7925 -020

MEMORANDUM MATH EMATI CA

Policy Research, Inc.

TO: Bob Dalrymple

tt

FROM: Nancy Heiser _h'/ DATE: 5/18/90

SUBJECT: Unbound Copy of the Report on August 1984 FSP Participation Rates

Contract No.: 53-3198-0-22-005

I have attached an unbound version of the August 1984 FSP Participation Rate paper.

Enclosure

cc: Alana Landey

Harold Beebout

Pat Doyle

Carole Trippe
OnTent Perspectives on Food Stamp Program Participation

Titles in this series:

Food Stamp Program Participation Rates

(November 1988) Pat Doyle and Harold Be.el>out

Food Stamp Program Participation Rates Among the Poverty

Population, 1980-1987

(November 1988) Carole Tfippc and Harold Bccbout

Determinants of Participation in the Food Stamp Program:

A Review of the Literature

(November 1989) Susan All/n and Harold Beebout

Estimating Rates of Participation In the Food Stamp Program:

A Review of the Literature

(November 1989) Carole Trippe

Food Stamp Program Participation Rates:

August 1985

(April 1990) Pat Doyle

The Effects of Food Stamps on Food Consumption:

A Review of the Literature

(October 1990) Thomas M Fraker

Participation in the Food Stamp Program:

A Multivariate Analysis

(March 1992) Alberto Martini

Food Stamp Program Participation Rates:

January 1988

(July 1992) Carole Trippe and Pat Doyle

Trends in Food Stamp Program

Participation Rates: 1976 to 1990

(July 1992) Carole Trippe, Pat Doyle, and

Andrew Asher

Food Stamp Program Participation Rates:

January 1989

(July 1992) Carole Trippe and Pat Doyle
_ CurrentPerspectiveson FoodStampProgramParticipation

UnitedStates

?_' /

Service

_rPiacu_mer:t°f FoodStampProgram

Evaluation ParticipationRates
CurrentPerspectiveson FoodStampProgramParticipation

Titles in this series:

FoodStampProgramParticipationRates

(November 1988) Pat Doyle and Harold Beebout

FoodStampProgramParticipationRatesAmongthe

PovertyPopulation,1980-1987

(November 1988) CaroleTrippe and Harold Beebout

Determinantsof Participationin the FoodStampProgram:

A Reviewof the Literature

(forthcoming) SusanAllin and HaroldBeebout

I

EstimatingRatesof Participationin the FoodStampProgram: "

A Reviewof the Literature

(forthcoming) Carole Trippe

f

l
'_ m_ United States Food and 3101Park Center Drive

Department of Nutrition Second Floor

Agriculture Service Alexandria, VA22302

FoodStampProgram

ParticipationRates

Pat Doyle and Harold Beebout

A productof

Mathematica Policy Research, Inc.

600 Maryland Avenue, S.W.

Suite 550

Washington, DC 20024

November 1988
ACKNOWLEDGMENTS

The authors would like to thank several people who contributed to this report.

Steven Carlson, Robert Dalrymple, and Steven Cole of the Food and Nutrition Service

provided technical consultation and review. Esther Miller of Mathematica Policy

Research was the research programmer. Wendy Campbell of Research Findings in Print

edited the final document, and finally, but not least, Shells D&de and Lens Cunningham

prepared the manuscript.

MPR Project Number: 7725-200

FN$ Contract Number: 53-3198-7-31

FNS Project Officer: Robert Dalrymple

This analysis was performed under · competitively awarded contract in the amount of

$1,841,585.
CONTENTS

Section Page

LIST OF TABLES AND FIGURES ...................................... Iv

EXECUTIVE SUMMARY ............................................. v

I. INTRODUCTION .................................................... I

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

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

1, The Individual Participation Rate .............................. 6

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

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

B. USING ADMINISTRATIVE DATA TO ESTIMATE THE NUMBER

OF PARTICIPANTS ............................................. ?

C. FSP CRITERIA FOR ELIGIBILITY AND BENEFITS ................... 8

1. Income Limits .............................................. 9

2. Asset Limits ................................................ :tO

3. Nonfinaneial Standards ....................................... 11

4. Benefit levels .............................................. 12

D. USING SIPP TO ESTIMATE THE NUMBER OF ELIGIBLES ............ 13

1. Development of the Analysis File .............................. 13

2. An Assessment of the Eligibility Simulation ..................... 15

IH. RESULTS. .......................................................... 19

A. PARTICIPATION RATES, BY SELECTED DEMOGRAPHIC

CHARACTERISTICS ............................................. 21

B. PARTICIPATION RATES, BY SELECTED ECONOMIC

CHARACTERISTICS ............................................. 27

r_

REFERENCES .................................. '. ................... 3?

iii
TABLES AND FIGURES

Table I Individual, Household, and Benefit Participation Rates,

August 1984 ..................................................... 20

Table 2 Household Participation Rates, by Household Size,

August 1984 ..................................................... 22

Table 3 Individual Participation Rates, by Selected Demographic

Characteristics, August 1984 ...................................... 23

Table 4 Household Partieipation Rates, by Selected Demographic

Characteristics, August 1984 ...................................... 25

Table 5 Benefit Rates, by Selected Demographic Characteristics

of the Household, August 1984 ..................................... 27

Table 6 Household Participation Rates, by the Level of Monthly

Benefits, August 1984 ............................................. 28

Table 7 Individual Participation Rates, by the Ratio of Gross Income

of the Individual Food Stamp Unit to the Monthly Federal

Poverty Level, August 1984 ........................................ 30

Table 8 Household Participation Rates, by the Ratio of Gross Income

of the Food Stamp Unit to the Monthly Federal Poverty Level,

August 1984 ..................................................... 31

Table 9 Benefit Rates, by the Ratio of Gross Income of the Food Stamp

Unit to the Monthly Federal Poverty Level, August 1984 ............... 32

Table 10 Household Participation Rates, by Selected Sources of Income,

August 1984 ..................................................... 35

Figure Factors Affecting Simulation of Food Stamp Eligibility with

SIPP and the Direction of the Bias .................................. 16

Iv
EXECUTIVE SUMMARY

Polteymakers are interested in the extent to which the Food Stamp Program

(FSP) is serving its target population and which subgroups are availing themselves of

benefits under the program. This report provides estimates of participation in the FSP

using more accurate data on eligibles and participants than has previously been

avaUable. The FSP participation rate is a ratio, with the numerator being the number of

persons or households in the program (or the actual benefits paid to participants), and the

denominator being the number of persons or households eligible for the program (or the

total benefits payable if all eligible households participated). The estimates reported

here indicate that, in the 50 states and the District of Columbia in August 1984--

o 66 percent of individuals eligible for food stamps participated

o 60 percent of households eligible for food stamps participated

o those households participating received 80 percent of the benefits payable

had all eligible households participated.

IMPROVEMENTS OVER PREVIOUS DATA AND METHODOLOGIES

Previous estimates of FSP participation rates have varied widely, for several

main reasons. First is the difficulty in estimating the denominator of the rate: Program

eligibility eannot be obse_ved and therefore must be approximated using household survey

data. The Survey of Income and Program Participation (SlPP), unavailable for previous

research, now allows better approximation of the FSP's rules for determining eligibility.

SIPP eontains, for example, detailed monthly data on income and household composition

supplemented with measures of assets and expenses--all variables used in actual

ealculations of FSP eligibility.

Seeond, many previous studies have relied on partieipants' reports of the

benefits they received--data known to be underreported in household surveys. This study

uses instead FSP administrative data on beneficiaries and benefits paid in August 1984,

and therefore the numerator of the partieipation ratios should be more aeeurate.

Finally, estimates of FSP participation rates have also varied depending on the

target group studied and on the unit of measurement. Together the SIPP and FSP data

allow a disaggregation of the estimates in this study by seleeted demographic and

economic characteristics. And, as noted above, this report will show estimates using all

three units of measurement employed in the literature: the individual partieipation rate,

the household rate, and the benefit rate.

V
ESTIMATES OF OVERALL PARTICIPATION

As summarized above, the estimates of over&U participation rates reported here

do vary by the unit of measurement employed. The rate for individuals wu 6 percentage

points higher than that for households because larger households were more likely to

pfu*tieipate than smaller ones. The finding for the benefit rate--20 percentage points

higher than that for households--implies that households with la, er benefits were more

likely to participate than households with smaller benefits.

ESTIMATES OF PARTICIPATION, BY SELECTED DEMOGRAPHIC CHARACTERISTICS

The estimates also show considerable variation aeross selected demographie

groups.

o Regardless of the participation measure used (individual, household, or

benefit), preschool children and school-aged ehtldren participated at a higher

rate than the average. For example, the individual rates were 80 percent

for preschoolers and 74 percent for school children. The benefit rate for

households with school children was 87 percent compared to the overall

benefit rate of 80 percent.

o Among the elderly, however, only one-third of eligible individuals

participated, although the rate was higher among those living alone (40

percent) and was higher still among those receiving Supplemental Seeurlty

Income (SSI) (65 percent).

o Among the disabled, approximately half of the eligible individuals (45

percent) and households (52 percent) participated, receiving 68 percent of

the benefits payable if participation had been 100 percent.

o Among households headed by a single woman with children, participation was

estimated to be approximately 100 percent (102 percent). The estimate

exceeded ]00 percent because of measurement and sampling errors in the

data.

ESTIMATES OF PARTICIPATION, BY SELECTED ECONOMIC CHARACTERISTICS

The estimates for eligible individuals and households with different economic

eharaeteri_tles show strong variation et well.

v

o Partieipatinn generally varied inversely with tne0me. Individuals and

households in poverty participated at eonslderably higher rates (81 percent

and 75 percent, respectively) than individuals and households overall.

vi
o In general, participation was greater, the greater the benefit, with the

estimates ranging from 29 percent for monthly benefits under $10 to 98

percent for monthly benefits over $200. These findings are consistent with

those showing that participation increased as household stze increased,

ranging from 47 percent participation for one-person households to 81

percent for households with six or more persons.

o Households with earnings had a lower-than-average participation rate (37

percent), whereas households receiving SSI, unemployment compensation, or

public assistance participated at higher*thanoaverafe rates (67, 66, and 129

percent, respectively).

vii

I. INTRODUCTION

The Food Stamp Program (FSP) provides low-Income households with assistanee

in buying the food they need to maintain a nutritious diet. A food stamp household is

generally defined as a person living alone, or a group of persons living together and

sharing food purchases and meal preparation, whose monthly Income and assets fall below

specified limits. The usistanee is in the form of coupons that can be redeemed for food

purehases. The amount of the coupons issued to participants is based on their household

size and income.

Not all households eligible for food stamps actually participate in the program.

' The literature on the program suggests a variety of reasons for not partieipetirq_. 1 Some

people may be unaware of the program, while others Tnay presume they are not eligible

for fas benefits. Other people may be aware of the program and their own eligibility for

it, but view the benefits as not worth the effort required to obtain and use them. Still

others may not participate because of a stigma they associate with the use of food

stamps.

Obviously, since some eligible households do not apply for benefits, the FSP is

not serving the entire population targeted by the legislation. Indeed, according to

prevailing conceptual models of the decision to participate in the program, participation

should not be expected to be universal (see Allin and Beebout, 1988).

But even if participation will never be universal, the Congress and other

polieymakers are legitimately concerned to know what proportion of the eligible

population actually does make use of food stamps. They are also interested in knowing

which sut_voups of the target population are avalll_ themselves of benefits and why

eertaln groups partieipete more than others.

1See, for example, Cee (1983).

l
This paper reports new estimates of participation in the Food Stamp Pro, am--

both among the total eligible population and among selected subgroups of interest to

poltcymakers. Previous estimates of FSP participation have varied widely, because of

differences in methodologies, differences in data sources, and inadequacies in the data

soUroes. 2 The estimates reported here are more comprehensive and more accurate than

previous sets of estimates. For this reason, and because these new estimates &re

generally higher than most of the participation rates reported in previous research, this

report should be of interest to polteymskars interested in how many and which program

eligibles participate in the FSP. Another paper in this series (Allin and Beet>out, 1988)

provides evidence on why program eligibles or particular subgroups do or do not

participate.

The estimates reported here are more comprehensive than previous sets of

results because they include all three measures of participation discussed in the

literature on the FSP: the individual rate, the household rate, and the benefit rate. Each

of these rates can be summarized as a ratio of all participants to all eligibles (or of all

benefits paid to all potential benefits payable if all eligibles participated). Significantly,

no single measure can adequately answer all the questions polieymakers ask about

participation in the FSP. As defined and explained in the next section, the individual

rate can be more useful than the household rate in answering how much a particular

demographic group participated, whereas the benefit rate can be more useful than either

of the other two rates in answering whether the neediest eases are being served.

The estimates in this report are more' accurate than previous ones primarily

because they are based on a newly available data set, the Survey of Inoome and Program t

Participation (SIPP). Beoause eligibility for the FSP eannot be observed directly, the

2For a review of the literature on FSP participation rates and estimation

techniques, gee Trippe (1988).

9.
denominator of the partieipation ratio (the total number of program eligibles or total

potential benefits) has to be approximated using household survey data. In eomparison to

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

rese&t_h, SIPP contains more, and more detaUed, information on the household

eharaeteristies FSP administrators must eonslder when making netual eli_bHtty

detarmtnations. 3 For example, SIPP eontains information on monthly (as opposed to

annual) income, on monthly household eomposltton, on most of the expenses used in

ealeulating deductions from income, and on vehicular assets, thereby making possible a

significant advance in our ability to approximate eligibility status using survey data.

Data for the numerators of the overall participation ratios calculated here

come from the Food Stamp Program Statistleal Summary of Operations. These

administrative data are more accurate than the self-reported survey data employed in

some previous studies of FSP participation. 4 Recent research has indicated that food

stamp reetpieney tends to be substantially underreported in household survey data (U.S.

Department of Commerce, 1987). Because the numerators of the ratios reported here

are based on administrative counts, they are unbiased estimates of the number of actual

partieipants and the amount of benefits paid. The Food Stamp Program Statistical

Summary of Operations does not, however, eontain data on subgroups of the partieipattng

population. Estimates for these groups were ealeulated using a sample of food stamp

ease reeords from the Integrated Quality Control System of the U.S. Department of

AaTieulture.

3Tbe exeeption to this comparison is the 1979 Ineome Survey Development

Program Researeh Test Panel (ISDP), the preeursor to SIPP.

4Although the administrative data are more accurate then self-reported

program participation, they are not without some error. For example, these data reflect

the inelusion of some ineligible participants and errors in reporting or recording by the

states,

3
Although our estimates represent an improvement over previous sets of results,

they are not without their own sampling and meuurement limitations. In particular,

approximating the total number of FSP eligibles stiU poses problems. For example, a

food stamp unit or "household" as defined by the FS? is not the same as the Census

definition of · dweUing unit or Wbousehold,Mthe prinoipal intm-viewing unit for household

surveys. Moreover, the SIPP data are insuffielent to group SIPP respondents accurately

into food stamp units. The ·vail·hie research indicates these differences are important

sour·es of bias in studies on tl_is topi· (La·da, 1987). Finally, some minor discrepancies

remain in matching SIPP information on assets and expenses to actual FSP eligibility

criteria.

In short, although this analysis represents a considerable improvement over

previous efforts, preetse estimates of the population eligible for food stamps, or of

subgroups participating in the program, are unattainable. Further research ·an reduce,

but not eliminate, the uneertalnties in estimation. As one example, data on reported

finaneI&l uset balances were not available in SIPP for use in this study, but data of that

kind are now available on a more recent file from the Bureau of the Census. Their

inelusSon in future analyses will improve the estimates.

The remainder of this report is organized as foUows. Section II des·ribes the

methodology and data used in obtaining the estimates, first by defining the three

measures in more detaU and then by describing how the numerators and denominators of

the partieilMtlon ratios were estimated using the administrative data and SIPP. Section

!II reports the results for the three overall participation rates and then for the rates

d_egated by selected demo_aphie and eeo·omi· eharaeteristles.

4
II. METHODOLOGY AND DATA

This seetton describes the methodolo_ and data employed in constructing the

numerators and denominators of the three FSP partieipation measures. Although each

measure can be easily summarized as a ratio of all participants (or the benefits paid to

them) to all eligibles (or the potential benefits payable if all eligibles participated),

estimating the numerator and the denominator of the ratios is not a cleM'-eut task.

Thus, after defining the three meuures in more detail, we wiU explain how we used the

administrative data to estimate the numerators; what criteria FSP administrators use in

making actual eligibility and benefit determinations; how, using a model of those

criteria, we estimated the denominators with SIPP data; and finally, what the main

strengths and limitations of the methodoloi_ and data are.

A. THREE ALTERNATIVE MEASURES OF FSP PARTICIPATION

As noted in the Introduction, no single measure of participation can adequately

answer all the questions policymakers have about participation in the Food Stamp

Program. The three alternative measures discussed in the literature--the individual rate,

the household rate, and the benefit rate--differ not only in their magnitude but also in

their advantages and limitations in m_swerir_ a given question. It is therefore important

to define each measure clearly, specify its potential usefulness, and explain how it has

been used in previous studies. 5

$Agaln, see Trlppe (1988) for · comprehensive review of previous research.

5
1. The Individual Participation Rate

This ratio has as its numerator the number of persons participating in the

program and as its denominator the number of persons eligible for the program. Poliey

diseussious about FSP partieipation rates have tended to focus on research results based

on the individual rate, whereas discussions about participation behavior usually foeus on a

model of the household as the decision-making unit. In fact, for some purposes the

individual rate may be preferable to the household rate, espeeially in answering questions

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

the proportion of eligible elderly individuals who participate is a more realistic indication

of the behavior patterns of the elderly than is the proportion of all eligible households

with an elderly member that participate.

2. The Household Partieipation Rate

This ratio has as its numerator the number of food stamp units, or households,

partieipating in the program and as its denominator the number of households eligible for

the program. As Just noted, analyses of partieipation behavior tend to rely on this

rate. $ The household rate ean be significantly different from the individual rate beeause

larger households tend to partieipate in the FSP more than one- and two-person

households.

3. The Benefit Rate

This ratio has as its numerator the actual benefits paid to program participants

and as its denominator the total potential benefits payable if all program eligibles

partieipated. For many purposes tb!_ z_lte may be the most meaningful measure,

e

although it has not been used extensively in previous research.. In particular, the benefit

8For a review of the literature on 1)SP partleipstion behavior, see Allin and

Beebout (1988).
rate may be the best overall meuure of how well the ?SP is meeting the target

population's need for asslstanee. For example, the _._._t rate estimates reported here

are generally higher than the Individual and household rate estimates, indicating that

eases with higher benefit levels, and thus greater need, participate more than eues with

lower benefit levels, and thus lesser need.

B. USING ADMINISTRATIVE DATA TO ESTIMATE THE NUMBER OF PARTICIPANTS

One source of disparities in the previous estimates of FSP participation rates,

as noted earlier, has been the use in some studies of household survey respondents _

reports of their own particlpation--data known to be substantially underreported. For

example, the U.S. Department of Commerce (1987) estimated that only 67.5 percent of

the households receiving food stamps reported receipt of those benefits in the CPS, one

source of data for the numerator in previous estimates. Those estimates, therefore,

were biased downward.

The estimates of the numerator in the rates reported here are based instead on

the Food Stamp Program Statistical Summary of Operations (henceforth, Program

Operations), which contains data for August 1984 on the number of persons and

households issued benefits and the total doUar value of the coupons issued. 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, which makes up the

population reflected in SIPP. This data source therefore provides unbiased estimates of

the number of households and persons participating in the program and the benefits they

_,ceived. It is these statistics that form the numerator in the estimates of overall

participation rates developed for this study.

The Program Operations data do not contain tnfm'mtton on the participation or

benefits of subgroups of the populetion, such as female-beaded households with children

or households containing elderly or disabled members. To derive participation rates for

?
these I_'oups, we employed a sample of food stamp ease records to c_eulate the

distribution of persons, households and benefits across various demo_aphie and economic

characteristics. The sample was selected for review as part of the Integrated Quality

Control System (IQCS), a s_tem 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. Although the IQCS is based on monthly probability

samples drawn from &Il 50 states and the District of Columbia that were active in

July/Aus_st 1984. This sample of &etfve eases was used in the preparation of an annusJ

report on the characteristics of food stamp households (U.S. Department of AsTieulture,

1987), which we refer to later in this report.

C. FSP CRITERIA FOR ELIGIBILITY AND BENEFITS

Before outlining (in section liD) our proeedures for estimating the denominators

of the FSP participation ratios, we must specify the criteria program administrators

employ in making actusJ determinations of eligibility and benefits. A model of these

criteria formed the basis for determining which SIPP respondents belonged in the sample

of program eligibles.

Eligibility for the Food Stamp Program is based on a series of rules defining the

&pplieantts need, which is deemed a function of available cash income conditions] on unit

(household) size ss we]] ss on assets accessible to the unit. 6 The determination of need

for each household applTlng for FSP benefits can be broken down into four distinct

t)m'ts: Income limits, asset limits) nonfinfmei&l stsndards, and benefit levels. The

SThe discussion that follows is an overview of the reti_Llations governing FSP

eligibility and benefits. The complete regulations appear in the Code of Federal

ReKulations (7 CFR parts 270-2?3).

8
parameters of each of these parts vary over time with cost-of-living adjustments and

legislated changes in the program. This analysis employs FSP criteria in existence in

August 1984, the month corresponding to the administrative and SIPP data used.

1., Income Limits

The FSP imposes both · net and · gross income screen. Under the net income

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

federal poverty guidelines. 8 These guidelines vary by household size and geographic

location. 9 In August 1984 the monthly federal poverty guideline for · family of four in

the continental United States was $850. Under the gross income screen, food stamp units

that do not contain elderly or disabled members must also have gross income below 130

percent of the same poverty guidelines.

In August 1984 gross income as measured by the program included ali cash

income received by members of the food stamp household, with exceptions such as

earnings of students under Me 18, loans, nonrecurring lump-sum payments, and

reimbursement of certain expenses. Net income was defined as gross income less a

specified amount of deductible expenses for housing, taxes, work-related costs, and the

like. It was computed by subtracting the following from gross income.

o Standard deduction: All households with income may subtract

the standard deduction, which varies by geographic location

and is adjusted annually to ·ceount for inflation. In August

1984 it was equal to $89 in the continental United States.

8The Ineome limits are based on the official monthly poverty guidelines,

published by the U.S. Department of Health and Human Services (DHHS), which are

adjusted each year to account for inflation.

9The 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

Hawal! and the territories.

9
o Earned income deduction= In August 1984 households with

earnings could deduct 18 percent of the combined earnings of

ell household members.

o Dependent care deduction: Households with children under age

18 or that provide care to lneapecitated adults may deduct

expenses for their care up to &limit, The limit on dependent

eare expenses varies by geogr&phie location and Is adjusted

annually, In August 1984 this limit was $125 for households in

the continental United States,

o Medieal deduction: In August 1984 households containing an

elderly or disabled member could deduet out-of-pocket

medical expenses incurred by those Individuals in excess of $35

per month,

o Shelter deduction: Housing costs (sueh ns rent or mortgage

payments, heating or cooling costs, taxes, and Insurance) are

deductible if the combined expenses exceed 50 percent of

gross income less the preceding allowable deductions. A

maximum is imposed on the shelter deduction equal to the

difference between the limit imposed on the child care costs

less aetu_ child care expenses incurred. Households with an

elderly or disabled member are exempt from the limit on

excess shelter costs.

2. Asset Limits

In 1984 a food stamp household could have countable assets (or resources, as

they are ea_led in the administration of the program) of $1,500 or less and remain eligible

for benefits. If an elderly person was present and the household contained at least two

members, the asset limit was $3,000. Not included in countable resources are selected

pieces of property, such as the principal home, adjacent lend, some household goods, smd

vehicles needed to produee lneome or to transport disabled individuals; but nil other

finaneial and nonfinaneial assets are generally Ineluded.

In most Instances assets are counted at their fair market value as long u they

are neeesslble to at least one member of the food stamp household. The prinelpel

t

exception to this Is the treatment of veltleular assets. Vehicles used to produce Income

or to transport disabled Individuals ale exempt entirely from the householdts countable

resources under the program, ¥ehleles needed for work-related travel and one ndditional

10
vehicle owned by members of the food stamp household are valued based on the eurrent

Blue Book value, counting only the amount in excess of $4,500. Any remaining vehicles

owned by members of the household are subject to botha market value test and an equity

test, eounting the msYimum of equity and market value less $4,500 toward the

household's assets.

3. Nonfinaneial Standards

In general, food stamp benefits are issued to mhouseholds," but there are upeets

of the program unit definition that distinguish t_e term from the Census designation,

namely, a group of individuals who share living quarters, l0 The food stamp household

consists of a person who lives alone or persons who live together and share food

purchases and meal preparation. Elderly individuals unable to prepare their own meals

together with their spouses are allowed to form a food stamp household separate from

those with whom they reside as long as the combined income of the remaining household

members falls below 165 percent of the monthly federal poverty guidelines. Restrietions

are imposed on the formation of the food stamp household to prevent spouses, siblings,

and parents with ehildren under age 18 from forming separate units within a dwelling unit

even if they purchase and prepare meals separately. Furthermore, seleeted individuals

within a dwelling unit are excluded altogether from participation in the Food Stamp

Program. These include illegal aliens, persons refusing to comply with work registration

requirements, strikers, and residents of most institutions.

f

10Groups of individuals who shore living quarters are referred to es 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 in eoUeeting

survey data on the U.S. population. Specifically, as noted in the introduetion, the

dwelling unit is the interview unit for SIPP, which is used in this analysis.

11
Income limits, as discussed earlier, take into account the combined income and

resources of all persons who belong to the same food stamp household. The composition

of the food stamp household affects its eligibility and benefit amounts as foUows.

o The presence of an elderly person, age 60 or older, entitles the

unit to higher assets (conditional on the unltts containing at

least two persons, by 1984 rules); exempts the unit from the

gross income test and the limit on the shelter deduction; and

allows a deduction for medical expenses incurred.

o The presence of a disabled person, that is, a person under age

60 who receives social security benefits, SSI, or veterans'

benefits for reasons of disability, exempts the unit from the

gross income test and the limit on shelter expenses and

entitles the household to a deduction for medical expenses

incurred.

o The size of the unit determines the income limits to which the

unit is subject.

o The geofb,raphie location of the unit, that is, the continental

United States, Alaska, Hawaii, Guam, and the Virgin Islands,

affects the income limits and the levels of allowable

deductions.

The FSP also contains several provisions designed to require able-bodied adults

to work, seek training preparatory for work, or look for work. Individuals not exempt

from these work registration requirements are prohibited from participation in the

program if they refuse to eomply. Exemptions from the requirements are allowed for

those earir_ for young children or incapacitated adults, those with a physical or mental

disabUity, employed individuals, recipients of unemployment eompensation, selected

students, and participants in drug treatment pr_rams.

4. Benefit Levels

Households deemed eligible based on the eriteria described above have their

r

benefits 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. 11 In

12
August 1984 the maximum food stamp benefit was $253 for a family of four in the

continental United States. Households of size 1 or 2 (one or two persons) whose benefit

computation results in coupon values of less than $10 are issued a minimum benefit of

$1o.

D. USING SIPP TO ESTIMATE THE NUMBER OF ELIGIBLES

Our estimation of the population eligible for the FSP in Ausmst 1984 involved

several stages. First, using the SIPP data, we developed am analysis file reflecting the

population as of August 1984. We then used this file to simulate pro,,ram eligibility, a

process whereby we quantified the program rules defined in the previous section and then

applied them to each dwelling unit in the data base. For each dwelling unit we also

estimated its composition, eligibility status, and potential benefits. We then ag_,regated

the households and persons deemed eligible, which yielded the denominators for the

participation rate estimates. Section 1 summarizes our development of the analysis file,

and section 2 assesses the outcome of the eligibility simulation.

1. Development of 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 replaeement panels are added

each year. At the time of this study, only data from the first (or 1984) panel were

avaUable. The 1984 panel eon,elna information on persons in a longitudinal sample

followed for a period of over two and one-half years. The long]tudinal sample Is defined

by adults, age 15 or older, residing at approximately 20,000 addresses (dwelling units)

v

forming a cross-sectional sample of dwelling units in the United States, who were

lithe maximum food stamp benefit in 1984 was equal to 99 percent of the

Thrifty Food Plan, adjusted for the size of the unit.

13
interviewed initially in the fall of 1983. These adults, along with other individuals with

whom they resided, were interviewed every four months. In each round of interviewing

(or wave) a core questionnaire collected information on each of the four months

preceding the interview date. In most waves the monthly core questions were

supplemented with questions on a variety of topical issues that varied from interview to

interview. Because the interviewing process was staggered, the reference period covered

in any given wave was not the same for all sample members. 12

Although the survey is longitudinal, it is designed to support cross-sectional

estimation for Census households residing in the 50 states and the District of Columbia.

For this analysis cross-sectional estimates of food stamp eligible households were derived

from Wave 4 of the 1984 panel combined with information collected in Waves I and 5.

Wave 4 was chosen because it sampled the population in the month of August, making it

comparable to the administrative data used for the numerator, and because Jt contains

topical information on assets and shelter expenses. The integration of data from the

other two waves was necessary because Wave 4 does not contain selected information

needed to estimate food stamp eligibility. Although it does contain measures of monthly

income, monthly Census household composition, shelter expenses, and assets, it does not

contain measures of medical and child ears expenses, and the information needed to

determine disability status is incomplete. SIPP contains no data on medical expenses,

and so we had to approximate the level of out-of-pocket medical expenses for elderly and

disabled individuals in low-lneome households. Wave 5 has topical information on child

rare expenses, and so we linked these data to Wave ¢ data, using procedures designed to

compensate for when an individu<s or beusehold's circumstances might have changed

,,

between the two waves. We used information from Wave l to determine disability

12For further information on the design and scope of SIPP, see U.S. Department

of Commerce (1987).

14
status, again employing a strategy to account for changing circumstances. Doyle and

Post (1988) describe in more detail these procedures for developing the analysis file used

in the simulation of the FSP.

2. An Assessment of the Eligibility 8imulation

In brief, the procedure used for estimating the eligible population was to

replicate, as closely as possible given the data limitations outlined below, the eligibUity

determination process for each individual or household on the SIPP analysis file, and then

aggregate the results. In other words, the program eligibility and benefit criteria

outlined in section IIC above were applied to each household u if it had aetuaUy applied

for food stamps. We then aggregated the results to estimate the total number of

eligibles. Doyle and Post (1988) describe this simulation procedure in more detail.

Although SIPP contains more information on the variables involved in

determining FSP eligibility and benefits than does any other household survey available,

some problems stiU remain. The simulation procedures described above 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 summarized below end outlined, showing the direction of the resulting

bias, in the Figure.

o Unit definition: The simulated food stamp household is not

exactly the same as the unit determined by the food stamp

cue worker because SIPP does not meuure the complete set

of characteristics used in determining e food stamp unit. ]For

this study the reported program unit composition in Census

households with reported benefits was used to simulate the

food stamp household. In other dweUing units with cash

assistance, the food stamp household was equal tO the euh

_lstanee unit plus any spouses or related children under Me

18 in the dwelling. In all other dweUlng units the simulated

food stamp household was the same as the Census household.

Issues affecting the construction of food stamp households

from SIPP are described in Landa (1987) and Doyle and

Dalrymple (1987).

15
FICURE

Factors Affecting Simulation' of Food Stamp

Eligibility with SIPP and the

Direction of the Bias

Effect on EstiBates of the

Source of Error Number of Eligibles

Unit Definition Overestimate

Countable Assets

Financial Unknovn

Vehicular Underestimate

Cross Income

Underreporting Overestimate

Definition Underestimate

Program participation Underestiemte of eligibles

underreporting and participating in other programs

misreporting

Net Income Unknovn

Disability Status Underestimate

Neasurement Error Unknown

16
o Countable assets: The financial assets held by each individual

in SIPP were approximated based on reported income from

assets. Vehicular assets as reported in SIPP were used to

estimate countable vehicular assets according to the program

rules. SIPP does not explicitly measure, however, whether

each vehicle was used to produce income or to transport

disabled individuals. That information was imputed.

o Gross income: The measure of gross income employed for this

study is close to, but not precisely the same as, gross income

reported to the food stamp ease worker in the application for

benefits. First, survey data on income and program

participation, such as the data eoDeeted in SIPP, tend to be

underreported. For example, the number of recipients of

AFDC benefits in SIPP was only 82 percent of an independent

estimate derived from administrative data; the number of

recipients of unemployment eompensation 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 as measured in $IPP. For example, the Food Stamp

Program counts net self-employment earnings averaged over a

period of up to one year, whereas SIPP measures selfemployment draw. Third, as noted above, unit composition as

simulated with SIPP data differs from the ease worker's

determination of the food stamp household, and hence income

aggregated for the food stamp household may differ as well.

o Net income: The use of approximated medical expenses for

elderly and disabled individuals and measurement error in the

collection of shelter and child care expenses in SIPP will cause

some distortion of the net income simulated for this project.

The SIPP definitions of shelter ·nd dependent care expenses

also differ slightly from the food stamp definitions. For

example, SIPP omits expenses incurred for the care of an

Incapacitated adult and small ·mounts of shelter costs such as

water b_ll_.

o Disability status: The determination of disability status relied

on reported disability and reported income receipts as

specified under the prcq_r·m. Reporting and measurement

errors in SIPP may result in some distortion of the number of

disabled individuals identified in thLmmanner.

o Measurement error:. Beveral forms of nonsamplln_ errors

affect the eligibility simulation, including the underreportlng

of income and program partlelp·tion noted ·hove;

miselassifying benefit and income types; and

underrepresentatlon of some population groups, sunh as low °

income households ho·ded by · single woman with children.

17
The net result of these measurement and reporting errors is uncertain.

Under?eporting of gross income In the survey will bins the estimates of eligible

households upward, since more households wW appear to have met the income limits than

actually did. On the other hand, the omission of some types of expenses may bins the

measurement of net income upward, thus decreasing the estimate of the number of

eligible households. However, the Inability to perfeotly replicate program regulations in

the calculation of deductions from expenses may result tn the reverse effect.

Furthermore, SIPP may overreport the value of some types of assets, particularly

vehicular assets (U.S. Department of Commerce, 1986). This could result In an

underestimate of the number of eligible households because some would appear to fail

the asset test when, tn fact, they wou]d actually pass the test if correct v_ues were

reported.

Finally, the underrepresentatlon of some groups biases the estimates of eligibles

downward. As shown latex' In section In, the SIPP data seem to pose a particularly acute

problem of underrepresenting low-income households headed by a single woman with

children. These households form a la=ge portion of the eligible and participating pools.

As s reset, the undereount makes some of the disagg?egated participation estimates

exceed 100 pereent-=obviously an unrealistic estimate for these rates.

18
HI. RESULTS

According to the Pro,sm Operations data, as shown in Table 1, ?.3 million

households in the 50 states and the District of Columbia participated in the Food 8tamp

Pr_t_ram in August 1984. Based on the estimates prepared from SIPP data, 12.2 million

households were eligible for the pro,ram in that same month. The overall household

participation rate was therefore 60 percent.

The overall individual rate wu higher: 20 million individuals out of 30.4 mtUton

eligible individuals, or 66 percent, participated in the FSP. The average size of a

participant's household according to the Program Operations data was 2.7, whereas the

average size of an eligible household according to the estimates from SIPP data was

2.5. Thus, participation rates were higher among larger households than among smaller

households.

The estimates indicate that approximately $1.06 bIUion in coupons would have

been issued to food stamp participants had the participation rate in August 1984 been 100

percent. Approximately 80 percent of those benefits were actually issued according to

the Program Operations data. This percentage is consistent with the finding (shown

later) that households entitled to higher benefits tended to participate at higher rates

than those entitled to lower benefits.

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

wu higher than the household rate, implies th, t, in addition to other factorat both the

size of the household and its potential benefit level influence the decision to

participate. The effects of household size and other demographic characteristics on the

tendency to apply for benefits are outlined in section A. The' effects of potential

benefits and other eeonomlc characteristics are discussed in section B.

19
TABLE 1

Individual, Household, and Benefit

Participation Rates,

August 1984

Participation

Participants glisibles Rate

Individuals (1,000) 19,990 30,359 65.9Z

Households (1,000) 7,343 12,242 60.0

Benefits (1,000) $842,601 $1,060,442 79.5

Average Household Size 2.7 2.5

Average Per $42.15 $36.93

Capita Benefit

Sources: Counts for participants are from the Food Stamp Program

Statistical Sunnary of Operations. Est/mates for eligibles

were derived from special tables prepared using the

expanded Wave 4 analysis file of the SIPP 1984 panel.

2O
A. PARTICIPATION RATESt BY SELECTED DEMOGRAPHIC CHARACTERISTICS

Table 2 shows household p_tfcipetion rates dtsa_'agated by the size of the

eligible household. As noted in Doyle and Post (1988), the distribution of eligible

bousehol_ is heavily skewed toward smaller households, wl_ch is also true of the

p_ticipating households. Yet the participation rate among the smallest households was

much lower (47 _rcent) then it was overall (60 _ent). In fact, p_tictpatton rates

increased as the size of the household increased, reaching a hfgh of 81 percent of

households consisting of slx or more people. This pattern of increasing participation

rates across household size illustrates the effect of household size on the tendency to

apply for and receive food stamp benefits.

Table 3 presents individual participation rates disaggregated by selected

demographic characteristics of interest. This table shows that the FSP was serving a

large majority of children in eligible households in August 1954. Over 80 percent of

eligible preschool children, that is, children under age 5, resided in households that

parttclpated in the program. Among school-age children this rate was almost 74 pereent.

The participetion rate for elderly and disabled individuals varied depending on

their living arrangements. Elderly individuals living &lone were more likely to

participate (40 pereent did) than elderly individuals living wfth others (whose rate was 29

pereent). Similarly, 60 percent of eligible disabled individuals living alone received

benefits under the program, whereas only 37 pereent of those living with others

participated. Given that particlpation rates fnerease as the size of the household

increases, this pattern for elderly and disabled individuals is surprising and suggests that

household size is not the sole determ_n!ng factor in the decision to pertictpate.

!

21
TABLE 2

Household Participation aates,

by Household Size,

August 1984

_umber of Humber of

Participating Eligible Household

Household Size Households Households Participation

(number of persons) (lt000) (lt000) Rate

! 2,363 5,000 &7.3I

2 1,&22 2,&51 58.0

3 1,294 1,776 72.9

& 1,052 1,450 72.5

5 628 846 74.2

6+ 584 719 81.2

Sources: Estimates of participants were derived from Program Operations

data and special tabulations of the August 1984 analysis file

of the Integrated quality Control System. Estimates of

eligibles were derived from a sample of 2596 observations

included in the expanded Wave _ analysis file of the SIPP 1984

panel.

22
TABLE 3

Individual Participation R_ttes,

by Selected Demographic Characteristics,

August 1984

Number of Number of

Participating Eligible Individual

Individuals Individuals Participation

(If000) (lt000) Rate

Living Alone

Elderly 1,078 2,716 39.7I

Disabled 216 359 60.2

Living vith Others

Elderly 601 2,079 28.9

Disabled 2&5 667 36.7

Children under Age 18 10,116 13,360 ?5.7

Preschool 3,259 4,070 80.1

School-age 6,857 9,290 73.8

Sources: Estimates of participants vere derived from Program Operations

data and special tabulations of the August 1984 analysis file of

the Integrated quality Control System. Estimates of eligibles

were derived from a sample of 2596 observations included in the

expended Wave & analysis file of the SIPP 1984 panel.

23
According to the USDA (1987)t approximately 22 percent of the participating

food stamp households in August 1984 contained at least one elderly individual, and 61

percent contained children under age 18. These !p'oups, therefore, constitute a

substantial portion of the participant population. Among the eligible households,

however, one-third contained an elderly member, and almost one-half contained children

under 18. The participant and eligible distributions differ because the household

participation rates among these [p'oups, like the individual rates presented above, vary as

is illustrated in Table 4. Only 39 percent of the eligible households containing an elderly

member participated. Households with a disabled member, which are afforded most of

the more generous eligibility standards given to households with an elderly member,

participated at a much higher rate (52 percent).

Among households with children the participation rate was much higher still--??

percent--and among households with school-age children it was ?5 percent. The majority

of both eligible and participating households with children were headed by a single

female adult, and the estimated household participation rate for this group exceeded 100

percent. In other words, the number of participating households, as calculated from the

administrative data, exceeded the number of eligible households, as estimated using

SIPP. This anomalous result stems from the underrepresentation in SIPP of low-income

households headed by a single woman with children, discussed above in section II.

The participation rate among households headed by a single man with children

was 82 percent, somewhat lower than the rate for households headed by a single woman.

The rate was even lower, 5? percents for households containing two or more adults with

children.

24
TABLE &

Household Per_cipation Rates,

by Selected Demographic Characteristics,

August 1984

Number of Number of

Participating Eligible Household

Household Households Households Participation

Contained: (It000) (lt000) Rate

Elderly 1,624 4,128 39.3I

Disabled 516 990 52.2

Children under Age 28 4,476 5,827 76.8

Children Ages 5 to 17 3,472 4,642 74.8

Single Female Adult

with Children 2,547 2,504 101.7

Single Male Adult

with Children 97 118 81.8

Two or More Adults

with Children a 1,832 3,205 57.2

Sources: Estimates of participants were derived from Program Operations

data and special tabulations of the August 1984 analysis file of

the Integrated Quality Control System. Estimates of eligibles

were derived from a sample of 2596 observations included in the

expended Wave & analysis file of the SIPP 198& panel.

alncludes households in which the gender of the household head is unknown

and female-headed households containing two or more adults.

25
The benefit rates were generally higher than the corresponding participation

rates for individuals and households. Table S presents the benefit rates disaggregated by

selected demographic characteristics of households. Th e benefit rate for households with

an elderly member was 49 percent, 14 percentage points higher than the corresponding

individual rate (35 percent) 13 and 19 percentage points higher than the corresponding

household rate (39 percent), in other words, in August 1984 the rSP was serving only

about one-third of the eligible elderly individuals, but almost one-half of the potential

benefits payable to households with an elderly member were being paid out. The pattern

was similar for disabled individuals: the FSP was serving about one-half of the eligible

disabled individuals and households, while roughly two-thirds of the potential benefits for

this group were being provided. 14 This pattern implies that within each of these groups

the needier households participated at a higher rate than households with higher net

income.

Benefits were being paid out to almost nine-tenths of the households with

children under age 18 that were eligible for assistance, with households headed by a

single adult participating at a higher rate than households containing two or more

adults. Like the other two measures of participation, the benefit rate for households

headed by a single woman with children exceeded 100 percent.

B. PARTICIPATION RATES, BY SELECTED ECONOMIC CHARACTERISTICS

Table 6 shows household partleipation rates d_egated by levels of potential

benefits. The estimates suggest that the decision to participate is influenced by the

level of benefits for whleh a household is eligible. In Augamt 1984 the lowest

!

13This rate was estimated from Table 3, summing over those who lived alone

end those who lived with others.

14The overall participation rate for disabled individuals was 45 percent,

calculated from Table 3.

28
TABLE 5

Benefit Rates,

by Selected Demographic Characteristics

of the Household,

August 1984

Potential

BenefiCe Paid to Benefits for

Participating Eligible

Household Households Households Benefit

Contained: (lt000_O00) (lt000t000) Rate

Elderly $ 77.1 $157.6 48.92

Disabled 38.1 56.3 67.7

Children under 18 696.1 787.8 88.4

Children ages 5 to 17 567.6 650.1 87.3

Single Female Adult

with Children 362.2 336.7 107.6

Single Hale Adult

with Children 10.6 11,0 96.9

Tvs or Here Adults

with Children a 323.3 &&0.2 73.5

Sources: Estimates of participants were derived from Program Operations

data and special tabulations of the August 1984 analysis file of

the Integrated quality Control System. Estimates of eligibles

were derived from · sample of 2596 observations included in the

expanded Wave & analysis file of the SIPP 1984 panel,

alncludes households in whlch the Bender of the household head is unknown

and f_le-heeded households with two or more adults,

27
TABLE 6

Household Participation Rates,

by the Level of Monthly Benefits,

August 1984

Number of Number of

Monthly Participating Eli$ible Household

Benefit Level Households Households Participation

(It000) (1_000) Rate

_$10 742 2,586 28.7Z

11-25 351 936 37.5

26-50 618 1,408 43.9

51-75 830 1,302 63.8

76-100 1,260 2,092 60.2

101-150 1,513 1,608 94.1

151-200 989 1,253 79.0

201+ 1,O&O 1,057 98.3

Sources: Estimates of participants were derived from Program Operations

data and special tabulations of the August 1984 analysis file of

the Integrated quality Control System. Estimates of eligibles

were derived from a sample of 2596 observations included in the

expanded Wave & analysis file of the SIPP 1984 panel.

28
participation rate was that for households eligible for benefits no larger than the

minimum benefit of $10 (29 percent). The participation rate generally increased as the

potential benefit rose, with the highest rate being that for households whose potential

benefit exceeded $200. The table shows, however, two exceptions to the expected

monotonic pattern. The rate deolined slightly as the potential benefit increased Just over

$75; increased significantly as the benefit exceeded $100; declined again at $150; and

then Jumped up to a very high rate, 9S peroent, for the highest benefit oategory. These

exceptions to the pattern may be related to the lower participation rate found for units

with zero inoome (shown later). For example if it received no income, a food stamp unit

of size ! in the 50 states and the District of Columbia would be entitled to $76 in

benefits, whioh corresponds to the low rate at the $76 to $100 level.

As shown earlier, in Table 2, participation rates increased as household size

increased. The general increase in participation rates by benefit level Just described

indioates that there is an interaction between inoome and size, both of which are

important factors in determining benefits. Tables 7, 8, and 9 illustrate the participation

rates by income as a percentage of the poverty level, with Table 7 reporting individual

participation rates; Table 8, household rates; and Table 9, benefit rates.

As shown in Table 7, individuals in households eligible for food stamps and with

income at or below the poverty level participated at a rate of 81 percent in August

1984. This rate is slightly different from the FSP participation rate of persons at or

below poverty in 195¢ (TS percent), es estimated by Trlppe et al. (1988). The difference

in these estimates stems from the use of a different approach in estimating the number

of persons in eligible households and from a slightly different reference period for the

estimates.

29
TABLE 7

Individual Participation Rates,

by the Ratio of Cross Income of the

Individual's Food Stamp Unit

to the Monthly Federal Poverty Level,

August 1984

Number of Number of

Income as a Participating Eligible Individual

Percentage of Individuals Individuals Participation

Poverty (It000) (ll000) Rate

Total [ 100 18,750 23,075 81.3Z

0 967 1,404 68.9

1-50 7,673 7,658 100.2

51-100 10,110 14,013 72.1

Total > 100 1,241 7,284 17.0

101-130 1,123 7,032 16.0

> 131 118 253 46.8

Sources: Estimates of participants were derived from Program Operations

data end special tabulations of the August 1984 analysis file of

the Integrated Quality Control System. Estimates of eligibles

were derived from a sample of 2596 observations included in the

expanded Wave & analysis file of the SIPP 1984 panel.

3O
TABLE 8

Household Participation Rates,

by the Ratio of Gross Income

of the Food Stamp Unit

to the Nonthly Federal Poverty Level,

August 1984

Number of Humber of

Income as · Participating Eligible Household

Percentage of Households Households Participation

Poverty (It000) (It000) Rate

Total [ 100 6,822 9,122 7&.8Z

0 479 773 61.9

1-50 2,414 2,580 93.6

51-100 3,928 5,769 68.1

Total · 100 521 3,120 16.7

101-130 455 2,925 15.6

· 131 66 194 34.2

Sources: Estimates of participants were derived from Program Operations

data and special tabulations of the August 1984 analysis file

of the Integrated quality Control System. Estimates of

eligibles were derived from a sample of 2596 observations

included in the expanded Wave & analysis file of the SIPP 1984

panel.

f

i

31
TABLE 9

Benefit Rates,

by the Ratio of Cross Income

of the Food Stamp Unit

to the Monthly Federal Poverty Level,

August 1984

Benefits Paid to Potential Benefits

Income as · Participating for Eligible

Percentage of Households Households Benefit

Poverty (lt000_000) (lt000_000) Rate

Toter < 100 $827.5 $970.0 85.3I

0 66.7 96.8 68.9

1-50 426.0 436.3 97.6

51-100 334.9 436.9 76.7

Total > 100 15.1 90.6 16.6

101-130 14.5 87.3 16.7

> 131 0.5 3.3 16.0

Sources: Estimates of participants were derived from Program Operations

data and special tabulations of the August 1984 analysis file of

the Integrated quality Control System. Estimates of eligibles

were derived from a sample of 2596 observations included in the

expanded Wave & analysis file of the SlPP 1984 panel.

!

32
Individuals in elii_ble households with no cash income had a participation rate of

69 percent (see Table 7). Similarly households with no income participated at a rate of

62 percent (see Table 8), while the benefit rate for this Eroup was 69 percent (Table 9).

Because no household can exist on zero income &nd studies based on other surveys have

shown measurement problems to be prevedent in the zero-income tFroup, the eligible units

with zero income presumably include households for which some form of measurement

problem has occurred, and therefore the zero-income households are overrepresented. 15

The overrepresentation of zero-income households in the eligible pool biases the

participation rate estimates downward.

All three participation rates rose considerably in the I percent to 50 percent

poverty class and c_eclined she.-ply after the 50 percent level, reaching lows of 16 percent

and 17 percent for units with income above poverty. Households and persons in this

higher income class are eligible for only smal] amounts of assistance, and so their low

participation as measured by all three rates is not surprising. Furthermore, based on

figures not shown here, these higher income units tended to consist of more than two

individuals, which means they were not entitled to the minimum benefit.

The estimates of individual participation rates include an anomedous result for

the category between ! percent and 50 percent of the poverty lev_. The estimate is in

excess of 100 percent, which is of course unrealistic. The estimate reflects an

lSSelected studies have shown that households classified as zero income often

represent measurement or classification problems rather than households with no source

of economic support, end that is why they do not oeem to behave in the expected

manner. In a ease-by-ease study of families with ennued reported income below $500 in

the March 1972 CPS, Burns (1974) found that edthoul_h most had iow Incomes,

approximately 70 percent represented some type of conceptual or measurement

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

represented special livini[ L,.rangements, support for which was provided from outside the

household or payment in kind. in another study using matched CPS and interned Revenue

Service (IRS) tax data, the families with zero CPS wal[e or salary income had reported an

average income of $3,911 to the IRS (Herriot end _ie_, 1975).

35
undereount of eligible individuals in this poverty class and is the result of the sampling

and measurement errors discussed above in section IL

The estimates of all three participation rates for units with Income above 130

peroent of poverty varied in an unexpected pattern, as shown in Tables ?, 8, tad 9. The

individual partioipation rate for that income level was 47 pereent_ the eorrasponding

household rate was 34 pereent_ and the eorrespondir_ benefit rate was 15 peroent. Food

stamp eligibility criteria restrlet this group to households containing an elderly or

disabled individual (they are the only ones exempt from the grou income test). These

differences in rates imply that participating households in this income class roeetved

benefits lower than the potential benefits of nonp_tJcipating eligible households in the

same class. Th'is implication is eontre__j to the notion that participation rates increase as

potential benefits increase. On the other hand, the sample size for this group is

somewhat small, so that the estimates have low statistical reliability.

An estimation of the participation patterns by receipt of selected sources of

income concludes this analysis of participation rates in the FSP. Household participation

rates by receipt of earnings, SSI, public assistance, and unemployment compensation are

presented in Table 10. According to the USDA (1987), 19 percent of all participating

households had earnings, while according to the SIPP estimates, 3.8 million eligible

households, or 31 percent of all eligible households (see Table 1), had earnings. Thus, the

estimated participation rate for households with earning, s was much lower than the

overall rate (37 poreent versus 60 peroent overall). Recipients of unemployment

compensation, on the other hand, participated at a higher rate (66 percent) than that of

the total eligible population,

Approximately 18 peroent of all participating food Stamp households in August

1984 received federally administered 88I payments (USDA, 1987). Those households

constituted 17 percent of all eligible households. The household participation rate for

34
TABLE 10

Household Participation Races,

by Selected Sources of Income,

August 1984

Number of iumber of

Participating Eligible Household

Source of Households Households Participation

Income (If000) (lc000) Race

Earned Income 1,420 3,798 37.42

SSI 1,352 2,017 67.0

Elderly in the unic 847 1,315 64.5

Public Assistance 3,823 2,961 129.1

AFDC 3,070 2,280 134.6

Ocher velfare 843 770 109.6

Unemployment Compensation 173 264 65.7

Sources: Estimates of participants were derived from Program Operations

date and special tabulations of the August 1984 analysis file of

the Integrated quality Control System. Estimates of eligibles

were derived from · enmpte of 2596 observations included in the

expanded Wave 4 analysis file of the SIPP 1984 panel,

35
these units--6? percent in Table 10--exceeded the overall participation rate (60 percent)

by about 12 percent. Both the estimate of eligible households with an SSI recipient and

the estimate of partieipatirq_ households with SSI exclude eases of ssi reeipieney in

eashout states, where eash is issued through the SSI program in lieu of food stamps.

Households that contained an elderly member and that also received SSI

participated at a much higher rate, 65 percent, than did households In general that

oontained an elderly member (39 percent from Table 4). The rate of SSI participation by

elderly individuals eligible for that program has been estimated to be 64 percent

(Leavitt and Sehulz, 1988), considerably higher than the eorresDonding rate for elderly

individuals eligible for food stamps (34 percent from Table 3). Given the much higher

FSP par'tieipation rate for elderly participants in SSI than for the elderly in general, It is

likely that the low overall rate of food stamp partieipatlon among the elderly is due to

the low participation rate of those who are not poor enough to qualify for SSI. Such

individuals are entitled to small food stamp benefits as well.

The estimates for households receiving public assistance, and especially those

receiving AFDC, exceeded 100 percent. This unrealistically high rate is primarily due to

the underreporttng of AFDC receipt in SIPP noted earlier in this report. The

underrepresentation in SIPP of low-income female-headed households with children also

contributes to this anomalous finding.

36
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Bur_, 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.s Bureau

of the Census, U.S. Department of Commerce, 1974.

Cue, R.D. "Participation In the Food Stamp l_am, 1979." In Five Thousand American

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Arbor, MI: The University of Miehitan, 1983.

Doyle, P., 2. Czajka, P. Boldln, H. Beebout, and S. Hirabayashl. Conceptual Studies in

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leavitt, T.D., and J.H. 8chulz. Time to Reform the SSI Asset Test? Washington, D.C.:

American Association of Retired Parsons, 1988.

Trlppe, C. "Estimating Rates of Partielpation in the Food Stamp Program: A Review or

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38