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Food Stamp Program Participation and Food Insecurity: An Instrumental Variables Approach

Food Stamp Program Participation and Food Insecurity: An Instrumental Variables Approach. Steven T. Yen The University of Tennessee Margaret Andrews Economic Research Service, USDA Zhuo Chen The Centers for Disease Control David B. Eastwood The University of Tennessee. 2. Overview.

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Food Stamp Program Participation and Food Insecurity: An Instrumental Variables Approach

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  1. Food Stamp Program Participationand Food Insecurity:An Instrumental Variables Approach Steven T. Yen The University of Tennessee Margaret Andrews Economic Research Service, USDA Zhuo Chen The Centers for Disease Control David B. Eastwood The University of Tennessee

  2. 2 Overview • Food Stamp Program (FSP) is a major USDA food program. • Food insecurity (FI) is an important measure of welfare. • We investigate • relationship between FSP participation (binary) and FI (censored); • effects of policy/socio-demographic variables on FSP participation and FI.

  3. Overview … • Motivated by mixed results from previous studies: • insignificant/positive effects of FSP on FI; • insignificant/negative effect of FI on FSP; • inefficient 2-step estimates • Estimation by maximum-likelihood method (more efficient)

  4. Overview … • Major findings: • FSP participation decreases FI • Also playing important roles in FSP & FI: • State-level policy variables • e.g., EBT, short re-certification • Socio-demographic variables • e.g., marital status • Being married reduces participation in FSP • Being married reduces FI

  5. Introduction: USDA Food Programs • USDA implements 16 Food Assistance and Nutrition Programs • to provide low-income families and children with access to a healthy diet. • The 16 programs were funded at $42.9 billion in FY 2004. • 1 in 5 Americans participated in one/more programs at some point each year.

  6. Introduction: Food Insecurity in America • Most recent USDA food security survey indicates that • 3.5% of U.S. households (3.8 million people) were food insecure with hunger; • 7.6% (8.3 million people) were food insecure without hunger. • NFSPS sample (1996-97, “low-income”): 26.6% were food insecure during past 30 days.

  7. Empirical Literature • Earlier studies of food insecurity addressed “food insufficiency”. • Gunderson and Oliveira (2001) • investigated food stamp participation and food insufficiency, using 1991–1992 SIPP panels; • used two-step estimator for simultaneous-equation probit (Mallar, 1977). • Findings: • Mutual effects of FSP and FI are insignificant. • FSP participants had same probability of food insufficiency as non-participants.

  8. Empirical Literature … • More recent studies used data for FI. • Huffman and Jensen (2003) • use the SPD data; • estimated simultaneous-equation probit, also using Mallar’s (1977) procedure: • FS participation (0-1); • Labor-force participation (0-1); • food insecurity (0-1). • Findings • FI decreases FSP participation; • FSP participation does not affect FI

  9. Empirical Literature … • Jensen (2002) estimated the FSP participation (0-1) and food insecurity (0,1,2,3), in a 2-equation SUR system • Finding: FI and FSP “are affected in the same direction by random shocks or unmeasured effects.” (drawing on significant error correlation)

  10. Empirical Literature … • Based on the 1995 and 1999 Food Security Supplements to the CPS, Nord (2001) found: households receiving food stamps registered almost no change in the measured prevalence of FI or hunger during the period. • Only one study has shown a clear positive association between FI and the use of public assistance. Borjas (2004) shows that a 10% cut in the fraction of the population that receives public assistance increased the percent of FI households by about 5%.

  11. Empirical Literature … • Kabbani and Yazbeck (2004) pooled multiple years of data from the CPS and, using a two-stage estimation procedure to control for the endogeneity of the program participation decision, Results suggest that participation in the FSP appears to moderate the observed differences for households with children aged 5 to 18, but not significantly.

  12. Empirical Literature … • Kabbani and Kmeid (2005) • Logit analysis • Sample: CPS; FSP-eligible households that experienced hunger during the year • Dependent variable (0-1): experienced hunger during the last 30 days • Results: • FSP participation (0-1; exogenous) does not affect the odd of hunger • FSP amount (exogenous) significantly reduces the odd of hunger

  13. Empirical Literature … • Apparent inconsistency among previous results suggests … that a more careful investigation between FSP participation & FI is needed.

  14. This Study • Investigates • relationship between FSP and FI; • effects of socio-demographic variables on FSP and FI, using an instrumental variables approach.

  15. This Study … • NFSPS 1996-97 data offer a unique opportunity for such a pursuit: • include the 18 items of the food security module (used for annual monitoring of FI); • include follow-up questions that allow examination of FI status in the past 30 days; • variations in state-level variables: • EBT adoption; • re-certificationperiods provide better instruments than those used in previous studies (except Kabbani and Wilde, 2003; Kabbani and Yazbeck, 2004, 2005)

  16. This Study … • Methodology: accommodates endogeneity of FSP in the FI equation • Results • FSP improves (–) FI.

  17. Econometric Models

  18. Econometric Models …

  19. Econometric Model …

  20. Data • National Food Stamp Program Survey (NFSPS), 1996–97. • Low-income sample (below 150% of poverty threshold). • Endogenous variables: • FSP participation (0-1) • FI – constructed from responses to 18 questions in “Food Security Module” • Censored (considered in this study) • Binary (considered elsewhere) • Ordinal (considered elsewhere)

  21. Data … Food Security Module: Sample Questions 3. “The food that (I/we) bought just didn’t last, and (I/we) didn’t have money to get more.” Was that often, sometimes, or never true for (you/your household) in the last 12 months? [ ] Often true [ ] Sometimes true [ ] Never true [ ] DK or Refused 4. “(I/we) couldn’t afford to eat balanced meals.” Was that often, sometimes, or never true for (you/your household) in the last 12 months? [ ] Often true [ ] Sometimes true [ ] Never true [ ] DK or Refused

  22. Results

  23. Results … Effect of FSP participation on FI Sample: Mean = 7.36; SD=1.84 (FI>0, FSP=0) Mean = 6.88; SD=1.68 (FI>0, FSP=1)

  24. Marginal Effects on Probabilities

  25. Marginal Effects on Probabilities …

  26. Marginal Effects on Probabilities …

  27. Marginal Effects on Probabilities …

  28. Marginal Effects on Probabilities …

  29. Marginal Effects on FI

  30. Marginal Effects on FI …

  31. Marginal Effects on FI …

  32. Marginal Effects on FI …

  33. Concluding Remarks • Nord, Andrews, and Carlson (2004) cautioned that the relationship between food assistance programs and FI is complex due to the two-way causality. • This study answers that call to address the causality issue by developing a instrumental variables model of FSP participation and FI.

  34. Concluding Remarks … • Results suggest … lack of association between FSP participation and FI in previous studies is likely due to the failure to accommodate the simultaneity, sampling weight, and the error covariance structure.

  35. Concluding Remarks … • Our results • FSP reduces FI. • Obvious policy implications

  36. Concluding Remarks … • Results in sharp contrast to previous findings on effect of FSP on FI: • Opposite (Huffman and Jensen, 2003); • Predominantly insignificant/non-existent relationship (Gundersen and Oliveira, 2001; Gibson-Davis and Foster, 2005; Jensen, 2002; Kabbani and Yazbeck, 2004, 2005; Oberholser and Tuttle, 2004).

  37. Concluding Remarks … • Use of state-level FSP policy variables • used improve the quality of instruments (without which the model would have been difficult to estimate). • Allow drawing more policy-relevant conclusions. • Econometric issues: state-level variables which vary only across states but not observations – use of hierarchical models (Raudenbush and Bryk, 2002)??

  38. Concluding Remarks … • Short re-certification (– on FSP; + on FI prob & level) • Improve to promote FSP participation and eliminate FI; • EBT implementation (n.s. on FSP/FI) • may be related to the combined effect of • reduced stigma; • difficulty to use among the poor who are less likely to own a debit card.

  39. Concluding Remarks … • Other determinants of FSP participation and FI have important policy implications as well. For instance, • married and widowed individuals have a lower FSP participation rate than individuals who are never married; • this segment of the population can be targeted for promotion of FSP participation; • which, in reference to the negative effect of FSP participation on FI, can help reduce FI among these individuals (true for married; not for widowed)

  40. Concluding Remarks … • Dissatisfied-Shopping (+ on FI probability and level) • Establishment of more easily accessible and friendly shopping facilities may also improve (reduce) on consumer dissatisfaction with shopping in the neighborhoods, … • which will help reduce FI.

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