Effects of the Food Stamp Program on Food Consumption in the Southern United States

The Food Stamp Program (FSP) began in 1939 in several ways. First, our analysis is more deon a limited basis. In 1961, President Kennedy tailed in that it covers the expenditure pattern of created an experimental Food Stamp Program 15 food commodities. Indeed, in order to investithat became nationwide after enactment of the gate how the FSP affects food consumption beFood Stamp Act of 1964. The two main purposes havior, it is useful to analyze this impact on seof the FSP are to improve the nutritional status of lected food items. Second, particular attention is low income families and to support farm income given to interaction variables in the specification by increasing food demand. The cost of the FSP of our model, providing some new evidence on rose from $1.8 billion in 1972, to $6.9 billion in the consumption behavior of low income house1979. This dramatic increase has motivated a holds. For example, it is found that the influence considerable research effort to evaluate the pro- of the FSP on household food purchases appears gram. This research can be classified into three to vary with the location, race, and education of broad categories (that are not necessarily mutu- the households participating in the program. ally exclusive). The first category concerns the impact of the FSP on the nutritional status of participants. Lane, and Scearce and Jensen have THE MODEL found some evidence that the program has a positive impact on the diet of participant households. Consumption theory can provide some basis The second category assesses how participation for the specification of a model of consumption in the FSP affects family expenditures. In this behavior. The theoretical implications of particicontext, West and Price, Neenan and Davis, and pation in the FSP in terms of total food expendiWest have investigated the impact of the pro- tures have been presented by Mittelhammer and gram on household total food expenditures. The West, and Sullivan. Although the increase in third category of research concerns the impact of total food demand under the FSP depends on the FSP on the nation's economy. Nelson and household preferences, they argue that the FSP Perrin have estimated that the nation's economy tends to stimulate the demand for food beyond gained $2.3 billion in business receipts in 1976 that arising strictly from an income transfer, parbecause of an increase in final demand of $5.3 ticularly among families with very low income. billion in bonus food stamps.' In other words, consumption theory suggests This paper focuses on the second category of that the marginal impact of the food stamp transresearch. It examines the influence of participa- fer on total food expenditures is likely to appear tion in the FSP on the food consumption of low greater than the marginal impact of income on income households in the Southern region of the food expenditures. The reason is that the FSP United States. It also investigates the impact of acts as an in-kind income supplement, the inselected sociodemographic factors (housing, come transfer being based on income level and tenure, age, family size, race, etc.) on food ex- family size. The empirical evidence tends to suppenditures for low income households. The port these theoretical arguments: Hymans and choice of the Southern region is partly motivated Shapiro, West and Price, and Neenan and Davis by the relatively high poverty count in the South estimated that the marginal impact of the food (Kletke), and by the empirical evidence that sug- stamp bonus on total food expenditures is posigests that food consumption behavior in the tive and substantially larger than the marginal South differs from consumption behavior in the impact of income on total food for low income rest of the country (Buse and Salathe). households. Our approach departs from previous research A question that has been asked about the im