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Consumption Reponses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program

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Author Info
Hilary W. Hoynes
Diane Whitmore Schanzenbach

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Abstract

Economists have strong theoretical predictions about how in-kind transfer programs – such as providing vouchers for food – impact consumption. Despite the prominence of the theory, there has been little empirical work documenting actual responses to in-kind transfers. In this work, we leverage previously underutilized variation in the date of the county-level original implementation of the Food Stamp Program in the 1960s and early 1970s. Using the Panel Study of Income Dynamics, we employ difference-in-difference methods to estimate the impact of program availability on food spending, labor supply and family income. Consistent with theoretical predictions, we find that the introduction of food stamps leads to a decrease in out of pocket food spending, an increase in overall food expenditures, and a decrease (although insignificant) in the propensity to take meals out. The results are quite precisely estimated for total food spending, with less precision in estimating the impacts on out of pocket food costs. We find evidence of small work disincentive impacts in the PSID, which is confirmed with an analysis of the 1960, 1970 and 1980 Census.

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Paper provided by Harris School of Public Policy Studies, University of Chicago in its series Working Papers with number 0711.

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Date of creation: Mar 2007
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Handle: RePEc:har:wpaper:0711

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Related research
Keywords: food stamp; consumption; food spending; Panel Study of Income Dynamics;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Douglas Almond & Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2008. "Inside the War on Poverty: The Impact of Food Stamps on Birth Outcomes," NBER Working Papers 14306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Howard, Larry L. & Prakash, Nishith, 2009. "Do Means-Tested School Lunch Subsidies Change Children's Weekly Consumption Patterns?," IZA Discussion Papers 4427, Institute for the Study of Labor (IZA). [Downloadable!]
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