Panel Paper: How State Policies Influence the Efficacy of the Supplemental Nutrition Assistance Program In Reducing Poverty

Friday, November 9, 2012 : 8:20 AM
International B (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Laura Tiehen, U.S. Department of Agriculture, Dean Jolliffe, World Bank and Craig Gundersen, University of Illinois

The Supplemental Nutrition Assistance Program (SNAP, formerly called the Food Stamp Program) is one of the largest means-tested transfer programs in the United States, providing almost 45 million Americans in an average month in 2011.  Program expenditures have increased dramatically over the past decade, with total benefits of almost $72 billion in 2011, while the policy environment has shifted to greater emphasis on fiscal austerity.  In an era of tightening budgets, it is essential to examine the program’s effectiveness as part of the social safety net.  An important indicator of SNAP’s effectiveness is the extent to which it alleviates poverty. 

We measure the effect of SNAP on poverty by including SNAP benefits in family income and calculating the percent reduction in poverty measures that portray the rate, depth, and severity of poverty.  We construct an annual state-level panel from 2000 to 2010, using data from the Current Population Survey to calculate our three outcomes of interest; the changes in the rate, depth, and severity of poverty due to SNAP benefits. By examining measures that reflect the depth and severity of poverty, we can capture how SNAP decreases the intensity and inequality of poverty, even among families that are not lifted out of poverty by SNAP benefits.

Our preliminary descriptive analysis shows substantial state-level variation in the antipoverty effect of SNAP.  We expect that the antipoverty effect of SNAP will be influenced by state policies to increase program access and reduce administrative burden, many of which are designed to increase participation among working poor households. For example, many states now exempt the value of one or more household vehicles from the calculation of an applicant’s assets in determining their SNAP eligibility. We also expect the antipoverty effect of SNAP to be influenced by macroeconomic conditions, through their effect on poverty and the propensity to participate in SNAP.

Our identification strategy relies on the variation across states and over time in state SNAP policies and economic conditions. There is a great deal of variation in the policies adopted by states, as well as the timing of their adoption.  There is also a great deal of variation across states and over time in macroeconomic conditions during the time period of our study, which includes the 2001 and the 2007-2009 recessions.

Our results will provide information on how state policy choices have influenced the efficacy of SNAP in improving the well-being of low-income households.  In addition, by considering separate equations for each of the three poverty measures, our analysis can provide evidence of how these policy changes have influenced the targeting effectiveness of the program.  Finally, our results will shed light on how state-level macroeconomic conditions influence SNAP’s effectiveness at reducing poverty.