerspectives on Food Stamp Program Participation. Alexandria, VA:

Food and Nutrition Service, U.S. Department of Agriculture, 1989.

U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis and Evaluation.

"Characteristics of Food Stamp Households: Winter 1988." Alexandria, VA: Food and

Nutrition Service, U.S. Department of Agriculture, 1990.

U.S. Department of Commerce, Bureau of the Census. _Money Income and Poverty Status in the

United States: 1988 (Advanced data from the March 1989 Current Population Survey)." Current

Population Repons, series P-60, no. 166. Washington, D.C.: U.S. Government Printing Office,

1989.

U.S. Department of Commerce, Bureau of the Census. Surveyof Income and ProgramParticipation

Users' Guide. Washington, D.C.: U.S. Bureau of the Census, U.S. Department of Commerce,

1987.

U.S. Department of Commerce, Bureau of the Census. "Economic Characteristics of Households in

the United States: Third Quarter 1984." Current Population Repons, series P-70, no. 5.

Washington, D.C.: U.S. Government Printing Office, 1985.

U.S. Department of Commerce, Bureau of the Census. "Economic Characteristics of Households in

the United States: Fourth Quarter 1984." Current Population Reports, series P-70, no. 6.

Washington, D.C.: U.S. Government Printing Office, 1986.

52
APPENDIX

TECHNICAL PROCEDURES USED TO COMPUTE PARTICIPATION RATES

AND TO ESTIMATE THE IMPACY OF THE 1985 FSA
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. We conclude w/th a

discussion on how we determined participation rates in the absence of the provisions of the Food

Security Act.

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 (1989) estimated that

only 76 percent of the households that received food stamps in 1988 reported receiving food stamps

in the March 1989 CPS. Conversely, 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 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 1988. 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.

The second data source is the Integrated Quality Control System (IQCS). We used this source

to adjust the Program 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

households in FY 1988 Program Operations data was adjusted downward by 2.66 percent to eliminate

ineligible households. Similarly, total benefits reported in the Program Operations data were adjusted

55
to correct for erroneous benefit payments to ineligible households and for under and over payments

to eligible households (net reduction of 4.88 percent.)

The third data source is a sample of food stamp case records from the January and February

1988 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

1988. First, using SIPP data, we developed an analysis file that reflected the U.S. population as of

January 1988. 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. At the time of this study, only

data from the f'u'st four panels (1984 through 1987) were available. 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 "wave"), 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

56
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.

Although the survey is longitudinal, it is designed to support cross-sectional estimates for Census

households that reside ia the 50 states and the District of Col_mbia. For this analysis, we derived

cross-sectional estimates of food stamp-eligible households from Wave 7 of the 1986 panel and Wave

4 of the 1987 panel, each of which we combined with information collected in other selected waves

of the respective panels. Although Wave 7 of the 1986 panel and Wave 4 of the 1987 panel were

independent samples of the U.S. population, their reference periods overlapped. Furthermore, a

straightforward adjustment to the sample weights allowed us to base estimates on combined panels.

We chose these two waves for the following reasons: (1) they sampled the population in the

month of January, making the reference period comparable with the administrative data used for the

numerator; 1 (2) they contain topical information on assets; and (3) together, they provide a relatively

large sample size (18,870 households). Integrating data from the other waves within each panel was

necessary because Waves 7 and 4 do not contain the selected information necessary for estimating

food stamp eligibility. Although they do contain measures of monthly income, monthly Census

household composition, and assets, they do not contain measures of medical, child care, and shelter

expenses, and the information necessary for determining disability status is incomplete. We corrected

the omissions as follows:

· We imputed out-of-pocket medical expenses on the basis of data from the

Consumer Expenditure Survey.

· We linked child-care expenses from Wave 6 to Wave 7 of the 1986 panel and from

Wave 3 to Wave 4 of the 1987 Panel, using procedures designed to compensate for

changes in circumstances that might have occurred within each panel.

1Be.cause one-fourth of the sample in Wave 7 of the 1986 panel did not include information for

the month of January, we deleted this portion of the sample and reweighted the remaining

observations.

57
· We linked shelter expenses from Wave 6 to Wave 7 of the 1986 panel and from

Wave 3 to Wave 4 of the 1987 Panel, accounting for changes in circumstances over

time.

· We linked disability status from Wave 1 of the respective panels.

A report by Mathematica Policy Research, Inc. (1991) provides more detail on how the analysis file

used to simulate the FSP was developed.

2. An Assessment of the Eligibility Simulation

In brief, given the data limitations outlined below, 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.

Although SIPP contains more information on the variables necessary for determining FSP

eligibility and benefits than does any other available household survey, problems still remain. The

simulation procedures described earlier cannot perfectly replicate the eligibility and benefit

determination process mandated in the legislation, despite the adjustments and enhancements made

to the SIPP data. The specific discrepancies are as follows.

· Unit definition. Because SIPP does not measure 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. Furthermore, persons not present at the time of the interview are

assumed not to have vehicular assets.

58
· 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 underreportecL For example, the number of AFDC recipients in

SIPP was only 82 percent of an independent estimate derived from administrative

data; the number of recipients of unemployment compensation was 79 percent of

the benchmark; and the number of recipients of veterans' benefits was 90 percent

of the benchmark (U.S. Department of Commerce, 1985). Second, the definition

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 earnin_ 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 the caseworker's determination of the food

stamp household, and, hence, aggregated income for the food stamp household may

differ as well.

· Net /ncome. Using approximated medical expenses for elderly and disabled

individuals, combined with measurement error in how shelter and child-care

expenses are collected in SIPP, will somewhat distort simulated net income. The

SIPP definitions of shelter and dependent-care expenses also differ slightly from

the FSP definitions. For example, expenses incurred for the care of incapacitated

adults are not included in the dependent-care expenses in SIPP.

· D/sab///ty 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 misclassification 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 on 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 (as opposed to the partici59
TABLE A.1

FACTORS THAT AFFECT THE SIMULATION OF FOOD STAMP

ELIGIBILITY WITH SIPP, AND THE

DIRECTION OF THE BIAS

Effect on Estimates of

Source of Error the Number of Eligibles

UnitDefinition Underestimate

Countable Assets Overestimate

Gross Income

Underreporting Overestimate

Definition Underestimate

Program participation Underestimate of eligibles

underreporting and ink,reporting participating in other programs

NetIncome Unknown

DisabilityStatus Underestimate

Measurement Error Unknown

Inconsistencies between income and program Overestimate

participation

60
pation measure) is correct, the number of food stamp eligible households is overstated. The inability

to replicate program regulations perfectly in the calculation of deductions from expenses may also

lead to an overestimate of the number of eligible households. Furthermore, selected assets are

omitted from our analysis file (for example, persons not present at the time of the interview have

zero imputed vehicular assets), thus overestimating the size of the eligible population.

On the other hand, the omission of some types of expenses may bias the measurement of net

income upward, thus reducing the estimate of the number of eligible households. Finally, the

underrepresentation of some groups of individuals biases the estimates of eligibles downward. 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 percent.

Doyle (1990) analyzes the impact of selected measurement and reporting errors on measures of

food stamp eligibility.

C. TECHNICAL PROCEDURES USED TO ASSESS THE IMPACT OF THE FOOD SECURITY

ACT ON FOOD STAMP PROGRAM PARTICIPATION RATES

In May 1986, the government implemented several major changes to the Food Stamp Program

introduced as part of the Food Security Act (FSA) of 1985, many of which increased program

eligibility. Among other changes, the maximum amount of deduct_le shelter expenses imposed on

households without an elderly or disabled person was separated from the limit on child-care expenses.

The earnings deduction was raised from 18 to 20 percent of countable earned income. The asset

limit for single elderly households was raised from $1,500 to $3,000, and the asset limit for other

nonelderly households was increased from $1,500 to $2,000. Finally, pure-AFDC/SSI households were

deemed to be automatically eligible for food stamps. This section describes how we estimated the

impact of these new provisions on the food stamp participation rate.

61
We computed the number of eligible and participating households, individuals, and benefits

under both the current program and the pre-FSA program, and compared the results. To determine

eligible households under the pre-FSA regulations, we calculated eligibility and benefits as if the FSA

rules had not been in effect in 1988. For this purpose, we assumed that Food Stamp Program

parameters would have had the same values as those in effect in January 1988, with the following

exceptions:

· No automatic eligibility for pure-AFDC/SSI households

· An earnings-deduction rate of 18 percent

· Asset limits of $3,000 and $1,500, where the former applies to a household size of

two or more with at least one elderly member

· A combined shelter/child-care maximum deduction of $160

We used a somewhat more complicated procedure to determine pre-FSA participants. Based

on the winter 1988 sample of participating households from the IQCS, we calculated eligibility and

benefits as if the pre-FSA rules had been in effect (using the same assumptions discussed above).

We then computed the relative impact of the FSA rules on the sample caseload (that is, 1 percent

of the sample caseload would have been ineligible had the pre-FSA rules been in effect). Finally,

we applied the relative impact estimates to the adjusted participant controls used to compute January

1988 participation rates.

As discussed in the body of this report, the FSA asset-limit provisions had the greatest impact

on the eligible pool of households. In particular, these provisions had a greater effect on the

participation rates of single-person elderly households than on the rates of most other groups. Table

A.2 shows the number of households that were made eligible by each provision of the FSA. The

impact of the provision to raise the asset limit on single elderly households from $1,500 to $3,000

increased the number of eligible units by nearly 3 percent. In other words, nearly 40 percent of the

newly eligible households were single elderly households. Thus, participation rates among elderly

62
TABLE A.2

THE INCREMENTAL IMPACT OF THE MAJOR

PROVISIONS OF THE FOOD SECU-RITY ACT

Newly Eligible

January 1988 Newly Households as a Percent

Eligible Households of Total Eligible

Households

FSA Program Provision (thousands) (percent) (percent)

Automatic eUgibitity for AFDC_SI households 259a 30% 2.3%

Separate shelter and child-care limit 0 0 0

Higher asset limit on nonelderly households 412 48 3.6

Earnings deduction at 20 percent 36 4 0.3

Higher asset limit for elderly living alone 317 37 2.6

Net impact of all of the aboveb 866 100 7.0

SOURCE: Estimates for eligibles were derived from tabulations prepared with the January 1988 analysis file

developed by MPR from SIPP, 1986 and 1987 panels. The SIPP analysis file contains a total of 18,870

households and 2,431 households eligible for food stamps.

aof these households, 177,000 received SSI, and the remainder received AFDC but not SSI.

bThe net impact of these provisions is less than the sum of the newly eligible households under each provision

considered separately, because households can be subject to more than one provision. Hence, percents add to

more than 100.

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households and among single-person households declined. In fact, in the absence of the FSA, the

participation rate among single person households would have been 49 percent, and the participation

rate among elderly households would have been 39 percent, compared with actual rates of 45 percent

and 35 percent, respectively.

As mentioned previously, the simulation probably overestimates the impact of the automatic

eligibility provision for households in which all members receive AFDC or SSI (pure-AFDC/SSI

households), since many of the households that reported participating in SSI appeared to be ineligible

for SSI due to high income or assets. Under pre-FSA rules, the high incomes of these households

would make them ineligible for food stamps. However, under the new FSA rules, they become

el/gable for food stamps automatically despite their high incomes and assets--because they report

participation in SSI. In the April 1984 SIPP file, just under 15 percent of the total number of

persons who reported SSI receipt appeared to be ineligible for SSI benefits (Doyle, Miller and Sears,

1990). While we do not know the number of these persons who reside in pure-AFDC/SSI

households, we do know that 8 percent of all SSI participants in the January 1988 SIPP data base

would be ineligible for food stamps if they applied as separate one-person households (Doyle, 1991).

64