End of purchase requirement fails 

to change food stamp participation 

Recipients no longer must buy stamps,

but this has had little effect on characteristics 

of participants; highest participation is among 

single mothers, blacks, and no wage earners,

according to the Consumer Expenditure Survey 

GREGORY M. BROWN 

The Food Stamp Program was established in 1964 to " . . . raise 

levels of nutrition among low-income households . . . "1 The 

program has grown since its inception so that in 1985, the 

program cost almost $20 billion and benefited an average 19 

million people per month. How best to distribute benefits to 

program participants has been debated. Should participants be 

required to purchase food stamps? Should participants be given 

the value of the stamps in cash, rather than coupons? At the 

start of the program, participants were required to purchase the 

stamps. The amount by which the value of the stamps exceeded 

the purchase price was the actual benefit level, called the bonus. 

The 1977 Food Stamp Act began a new era in food stamp 

benefit distribution by eliminating the purchase requirement. 

This change took effect in 1979. A great deal of research has 

been done examining the characteristics of program 

participants, and the determinants of participation. However, 

little research has been done using data collected since the 

elimination of the purchase requirement.2

 The purchase 

requirement was believed to discourage participation by adding 

to the application burden which is the cost in terms of time and 

effort needed by the applicant to take part in the 

Gregory M. Brown is an economist in the Division of Consumer Expenditure 

Surveys, Bureau of Labor Statistics. 

program.3 It is reasonable to expect that this discouraged 

participation unevenly across the demographic spectrum of 

food stamp eligibles.4

This article compares the characteristics of participants in the 

program to those eligible but not participating, and examines 

the demographic factors related to participation using data 

collected after the elimination of the purchase requirement. The 

results of this study will indicate if any substantial changes in 

the characteristics of participants and the factors related to 

participation have occurred since the program's structure was 

altered. 

Data 

 Data used for this study are from the 1984-85 Bureau 

of Labor Statistics' Consumer Expenditure Interview 

Survey. The unit of measure for the survey is called a 

consumer unit. Consumer units are determined by three 

characteristics: (1) all members of the household are 

related by blood, marriage, adoption, or other legal 

arrangements; (2) two or more persons living together 

who pool their income to make joint expenditure decisions; or (3) a person who lives alone or shares a 

household with others or who lives as a roomer in a 

private home or lodging house or in permanent living 

quarters in a hotel or motel, but is financially independent. To be considered financially independent, at least 

Reprinted from July 1988 

Monthly Labor Review 

U.S. DEPARTMENT OF LABOR 

Bureau of Labor Statistics 
two of three spending categories, food, housing, and other living 

expenses, have to be provided by the respondent. .

The survey uses a rotating sample design with respondents 

interviewed once during each of five consecutive quarters.5 

Expenditure data are collected during each interview and income 

and financial asset data are collected during the second and fifth 

interviews. For the purposes of determining food stamp eligibility, 

only the fifth interview requests sufficient financial asset 

information. Accordingly, this study uses only fifth interview 

results. Because of the sampling technique and the subsequent 

weighting scheme used, employing only fifth interview results still 

represents a national sample. This original sample consisted of 

10,300 respondents. After data screening and elimination of food 

stamp ineligible respondents, 1,810 respondents remained. The 

procedures used to simulate eligibility are described in the 

following section. Data screening consisted primarily of eliminating 

incomplete income reporters.'

Determination of eligibility

The criteria used to determine eligibility for food stamps are 

lengthy. Title 7 of the Code of Federal Regulations details the 

eligibility criteria, which consist of 136 pages of fine print. Previous 

researchers using the Diary component of the Consumer 

Expenditure Surveys have determined eligibility by statistical rules 

of thumb.' In contrast, the Interview Survey provides the 

information necessary to apply most of the eligibility criteria 

directly. The exceptions to this arise through the inability to identify 

striking workers, disabled consumer unit members, and compliance 

with the work registration requirements.

Students, categorically ineligible, were eliminated from the

sample, as were recipients of Supplemental Security Income from 

the "cash out" States, California and Wisconsin.8Income deductions 

are allowed for excess child care, shelter, and medical expenses, 

and for earned income under the Food Stamp Program. The 

allowable deduction depends upon whether there are household 

members age 60 or older, or disabled members. Food stamp 

eligibility criteria are based on monthly reporting. The Interview 

Survey, however, asks respondents how much was spent for 

different items over the 3-month period. Thus, to compute the child 

care, shelter, and medical deductions, the reported quarterly 

expenditures were used and the limits on deductions allowed were 

multiplied by three. Similarly, a quarterly average of the reported 

annual income was used. For the assets test, the account balances as 

of the last day of the last month covered by the interview period 

were employed.

The final database contained 516 eligible program participants, 

and 1,294 eligible nonparticipants. Weighted to a national sample, 

they represent roughly 4.4 million

eligible consumer unit participants out of 15.9 million eligibles, 

indicating a participation rate of 28 percent.9 This participation rate 

falls in the range of those found in previous studies. John Czajka 

estimated a rate between 28 percent and 33 percent; Christine 

Ranney and John Kushman, on the other hand, reported that since 

the elimination of the purchase requirement, the participation rate 

has risen by 14 percent.10 The comparability of the participation rate 

found in this study with those found in past studies is limited by the 

different data sources and methods used to simulate eligibility.

Characteristics of participants

Participation in the Food Stamp Program is not the only 

difference between the eligible consumer unit participants and 

eligible nonparticipants. An examination of the demographic 

characteristics of these two groups reveals many other significant 

differences." The average consumer unit size is significantly greater 

for participants, 3.1, compared to nonparticipants, 2.6. The larger 

consumer units are, on average, composed of more children, and 

fewer members age 60 and older. Participant means are 1.4 

children, and .3 members 60 or older, as opposed to nonparticipant 

means of .8 and .5, respectively.

There are also significant racial and educational attainment 

differences between participants and nonparticipants. Blacks 

account for a greater proportion of participants than nonparticipants,

36 percent as opposed to 18 percent. A striking difference in the 

levels of education is that 11 percent of participants have some 

college training, whereas the proportion is 31 percent for 

nonparticipants.

Eligible nonparticipant consumer units show not only a higher 

degree of investment in education, but a higher level of physical 

assets as well. The proportion of homeowners is 45 percent for 

nonparticipants and 23 percent for participants, while the average 

number of vehicles owned is 1.2 for nonparticipants and .6 for 

participants. The mean income of nonparticipants is significantly 

higher, before and after taxes, than the mean income of participants, 

excluding the food stamp bonus. However, after including the 

bonus there is no significant difference between the two groups. It 

would seem that, although current incomes do not differ after 

accounting for participation, nonparticipants are in a better position 

to withstand a temporary financial setback, such as the loss of a job.

The relationship of these characteristics to participation is 

reflected in the participation rates in table 1. The consumer units 

with the highest rate of participation are those with single female 

parents, 69 percent, while the lowest rates are those with four or 

more earners, 7 percent, and more highly educated persons, 12 

percent. The impact of racial differences on the probability of
.MONTHLY LABOR REVIEW July 1988 * End of Purchase Requirement and Food Stamp Participation

participation is reflected in the 44-percent rate among blacks and 

the 22-percent rate among whites. Participation rates decrease in 

higher age groups, from 40 percent for those 25 to 34 to 20 percent 

for those 75 and older.

How do differences between participants and eligible 

nonparticipants compare to those found in studies using 

data collected prior to the elimination of the purchase 

requirement? Donald West employed 1972-73 Diary Survey 

data for his analysis which shows the same overall 

differences between participants and nonparticipants as 

those found in this study;12 participant consumer units 

have larger families, fewer homeowners, a greater percentage 

headed by blacks and women, and a lower level of educational 

attainment than nonparticipant units. Significance tests by West 

also resulted in the similar finding that income differences are not 

significant after accounting for food stamp benefits. While some 

differences exist between the results of this study and those of 

West's, the direction and relative magnitudes of the differences 

between participants and nonparticipants are similar. Another 

benchmark for comparison, which reported similar results, is a 

study by Czajka which employed data from the Income Survey 

Development Program, the predecessor to the Survey of Income 

and Program Participation.

In the past, several propositions have been put forth to explain 

the differences in participation among socioeconomic groups. 

Included in this list has been the purchase requirement. Other 

factors often cited have been welfare stigma, the burden of the 

application process, and ignorance about the program and 

potential eligibility. Eliminating the purchase requirement helps 

reduce the burden of the application press. Besides ignorance of 

the program, these possible explanations are a listing of the cost 

considerations in a cost-benefit type approach that a household 

might consider in deciding whether to participate.

Focusing on ignorance about the program as an explanation for 

nonparticipation, it seems reasonable that more highly educated 

eligibles would be more aware of the program and their possible 

eligibility. Following this line of reasoning, the expectation is that 

participation rates would be higher among more highly educated 

eligibles. However, the estimates of program participation rates by 

educational attainment in table I show just the opposite. The 

notion of welfare stigma being associated with participation helps 

to explain this result.

Ranney and Kushman directly incorporated stigma effects in 

their model of the decision. In this framework, households are 

said to be concerned with prestige and privacy." Welfare stigma is 

the negative effect program participation has on household 

prestige and privacy.13 If households define prestige in 

relationship to a perceived peer group then the strength of this 

negative relationship might be greater for more highly educated 

eligibles, whose peer group is economically better off. This would 

depress their participation rates relative to less educated eligibles.

Observed differences in turnover in the Food Stamp Program 

among demographic groups are also useful in exploring 

explanations of differences in participation rates. Timothy Carr, 

Pat Doyle, and Irene Lubitz found that elderly and single parent 

households, and households receiving Aid to Families with 

Dependent Children are low turnover families." They tend to stay 

in the program for more months than other demographic groups. 

High
turnover families are characterized as those with earners, more 

highly educated reference persons, and two parents.15 These 

families are more likely to perceive their situation as temporary. 

For example, the more highly educated eligibles may be between 

jobs. From a costbenefit approach, the expected returns from a 

short period of participation may not outweigh the perceived cost 

in terms of stigma and the application burden.

If we consider the application burden as a cost discounted over 

the length of time in the program, consumer units in the program 

for shorter durations face a relatively higher cost. This is also true 

with respect to the updating procedures required to remain in the 

program if these procedures have a learning curve. These 

propositions are possible explanations of why lower participation 

rates occur among high turnover demographic groups. 

Additionally, they imply that the elimination of the purchase 

requirement, by reducing the steps in the application process, 

would be more likely to improve participation among these 

groups. However, as the results above show, an improvement in 

participation among these groups did not take place.

The same considerations used in exploring the differences in 

participation rates by characteristics can also be used to explain 

participation rates by sources of income. The following tabulation 

shows participation rates by sources of income. These income 

sources are not mutually exclusive.

Eligible Percent of

consumer eligibles

 Participation unites reporting

 Rate (thou- income

Income Source (percent) sands) source

Public assistance (including

 job training grants) . . . . . . 87 2,403 15.2

Unemployment . . . . . . . . . . . 33 1,177 7.4

Worker’s compensation

 and veteran’s benefits . . . . . 26 544 3.4

Supplemental Security . . . . . 64 1,707 10.8

Social Security or 

 railroad retirement . . . . . . . . 23 5,268 33.2

Wage or salaries . . . . . . . . . . . 20 8,529 53.8

Interest on savings account(s)

 or bonds . . . . . . . . . . . . . . . .10 1,623 10.2

The highest level of participation is among consumer units 

receiving public assistance, 87 percent. There are several 

reasons to expect this. It may partly reflect a reduced 

application burden. In some States it is possible to apply for 

the Food Stamp Program on the same application used for 

public assistance.16 Another possibility is that the welfare 

stigma from participation in different programs is related 

and decreases at the margin. If an individual participates in 

a public assistance program, he or she may feel less stigma 

from using food stamps than someone who participates only 

in the Food Stamp Program. Lastly, this high participation 

rate may reflect a deeper level of need." The most frequently 

reported income source is wages and salaries, 53.8 percent. While 

this is the most commonly reported form of income among 

eligibles, the participation rate is only 20 percent. For these 

eligibles, the peer group is other working households. For them, 

the stigma deterrent to participation may be greater, and their 

perceived need less.

Determinants of participation

By using a regression model which isolates the impact of each 

demographic characteristic on participation, a clearer picture of the 

relative importance of these characteristics in determining 

participation can be obtained. A probit model was estimated to 

accomplish this task.18

The probit results show that as income increases the probability 

of participation decreases.19 There are two ways to view this 

result. First, those who decide to participate do so because they are 

needier than those who do not participate. Second, the amount of 

the food stamp bonus will tend to be less for those with higher 

income, so after weighing the benefits against the costs, the 

benefits are too small to bring about participation for the higher 

income eligibles.

Other results from the probit model estimation are in line with 

the differences in characteristics already reported. The probability 

of participation is higher for consumer units with children or with 

a black reference person. The probability of participation is lower 

when the consumer unit has a reference person with some college 

education and owns its residence. Neither region of residence nor 

urban residence is significantly related to participation.

Another factor important in the probability of participation 

model is the consumer unit's income sources. Recipients of 

unemployment benefits and pensions are more likely to 

participate. Participation in other welfare programs is also strongly 

related to participation in the Food Stamp Program. In part, this 

probably reflects the reduced burden of applying for more than 

one program. However, as Czajka points out, it is not possible to 

determine if participation in other welfare programs induces 

participation in the Food Stamp Program or if participation in the 

Food Stamp Program induces participation in other programs.

To clarify the implications of these results, a representative 

consumer unit was selected and the probability of its participation 

calculated, using the probit coefficients.20 This representative 

consumer unit is a husband and wife with one child under 6 years 

of age. The reference person is employed with a wage income of 

51,500 per quarter, the mean quarterly income for the entire 

sample of eligible consumer units. In addition, the reference 

person is white, a high school graduate, and the consumer unit 

rents its dwelling. The probability of this consumer unit 

participating in the program is 16 percent. If one characteristic
MONTHLY LABOR REVIEW July 1988  End of Purchase Requirement and Food Stamp Participation

of the representative consumer unit is changed, holding all other 

characteristics constant, the probability of participation changes as 

well. For example, the probability of participating increases to 18 

percent if another child under 6 years of age is included in the 

consumer unit. If the dwelling place is owned and not rented, the 

probability falls to 7 percent.

If the reference person is black the probability of participation 

is 24 percent. Should he or she have a college degree, the 

probability is 8 percent. The probability decreases even further to 

4 percent if the reference person is age 60 or older and the child is 

older than 17. The probability of participation of a single parent 

consumer unit with two children under 6 is 29 percent.

The strength of the relationship between income source and 

participation is clearly evident. If the representative consumer unit 

remained the same in every way except that income came from 

unemployment benefits rather

than wages, the probability of participation would be 45 percent. If 

the income source is public assistance, the probability rises to 83 

percent.

Conclusion

The elimination of the purchase requirement was intended to 

improve the level of participation in the Food Stamp Program. 

While the comparability of the overall participation rate found in 

this study with those found in past studies is limited, it appears 

that if an increase in the overall participation rate has taken place, 

it is not large. Furthermore, reasonable expectations that more 

highly educated eligibles and two-parent households would be 

encouraged to participate by the elimination of the purchase 

requirement are not supported by these findings. The pattern of 

uneven levels of participation across demographic groups has 

remained in this post-purchase requirement period.

FOOTNOTES

1

See The Food Stamp Act of 1964, Public Law 88-525, 88th Cong., 1964 (H.R. 

10222).

2

See Christine Ranney and John Kushman, "Cash Equivalence, Welfare Stigma, 

and Food Stamps," Southern Economic Journal, April 1987, pp. 1011-27.

3Additionally, if the purchase requirement exceeded the usual food expenditure by 

the household, participation was discouraged.

4This point is more fully discussed in this article while exploring how the 

application burden could lead to differences in participation rates among demographic 

groups.

5

For complete definitions of the terms used in the survey, see Consumer 

Expenditure Survey: Interview Survey, 1984, Bulletin 2267 (Bureau of Labor 

Statistics, 1986).

6

For a complete description of data limitations, screening, and eligibility 

simulation, see Gregory M. Brown, "Food Stamp Program Participation and 

Non-Food Expenditures;" paper delivered at the meeting of the Eastern Economic 

Association, Boston, MA, March t0-12, 1988.

7

See Chuang Huang, L. Stanley Fletcher, and Robert Raunikar, "Modeling the 

Effects of the Food Stamp Program on Participating Households' Purchases: An 

Empirical Application," Southern Journal of Agricultural Economics, December 1981 

pp. 21-28; and Donald A. West, Effects of the Food Stamp Program on Food 

Expenditures: Art Analysis of the BLS CES 1973-74 Diary Survey. Research Bulletin 

XBO922 (Pullman, w A, Washington State University, 1984).

8No attempt was made to eliminate the demonstration Supplemental Security 

Income cash out areas.

9There are many reasons to suspect that this understates the participation rate. See 

Brown, "Food Stamp Program Participation and Non-Food Expenditures"; and 

Timothy Carr, Pat Doyle, and Irene Lubitz, Turnover in the Food Stamp Program: A 

Preliminary Analysis (Washington, DC, Mathematica Policy Research, 1984). The 

simulation also produced 66 seemingly ineligible participants. A likely explanation 

for their occurrence is that the use of quarterly averages of annual income doesn't 

adequately reflect the variations in income that lead these respondents to 

participation. Because the presence of these seemingly ineligible consumer units 

might distort the relationship between participation and income for participants, they 

were eliminated from the sample. If they were included, the estimated number of 

eligible consumer units would be roughly 17 million, with 5.6 million participating, a 

participation rate of 33 percent. Whereas, if those consumer units with incomplete 

income information that were estimated to be eligible nonparticipants were 

eliminated, the participation rate would rise to 31 percent.

10See John L. Czajka, Determinants of Participation in the Food Stamp Program in 

1979: Spring 1979 (Washington, DC. Mathematica Policy Research, 1981): and Ranney 

and Kushman, "Cash Equivalence:" p. 1012.

11A t-test was used to test for the significance of differences in these characteristics. 

The t-statistic was based on the results obtained from estimating weighted regressions, 

and a significance level of alpha - .01.

12West, "Effects of the Food Stamp Program."

13An earlier work incorporating welfare stigma in a model of program participation is 

Robert Moffitt, "An Economic Model of Welfare Stigma," American Economic Review. 

December 1983, pp. 1023-35.

14See Carr, Doyle, and Lubitz. Turnover in the Food Stamp Program, p. 41. One 

reason why the elderly have a low turnover rate may relate to the reduced administrative 

burden they face. If all household members are 60 or older, and have no earned income, 

then they do not have to report monthly. See Code of Federal Regulations 

(Washington, DC. Superintendent of Documents, Government Printing Office, 1985), p. 

499.

15The reference person is the first member mentioned by the respondent when asked 

to "Start with the name of the person or one of the persons who owns or rents the 

home." It is with respect to this person that the relationship of other consumer unit 

members is determined.

16See Code of Federal Regulations, p. 384.

17Czajka, Determinants of Participation.

18For a description of the probit model, see G.S. Maddala, Limiteddependent and 

Qualitative Variables in Econometrics (New York, Cambridge University Press, 1983).

19The probit model results can be obtained from the author.

20The probability of participation equals 1 - F(-B'X,), where F is the cumulative 

normal distribution, B' is the vector of probit coefficients. and X, are the data describing 

the consumer unit.

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