Do Food Stamp Restrictions Really Work?

A recent article in the L.A. Times describes how Ronda Storms, a Republican state senator in Florida was so galled at the sight of grocery shopper using federal food stamp money to purchase junk food that she sponsored a bill in the state of Florida that would prohibit people from using funds provided by the Supplemental Nutrition Assistance Program (SNAP) to purchase “non-staple, unhealthy food.” Proposed legislation seeking to restrict SNAP purchases may be driven by politician’s concerns (genuine or not) about public health, but such legislation can be subject to the resistance of a rather odd coalition of anti-hunger advocates and powerful business lobbyists. If you think the Coca-Cola and its upstream raw material producers don’t profit from SNAP revenues, think again.

Aside from avoiding further stigmatization of the poor, there may be good economic reasons for rejecting such proposals. Can earmarked funds really prevent a SNAP recipient from purchasing junk food? If a person with a monthly income of say $400 receives $100 in food stamps, and the person’s monthly food budget under the SNAP program is $200 ($100 purchased with her own cash, and $100 purchased with food stamps), and the person typically spends say a quarter of her budget ($50 of the $200) on “junk food,” then obviously the person will still be able to purchase $50 worth of junk food—at no additional cost—even if the earmarked food stamps are restricted to healthy food items. Under the restriction she simply uses $50 of her own cash to buy the junk food, whereas before she could have used the SNAP money to buy the junk food. In either case, the total food purchased is $200, with $50 of that amount spent on junk food.

So what happens to the consumer who has the same $200 budget, but who typically spends $150 on junk food? Will she be forced to buy $50 worth of healthy foods that she would not have otherwise purchased? Or will she let some of the SNAP benefits go unused? Many would argue that either outcome would be more beneficial. However, such a condition may be the exception rather than the rule; and before we introduce a policy that restricts all recipients' food consumption, we ought to do a little research. Besides, if politicians like Ronda Storms want to implement policy that substantially improves public health for all citizens, it might be more efficient (a better use of taxpayers’ dollars) and more effective to target the producers of unhealthy foods rather than the consumers. Check out my post on Denmark's fat tax.

There is also strong evidence to support that idea that a cash grant program is superior to a restrictive food stamp program. The idea here is that if recipients would have spent at least as much of their own money on food purchases as they received in stamps then not being able to use stamps to buy other goods is a somewhat meaningless restriction; and if recipients spend less on food than they receive in food stamps, then of course the food stamp program has the effect of forcing the consumer to devote more to food than she would have chosen to spend on her own.

The USDA Food and Nutrition Service issued a report in 2007 that suggests there is no known research-based evidence to support restricting food stamps and therefore no basis for singling out low-income recipients. The USDA’s own estimates indicate that approximately 70 percent of all food stamp recipients—those who receive less than the maximum benefits allowed—are expected to purchase some portion of their food with their own money.