Staff Papers Series

Staff Paper P71-31 December 1976

An Analysis of the Market For Food Stamps

W. Keith Bryant

University of MinnesotaInstitute of Agriculture, Forestry and Home Economics

St. Paul, Minnesota 55108

STAFF PAPER P71-31 December 1971

AN ANALYSIS OF THE MARKET FOR FOOD STAMPS

W. KEITH BRYANT

/.: , .;;S .... ..... "...... ' F' !) S '. r ;

4 , I I _ te'-. . ' smp P p.-ogr;'¢:.n,,

rThis papwr repre1s ts i n ^tte0'y t . th namP

.. or a p C u C( goo. h hwa s t.c te. r) Coerif&tt

hihe for.e:s t";te rmn b rga the .:and fo. .i an..d suppI f0 o f f.d st mp:. t

,on c:ed .:.": an a.t~ .0,.,:,P;t t.o co.tr bt .t;¢ i' le tho an t;;o/; 04 o¥f u"f i C

rorrtp ?ro R t. .. c to rs oC9 z e e! couno r iitj ^(t ^nac e ^cl,,t- hy econorS 4 ts.

:i' rece''t :. y.

'. The a *aly' of hte FSP r^ t 'portant 1r sei f C t t 1 O o,

'e projgarrs the pixwr ri'gkhtt'y clahm S beien stuEW d I oo adUch ad[ cS ed

'!- tle' Pa.~,}$ribe..9 |.'i..:~],.:,( Hoove; anrtd Maddox 4 j. Kwot |t. j, Sega I 2],,

Sefirneir [.i3 a¢o9 ;,thef's ha.ve made s:ud.sa.i o'f; "Iarli,,u i -apet;. oi lche

I-rt^r. and oF ,th.: fed ph'rogra^'So r. ste;de t i f;. n:,.s9,:d ;o b,e 8 i,.s',$n

iy .fot the F'SP l, O' represntatv of a rg numbr' o 'I. blc ad .ot ^'--

t act I v ¢ S.- The.# PSP F S i charac terS Td -by l bureau G{-^h ap rfev.-

pro, gra asid wh i c-h Cm, c s-sno t on I y a lfQ|situe *rom ;heich It oi. #di;.

Itrual appropfria'tion, but, ; t AISo se i s tshe sa rvS ice t.. p ,'Adl:s, ,

,By food s ¢,te',ps to oe- W:eho: , Co' , ;: ho, p i ,e :

dag.. IidIg -. .t

aC-,t | i^ e s C ah0 tC ee ^uar t z,; i f 'S i T. t TSAP ;5» rto er-

be 4L qus Fit 4 rSwtlp' f £h-S: .p ,f a ity ard.

. .

b4 L i4Aecui§ a t- r ;e vW aso 5(1,in tfl h n t P t r3 Mrn I te d 3 t S>

iTho amosc Ielop 6 rI' th a I a lr ex.t:s"o .n 4f a mode o -a s

tra§§n 6 t g Ii s one wbh tae U r tpt p rt a feet The e ens ion

s6 tos whaW.t [kanen ca&ieAd a Ii'xed bureat crmOqe tUat L vc'nly a xPhair"ea

ts output fcsr a bu dqget tut aiaso .s 6e ls St at a ul t pI inota The Food and

Nytr ort $,r#Ice (FNS) of the USiAv) te yagency wAthich a4drtfints) ters the FsP

aSom B tg th aother fd pr oijy ra^ rltp obi&ous ly Is a imT,4xed ' bur4eiaut I sksiasen

has pro-ded iibs n owo azalysis of tuh mxti;ed b&uraut as waeH as oft other

typPe sf bvxIeraus 6I o a Jus v;publ Is hed, bcwrk |9j This ata y I s of the PS P

ca n be v iewed as a mpod tf car tt6or and appl6catzon 6of 6§s ande,6

t r seat I a I 4 the m4de l of the a reX ta ttet for fiocAd starp't; js dei e oed

To ta t th e La,'I ce r ta ini n pr 6 m d A.p Cutpt W 6m p l a ti t 6 Elcats ofa the mica 6e3 ae

Oeveia rd and ca fronted wni th the hit or6 y of the FSP 6n Sea^, tlcea. I16o

The r s, Is wsati vfsaztory S6* t a -,se that a t do na t tS V r to ts t

mat el th, e csafpite I ItOedo I

H K fA Node I of th 'a4kfiewt. fo- Fcood Stampe;3S

;hree fre four cgtmp)onenl ta t to he it ltl;cture ur4dtra Ig the iake

e wr gal^ 4raQ '~oyttS' 6ned Iti~s doetai' i the 4'cod S t At of 6

,'IIG.

In «@n~~imn II l. 19.6^ i98 'S t&I(M 8855 Pot.OS L, P.c 90

55;:^.~? ~.:~d P:-< ,IL.; f3S^;Y6?},.:, ~t, appropria~t~e~ r;~>.OS I Rannaly Ito opera thet~ai4ap 1 pe A 4tt

prg rav cad trelrai t iw)he fro $¾a ,fowrmly' v6 apXp\rtprl orb's hear

8g a and the, § kcI . .

The second I~ner~ t ft ~s ~th VhSI the agevicy Nlth'in the USDA which

aJ4d^4IMer5 the aprryv-] It adqmistars' saie six chti IC. ftcedting proa

&^ rawms and ts fenli Vy fmd asst stance proq osf 4hich the FSP 6S ace0

For our purposes te IF$S can be vewed as opeiatAng fthree prog rams the

FSP, the Food DEfs tar f button Pqroram (FDP)- the legoal sbst I tute for tihe

a> end &iS other pcograms The NS §s the el'source suppli3er of

the FSP and CDP to ilocaSt welfafrre dcpartwants wtk ; iake up the 'tht rd

cPoeft'e nst of the marketo

Given that the s ta tes fIn whIch they are ltocted have a reed to

rascept A5 -her the FD or the FSP^ loc&l w%1fareo 'erfiiente choose tW

prato one or fta ither tf the INo prg, rmssr gaflily they carnot offe w

bo the. St he FSIS ft cheson the locali wef i fare departaeaent admFn s ters

the proegream. DoeallyU Thfts linciudes et fyyln-jl households as eflfgblie

to pa rttc paPte arrangitng for stamp recueftpt "enters and the tfmes durftng

theM month they awe open for bhu se ft oa d edmt ftasnterd the sa e of

sta-pv, the househo% eof lqglfate to part cfpatc In the FSP const§ rut,

the four lhi corwpanernt. /

The vnazysis ft tales p)a per ti at:ir at. the ftda ftl aee nd uppres

r~ef£kns fethenP -D.. ocsl! nelftare depwtscen te aedej hmoeh;tds and betwers

tc FheNS -rand lOcal itefaD ree depar tecte Gnsctergy 9 the d FS .Is viea-ed

4

opr kF sO C o .the suppl ro .er 'of Th t" e n^ ,t.Iton : @ p ad th co .t fwtc t !ons

sThe aotal atevenu frn f the sale of stamp s rnrepr' ex.ced yn

., .

3atI 0on of the prograso. c eav revenue funcrtogrs and wte wOst fbuCthsm

The totpA -revanu forod thp galed of stamps gbi» rehuprhdse..ted byL

' u of< foo stawt eimgkip .ehdInay,:u

h'pr* [e thyr to

p t progb ho usehold mustSmes, The pTog m Ope rates sNithd bofah

ohouschoaAcd ald am ntiApnuc chaeq as w hr 'Vco hcaupn baen co Iat rsd

I ac- P§ a spfiec part.cfpedm. In *he f od upon cao f : Iori a

: ; ) z« " z pr. I f rhae r to p a r. .;t a :t

of- hash wileds iff ^seurchg~e roqyjr~ient^ on f-od coupon s a n re tu

P ea C ifeb r oF, a 3pech4flf d msm of col hipons eale A. Vu n aJl ll e w h ip a a Pt }.txm o , t ̂ -

Sf t3 forda stffp Ic4 da.f<inh neh at the uai t : ty o'f ioipn one e r ''3 4

I3 toegfc4' f foo-d ther, p~qs is the purf;chase lrequdire-mo C't1? 1s- 1 'p

a| Ut3o t. e;'t9 ,ga3 p@L E pr ca'se W qS l,3 . .t.. : v. . s rel~y n:^ p Th.e. pur

chupo ehu dmand for foosd po t;Ive fpari of ligb of househod dIn-e w thk'. mh ..

colase th prz csisargend thre for ttpo a ostaet ra a ph qt£ty o fsu fnct.'od

Ths pt artc$piaton hqir tohe bS I ahs e P is the aggregate dein id to

participate 'o the p. 'ograrl of houshorease in the prIa of fSi .t d.epads

upon, the,,,, demand fkr Stood on the part of al gbt households h te

class a the pric.;e3 chabged them fco r fiaod stamp 0 and the quan t Ity of, fod

s tareups they are reqou red to buy 4 f they are rw part.1cipato0 For IP

stericwsq gfVenf a cotegp I¾Par bus increase In tihe price of food stanps"

fewar households will find that participation An the progir<,m bemnf't.s

tham' (if food $s a normi .g9ood) and ihence participatlon, Pi wItt d,

c I ne.. Mo owover,, no te that §f ,po $1 00 thTen there .i no benoef t.

frc^ participating and there is no dawrnd. i f the price i ze ro0 food

St.4aps wo uld' be a free good and al' those eligiblSe would patctltpateo

ceer : gkabU o s 0 . ~;onsesquenc>, 0 < ps S 4 l

ApypoFlrations Revenue Functkon

C0oraress- Imposes. to sorts of cornstraints on the behavior of th.

fHS,- The first Is the legiislatlon authorizTing the program plus aU of

Its a.endanents along with iirnfortmal directiUves given to thie bureau. In

the context of bergalts-nng ,at appro'priati;:ons t ilr nMe, The second con. stri'nt

; th e *approprrat ons 4 *'t 'o a e concewd wi th the app rop Kr

Ot t oaStr}'igt;

45

Congress is vieaSed as being, f.aced vlth bucget requests for a' myria

of protixams each year and iutSt allocate its lmited reso.rces .among them

and as having preferences with respecct to the proam l.evel of each. progra,

With respect to the S3P it is willing to allocate added funlds in order to

expand the progrin from a low program .levelO ..At higher pro.rar.s levels it

is willing to allocate fewrer funds in return for the-same amount of' program.

expansion0 Whether there exists a situation in which appropriations3 are .owred

if, the program is expanded is debatable.

Program levelS. of course, depends upon the aspect of the! proTgram that

is judged to be important by Congress and that judgement changes from ti'me

to time as the political enviro:nment changes '.Three aspec ts of the pro{:grac.z

have been important historically- the total number of stamps distributed

(Qs Pq ) the aggregate nmIber of pa rtirants ( r P-) ' and wheth r a

participating houzehold can ai'ford to purchase a nutritionally adeq.uate diet..

It is assumed in this analysis that the maximum appropriations Con.g'ess is

will-ing to grant the FNS to operate the FSP (TR ) is a function of Q( anda.

of . P 6ji.e.

(2) TR a^wQ, wX P1 ) (i Z Po )

where: w and w are .',eights indicating the importance Corngresa3 a.ttaches to

the total. quantity of stamps distributed and to agregate p.artici-atio.i

respectively as aspects of progra-m level0 Of coursel, w> * w 01 Further;

Wa/iwQ'.a, O 0 a )w 0 a/w-- , P a Ž,; 0 a it P •O(0'. '. -. .

The Total Cost Function

While the administers erl othemiitera ot programs in addition to the

SP -it is .onl t iy the t ihe aagency attriLbutzl:)e .pto thte FSP

7

that re of - tereot!I As in any ecoomic; analysls It ts the miu10lU's1

cost for each program level thait as of interest.,

The FNS reports thie costs of the FSP under the followlng headsg

administrati on, stamp prInhting and destrusction, cr t fcation, transm

port.tlton. and the value of bogus coupos,., See Table I for the break=

dwn of costs for recent, .years. Stamp prntlng and destruction. cos:ts

clearly are a positive function of the nufber of stamps distributedo. So

also are'certiflcat.ilon ;osts folr they are related via the number of

households certIfied and thus via particlpatIono, UndoubtedlyI sole

portlon of admIn Itreatve and transportlaton' costs are also some poSiitIve

funct on of the quantity of starmps dIstrWibute4do

The value of bonus coupons equals t-e market value of .the sta.mps

in tewst of food mtinus the revenue from t:he sale Iotf staOnps. It repre>

sents the total1 transfer paymwnt; made to part&clpat:ng households. The

market. value of the stamps s reated as a ch rge againslt the cost of

the program while the revenue from tie 'ale of s tamps can be' tree ted

eather as a del.etion from cost. or as an addition to revenue re celve-

by the agency even though the Treasury Is thie actual recipient of it,.

I t Is treeated as' an addi tion to age9'cy revenue in this analysis. jly=

Ing that the marginal cost of stanps s equal to $'SOO pu$s the .a.rgilnal

ah0anistrative, stanp prin-n9 and destruct.io'0 certlifcation and trains, .

porteaton cost DefIne TC as the total w.m.Tni cost -att iuutable to

the F$P apd.D

ITc ·4 cN()e

8

where c/ Q c. > . and 3e .Q Q o

,g,2ey Objecte Thncticns

A main tenet of t'his paper is that t'he FIS admin:isters the FSP so as

to achieve" its o-wn objectives .whateve -otier 'objectives it might seek tos- . -.: .- t b t ;

a chieve i. ,thtis we agree With en ho states that :

uti.lity fune tin a te o ooffLce# publi eutation poera paytronager etase of managingthe bureau 'and :easeof: m king changes All: of these variablesI conteid'' are a .ostive monotoni~ function of the total bu.dgetof the bureaou;0 " J p m 293:294J

If this is true: bthen it is:nalytically useful t.o roeard ;bu3.reaus i n gencial

and the FS in particular as maximiing their,:tota.l revenue subjet to total

cos't n. 'pursuit. of their ob.ec:tives,. In. essence t,, ';he 'f. is regarded. as.a a.

· .'' .i" ~. - ' .' " . · . .."" '. "." :' ' ~-'.:'".:!'):,:.. .'".' · .' .". -' . p .' ' .."' '. of.,· '

revenue e'maximizing .:.monopo:list in the peculiar but not uncommon si.tion of

sell.ing its output simultaneot. .to Con.eress.and also t.o parti:cipants in.

hand. it: can pursue its on goalswithout regard for thetintnlt of Congregs

excepti insofar as it is rev^ealed trough the;appropria tions e lenue unction0

ThiPxs -view:is identical:to that portfayed anp analyzed by tJSkanen. y 9L

On' the -other hand it can pursue; its own objectives at the same time it co.

operates with Congress ~in;at"te-mpt : to mx"imize the aspet of the program

Congress deems important 0 .ince some of: the emnirical implications of thease

two views differ substantiallyg both are pursued0 ;fior brevity the bureau

whiCh' pursues only its own goals will 3be calledi a ] e , 123: bureaus

;3 ,; - 1 .l~iS^S 1!,:~ ~ ' the ' -tot''' ' .''

tohee aNS tent w f.howane.. .s. te '].i inol.a. '.theb a hi n e.t

own"th. tothe itr. thcn aare. of o n obetes wil b h calld ea toifed .. itr.

-zi ~ . ·bureau : :

MO; ~li . ..

9.

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Cn,,~,!res-s,.. For 'th-,.e period. t 96.'I 'to '96 <:~::J.: e b'w : ;: he F'D:" ..... ~e a fi

...c ..e.--, ',port C'C'f[r2rffi the price ''.oiicy -' wou.d be

\ ·.. ,ei/(4Lki).~ pU^^ . .. .. .,,.A')' for each 'level of QJ:

horhere '.

-/ :': 0 : adsded r,.'Otenu. ,:ive"-. an increase cf one " Q .:

a, mainai rvme approp'iaios i.th res ec to Q

£4 E. . .. .. W"I~. - .F a..p- , iabsolt ie o the pi Q ) 3ticity of the dean to

partiA.cip..e In th.e .. on t'e pert 4pf households in: class io

.·

Gi'ven t.at the o'ci'r.rt .'itv cost of expeI..d.tureE3 on stamps is

( 4b)' 'i p p-- i, :i. i N; for lvet 01j

P ' .. ' ..

a j^ ar'ginalI C0 revtrme of. ap1p1'opriC'.a'bic.;3 with 2o3:cS~Žt to >I; P.

V) *' "1~~~~~~JN f r c ,ch IiS~~~~~~~~~~~~~~~~

".''he 'mico policime$ of thv n di .f>Le. J iI3.t Ze2n; 3.hik.?d f lodilVotly fro N the ir, t order coditions of euation (? ^(G5<2o-.

tTi 'roe ' -, t Or.'6 r ('J,;o " ':" . . .:s been ved a k. 'lr

t -~f

tihere h glob& margina Cost of Ia ratir.g Qs by one stamp,, For

thel riod 1969 to daft the price policy of such a bureau woud be

(56a) P + » s ' * ( 'o

S - ^ 7

These pricing po llsclas can. be compared NWth each other and with the

pricing policies- o'- the FNS n the to perlodso The coparisons are made

to determinea whch modei of a bureau most Closely fits the behavior of the.

FNSo. The comparisons are Based on one assupltion rnd one facto Th. e assumption

s tha&t the. derand to participate In the FSP is more price elastic.for .house-"

holds with low per capita household Iname.-,than for those with high p, r capita

household incoeeo Th I s ppa rs reasonabl given tha t the opportunity ost .

of expenditures on staaps probably declinas as per capita lncome rtseso. The

fact Is that the quantity of stamps households have been required to purchase

has.. throughout the I fe of the FSP .been an .. ncreas Ing function of household

'Now coMpare equations (4a) and (5a)o Price discrimination 'ils clear

?in both equatIonlso Either type of burea4 wouid charge high prices to housew

ho..lds with high per capita Inco and low p:rces to households with iaw.per

capitae Incom o The lefthand part of Tib-e 2 shows average prices charged In

1964 to households of different per:.cal.ta,..household income and househoid

size classeso The prices for 1964 In T1rah 2 were dr§ived from the Orthern

prsce and qsnwti.ty llts" by household mnifSe ind size Issued0 .by ththa FNS

to loca wefare departents in Febo 1964S o i The prices for 1964 a r Wnsismten

wi-th ither wdel postulated as re'prm elv of F"iS behavior,0

'A ooaJpwrinof eqiaatcins (4'b, ad (5b) yi el'a the same condition,,

WiLthidn ay hoasehl.:d siie eamtma (an-d. thetefoe 9 holding id ron tant

At ier typte o-f bwvesu.R taiLd t trvt r, Sti -prices to poor) househlde hs to,

the nuPs=pt ',he 'pric. and . uatity ta i aral by the IdN in Dee, , 1196:9

a :in July, 1971 aid frtOm wlieh thue $,i969 and 'il' prices in Table 2 were

.omiMpute-a rewea3, this type of .'rice diacriminat-ionu Agman on this evidence

alone' there ia no bal ,iafor detidix4; whiih model' represents F.. behavior, ot,,

k' Now note that. pr.t is htde.pexet of I n. eqatioa (4a) and (ga)

Wbe.:ea'^pr-ic is dependent on q, in, both equatmion (4b and (.s )r ,Moreoverz,...

,in qquaticn (4b) 1.4 ne .tiveIvly rlated to. wher.e i.n equation, (:)::

p8 1 .i positivtely related to Since g is a :psitive function of'P " a I'. :x .qx -,

honeehod sies a compariaon of tie relationship between price and housenol

ma8leir eie5, The anMalagous a erag: was $.06 for 969 and. wa $o ii fo i97lo

In tbe. word, as time passe a rati p btwen. pri

and hovta.hold zlose holding' per tp 'a :neore constant:, bha: amerged&, This result

is 'oniitent *.th tha not'.ion. tht the N.S heas behaved Ulik a .^ t1i. t .&..

asi. A PaThe eigat positv relationsp that exists in tha 11964/-

pxioe s titure can he @ explaioedi sIte.r on the gounda of random .ero r., o:a

the ba 'is that evn in 1964 aggreg.te partictipation wa net deemed of no

a portanc- b. CboygreSao Those .re.ationehip. clearly contra4.tt

the nc oin that the F&S haa 'bebcave" a.;, r i 'M-PS$U,- 'n ... tio : wie, * the "d&I o.f 'the bt.: , -, xwill b 4e o ed " ." t rc

of th'..wdel of thebks

,* - ·

Tie hnt ortwy of Ohgws tlin the priuce struture shows that the resat

t:ot.biip .beiween: par apd ta hotw;eohold iMcowe and tdhe pdrce of staa.p

has c-4!-y bcw Strengjthnen by t.t0ccee41d ¢g charsgSo Ip f968. the prices

char ed th . poorest of th. poor vere ownred aftar ..nte se:fI re was.

dib'¢ctd at th. FNS hb heter§nqs I fty the: subcomm& tt eu o on£ipkynnt9 ,daf

poner, a^d Potevly of the Senarte Caotir ttee onr Labuor and PubIIc Wel fare

ins 961 nd' 968 |I3jo Tho entre price struc tutre was kceewe3-d -by an

averaeu ot id per ae ntra inprfter;4 lb69 a53O M4, chanqNes as a rsult

f t the 97 at to the Stap Act tPOtKh 51 6p71-) that are

beinlg made cu r ntl'y drop prices forth poorest of th poor to zero.\

4rid rase pric^s to the least of. te pro The f r s Pn ,enrg t.ot

of the fact' that some 'of tthe poorest housaelds have ltte or nO ash

incae while the latter change. Is an effort 'to dmIn Ish the' fnotmchae Ir

plk t t in the old !Sc'rtAe eittr0c 1tura[J, O71

l ,f

t'¢e o c 'a';' >g 4 ; @' f par^ Spt 3 l tL .* Se 4t;r Ow hp .

_. e .S, wil i.:t 1 efeiwe tc. .o 1,v te..t~.

^§^ pal~o o FS prsilpaio an oupu a u6 ca cagr.nte

FVh~.6.<Q:.~=f¢, ,~ .zi. ~:,:., ..~; I?- *-: .. . :.. .,, - .... CS t.7-

,- 1,*eiS::.-f''':,-- :. ~'?~e1R,.,,' , ~;: ,j i: ",t, ~?.:!' !t~#,j'§. :i '- .t~.:': ':?:i; :~#,'-.' ~i. ,! t.t':,¥,+= .' ts $~~^ e e i iss. t ,'i;.,7-, $d;,

A.

,.~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ x ,. A C',

ie -~~ to p ot ^op p ~ - ^a ^neola ^^,^c~e^~

,;d l # (fiw;'ff: ^to P ' m "tw '' fo risi a f, ; e r3j 'IP: n ted . I>jmf t if' op ra t a * t

cQe fc cf yso^ ^e^Pt '}a~ to f thfe ; i Sg f +k if f>. * ,3t oj tr>..e ;s< X ̂i^ a ¥frf i; , ;S e¢ i d t ,,, ott, fi d. ,

.... ,~,,, .,,,3?.. .,,li~,.i' f~.: . .~,', .,'t .~.~ ~ -~,?p. ,t f, ,z': ., .: hyi.:~.. ?,f > [. ,4h ,.'i,- t "f: ~::,t3 ., f ' .~:~ . : i ot;) ~3r., e.. '- y":' -'

_ f t,, Q$. &,,fl eM"; .................. ti .^ 3a¢d iira 4nft i43'4fYI1p t ,iot th "i i di' dos£ #fih ; . 8 Nated^ 7}^ ?^ 'ceh' the fi' i 3 r cj r;l *s 'ihi "

l,~ .. yf ..ti <.il:': t:a',, : -: ,-.', ;,,: ,r"?: ,..,B i,', ~ . .. ai4t teih i ft3i.:P .i!; ", ....'"r.

,. ,,:^,: j, .,',' . '" 3: .i.'~;~',~,,:~ p -i,"-.'t ". ? ,''.: . ; . it: j.'3,i: iith. ~;:i'.', !: a et e, i ~,' ' :'" f th, pi :;

:,. iS t-~ t i jf^'~ . . . i.'.....d t i! ,> '-. w l-....f; 1,'.!^~:if ' lgt 4 W 3' w ' 3'.,e >' ,,,:' ;.3 ',

?'-.e"Se { f|4p J;""y, jr :Fi:'.'..';:} ~ f~i,, ite '-. 't!~ i~ ,', ^; ~?.'j. "... ....: -' ,,-. i !,-> ,tX i '.i'M 3; :i, ? !

&tw other g8¥@^ food j~ag~llf ^w f cetxisv; i awnlohw

ga~ vSos,~8 bot.~¥hateli ,. i'e : .fw . d ;t;'.r, cf~./ I I' I Itfpa v di? 't

tr P" t ^iaw, uly

Tte~~~~~nv neire ev,,nce pW-Irv a^n iX %^gbryNth ths.

opportw~~~~~~~~~tLtt of k-Aett~ eprgafh-prpr~i^ o hc

wfi, e-e"I..deos pcroq ya Al-VOf ffor cihe',p~r."gr~infh yia frb r ^An h 8s

8^^p^^c~ar§& af sopukbpyt y ala0 th 42 tpporty vt- to sse. he,% f uds. io

Okd!;jesv*d t- bez ew~~ II th-0, ig the thce^ the thfoutph «

on^. vietld kte~ atcptcid Cn Dte£P xu fra 9eq P, par tlc, pa V wio ?n

the FSP Aesa ceaereda pjairflbyis

"'A~- .u ...f ,.s, hyp?:hri.l, f, p'd f.. r' "C, . .'!', p-, o~ b:a:" .(:.apa tn.

~i,~";J &~],',:,,~ ~ ~ ~ f I' " .?...

·̂ ^ ;*^ c~h^ ^SF i%9^5j nd £ht s' .a..oo...al .. x " Aij~. a,, uani.:,.

t~o^ aa-lh^ u~o~ij^^^^ rava if^ ^eȣXcifi ynad'ase^-te1^,,

(13) ̂ ^ i^^U^Sa - 02009The 6832X3 b, 6v 4 3a^9 I 2c a ^3s

ii~ ~ ~ ~ ~~H o7 (l, ow"t fno&Or)(py"r)

chmbr 15 pa'ahs^aetfs~~<Teefcecf bo th ivriS b i0s

Vs rt-, sl-Qn~f~canlly ZIf'fer~nt f ero 4^,,'Rd, -,Q ^is fe-iCA^Ub ^xp€€,.

TIe M exspid f4 isa56t of? vritse fi h th pO&llt Oicmf hung

vaas2 W[ 8ntf&, i On AS Tsc IWSi !Isse t$i poeti11 .»11y Axplo*BIm, t'W V

g9inljm IAn Apr1ig, 1967, az .the ieasui t of hearings An MHoskSgslppI of

th-, enatea $ a SbaaJ tee m E8P.plo yAman ton poweEr and Povrty0 IU]3

Thctraafte% evtc ece pA 'ed up ruap (dly of 8'&WW#6Jtrif 6 otmt 4 9 the. poowr

7'de iea §g.38 gln Ca feirasl foo@id aN programs, espec§lafly t FSh P 1 an4 the

fgPD aend of dIscramainatory admA Anl-istratqAor of the prograsma at the Ao CZ

tet g fe (s$e for bD 7 as e 15 64 J r t 93 A °g t 8suae rel, evaent

here werre thatt ihe benaf th ts under th e FSP thdt r t ht ¾ tsecS tr

scold afford a nutri tiona'ly aequite tdhtc ictt that : f poor ou-d

ncr afford to participate fn te ptogr'a^ 'ad 9 that th emD we re senany -local

wtfifara .d ltrAtfSs ^n fthe COIuncay that oftfered ttelother thi COGP noir the

FSPo * . .

CQz)patm ti tbn forw wNds im Se.erehns IA So£ AsAa grew and foo6^

drdTyaqgg by. ther .Agr1eupW ture t tl&es An Con'ress %i.ept apprl;patlaos

frotn groNfinng es6 qu'cktky as they mtight have othdtwo se- AppropretkSni for

thi FSP grw by $745 &ml:Wl gon in fIlac$a 15368 Z.and by 54A 0nmlAn AIi Sr fA i

'1969s As presture grew hIwiver P F dSP agp nriPrtdon' hSap d hy $52;5 YAi Won

for fsecA B1970 and .y $500.r fostal laW I

Such ncreases o In tirevenoe njfrom appropr'6 a tic4s *can af Bf'ct :pi ce;

and output In two ways. t ti h p( prctgam does-n0 t have ttaticnwidM des csvoeragce

e ffort sa a Fr4 reue to opein projeQC t. in CO&ueI t et of ring d thtr p rr

grams that. is sexpand the nnwter rf ael g4lglble housetihodsso A'nd -thewfe i a

ar <a twd'& -t.y to 'low,^ pfrcSSoAAi Furtherotre0 as the pub'l kc and

Congress increasingly adopted the vew that the FSP should ensure that

recipients could afford a nutritionally adequate. dlet, there was upward

pressure placd on the quantilty of stamps households wre requ Ired to pur

chaser It order to particlpate in tlhe absence of increased reverwe from

appropr8at§ion and given t:he pressure to Increase partIcipatlons such a

move al on e wOld have forced food stamp prices dow no Th is Is so because

a ateris paribus increase in the quantity of stamps required would:hae

loaered parftcipation (see '2 po 173) and prices would have to have been

lowe.red to offsct the decli e :

In sum then, It is hypothes lzed that the effec ts of ithe poli tcs of

hunger were to sthift the r-evenue from appropriations curve upward and to

I ncrease the quantity of stamps recipi ents had to buyo The Impl I cations

of these actions are to Increase participation via prograi texpansion and· · ;

to .ower food stampn prices both of wiicch would -increase partscIpatdono

Al1 occurredo Wh ie the proyram was slowly expanded Into new areas' In

fiscal 1968 aand 1i96 (189 new' projects inr fiscal 1968 and '62 In 1I969 li41),· . .· t

*prices and quantiti5'es did not change until mld.Iflscal 17O'.the first year-

in which eppropriations greatly increasedo -

To estnimate th. he effects on participation and outputs .two regret..slons

were run First, partlcipation In tUe FSP by month from July, 1963 to Jutne,

1971 (X2) was regressed on the seasonally unadJusted c 1ivilian t.nemployment

rate .(X3) the number of FSP projects In operation (Xa4). and a drminy

variAble taking on the va~,ue. zero for each m.onth from July: 1l963 through

January, 1.)70 anrd taking on thlb value one thereafter (X5)o Second, the

tot ta quanti ty of stamps dsstri buted per month from July, .l63 to Jure,

:aai C^<) w;as rayr:le~t~~aied c,;:J i^HNT ~ian~i·~~~a ···tIlr~e~a;:rnlepentet wrs·~al~abieso Theo?^U''Kt:f

.t, a'. n ) td .4; o I : ,H. · o h. . ... pan. ;o s .. . dgS .

wsriabia P, ptyr^ the Ffai t of tte ^Imul teneoys hag i pr1ce afend:

cq~arrif alstria PrU6 f:ei'B s NiW~eU^r 2~iv~So«r ;Pra^ a f'd5; wigsht~ae~~tad a,6ran.geg f ,i $ ' ./;t,:-..p

ps jmortih w§a: rald f $17 t $i Ian ant. an iwvnc;ae .nt1 oa Dfe . -i-

196^ £Sfi|53 ,. t l-plIlet€n t a lc of a ,, «ainge w n sa ot w;iJt o ^s.pfel1 a, ng .

f-aroar sev b s, IKis lt94,SJ'U :' ': ·

iFE eslts Smvsutv tf. 6.e i. ol. l o s " it

(1^1 x, M1 c~g~g~if!8.." : >'.-". :,... OX, + 2,632.'528X ~ 2J!2,'' " 6...$X'

(I5). X,~ ; .. -.52 .:.~: ,5,.::.? ~ ' : , 81X,^ .; ,..: , 2;, .,: . ..2IX ,r ,76',>02^%? .;,<* t' ~~~~ ~~~~~. :

I® "B c93&8 Wo: M^. obsasvwaU~ra ,: ... )

:Vith aqu Cras 'Al P.pasrilv .he 1a ofgf - ..' 'I ' ) a;, ' '. '7 "o 'J

b~~~sne^l · ; · t_| ~, *) p c es,;as4; ·Xt�a ~ l'ny � 2 ct t�$is i'e l w- '.K. ';. ,w 1

,>~ ~p t b y - ,, -! . :r c

v %J t , 4I;>jsjt y7jSifi FgS;t.z ;i Srtf:zi s ' 5g: 'i0Sft ~ ;, t:. SS f .........wi li_9i·

20

&xpjtniioni of tJ'i--jtptQiawt I trtp abrutp4t teatv © pIL$tt rt h

aid 'i;y twt ugw V itC C tgfw d l a.kevzmt ivt. fr. . 50

•eaat jup in' .....ie at... .a Ct 1970 I agQAd-tb 116 pec;t :t&-tWTO .1m fiaeal Wl Fl 7:>.

A n f ic .4

Ytal 1y Ct a of he .rasdtdwls it- ap., .t .te

wa ww time .tb a t throot tntfh lt "ag bewfl the time Ilm:tantt^eht rnf the

blhralt&ati.on wa ldotjpread C;& th.: tie th rsipOse to it wia sYt

.i·Lpea~ ir ~io~a~. 1w,.-.,..'.treple¶.@'ed 0 a Thia is ai vfwy :aypid rops by any Iadard Tpee ally a &

eleveaBntates $ d' ft impl ent t cagtitl IfeAr tnit Ia nrtend Arti 0 ItM

** "'^ t'fest *,rs» . . o.

Galspetdly ipresoive in tbe T. igh It c the, fast tha t Itct f ktladedge ahwut

prcgrae part'ietpatiorto Satbsr :I, mtheyp porte fthe **v'is the$ tti &. the t

-,c CZ gT a a I:z Igv:e, aw 'vGm PXi 'r . 'I 9" 6-

ranf W boutaral th edp"ra hiek ti, luteex whid moplofany ofp theS: oAr tei

oaltto i~n V sc4S pcngz a Jr~: d~pywd byf iwnt 30 pkeI Int as to, Ck,5 t& wsi, a, fww

1w ~ t. 4UI'~."i fl67 I? ~4e m N.

.4v:, . e1-·f e iS , '. l .

p a. Ite,. sthsat . hie t-4'at tEhe £up'--i,"aiat i h ihsrr -vwt'" . t' ' · Uti tfe Vk

'was Warsv nue vez4atdcin ;tazo v - ^red Oe,'saolV whilpe. theh td)

tXe test nssd ti' ro .*ot; 1t fbav' tmi vcs(4 w - as' 'ctx a t td;cA@'t $r tblt

in thsa the vtftr ragrds :'.raj^:9 :U t .:tti.p. b ..0 . .a. .s'

amel. .w's-, :he d16 .

ai

reAa.ted by a OtSc eTSdeuce 0c Zf it happen.a how'eer that other tests support

a bhL..Saotev:i:.m.tioT. o.f the MS,? a at tureaui aoti-vlty cooperatig with the

trel'vnt Con .0eioTit oorid. tttee, , it -will be *conistent with the irapesiio.r

one ec.tive.I rom the varioua iato,. :i.eal thrARtSt 0o the esP etp 12t of

5 Uhp j I6t7 appiears tatt t-he aCtocritttee on) Agrieulture of the House

App:Popriationa ComiS:.tten 'hm bd ad, unoSu.mon influence over the conducet of

the ESPo Thi is inr contrast rtith 4thRe tiprssion thsn author baa of relation

betveen Congress anxd otheri federal EbreaW. CUlearly, the model of a bia

'..bus gu. :whticah doens , not ,prsue: the liatent of the relev ant Coongreiorxfl

committees except Bisofar .as it appears in the rppropriatioCs reven:ue funetion·' .- . . .

appSars to fit ,e other federal agencies more :loeely. Obviously WuMlch

mora research ,o these mat'terx' is needed0

*Of what importanc e is thi. eff.:rt? .Te fact that the model has not beea

rej3oted ogc of hand .akye the author more hopeful that it might havew 'aoa

prediot&'e as well as explanatory power 0o Had the mcdel beern rejected, as an.

ezpsa.attons of the price a:. outpaut behavior iz the fiod siatp market dobt;

would ?ave been cast on. the efficacy of sim iiar xmodel of other publi saectar

o' '.r ' pAidn if the motdel bad no empirical con.tent- tv.en i t would rt 'be

sui tab'l as a whe.Ol on xthth to spin normt i'ive theoriea0 1*,oe fjact that i.et

not 7rejecte. d gies a "lit'te mor credeance- e abow that lent by intuitlon

polif.tc afidg· . . .

p ~ d D E~l~l~il 111~9 ~En3~i~ na~E2~, . ,o bin..,,. said.zJ e~ ''r,r3F Jl~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~s ~~~~~~~~~~~~~~~~~~ps~~~~~~~~~~~~~~~~~~~a~~~~~~~~~~~~~~~~~~~2~~~~~~~~~~~~~ Bo~~~~~~~~~~~~~~~~~~~~~~~~ -~~~~~~~~~~~~~~~~~~~~~~~~~R~~~~~~~~~~~~~fi"'b~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

' A refvirdi-m airi oaf ,Y! A. haJw a bad heifpt p i d dws :

thia 8ubject $Plth aott.ag M th. i of . iLeaot&,; at the .Uof o.

wher I e n rt-I a pleananft and fra&it'f3l leaia, dar,4ng 11970-4 and wit1ft membt

xit the now ethot WORi '*I a n particularly indeb -ted to iartit Abel,

Lee tI0e2rti., and Willia inRkaa skana tor setting 2y ideaa straighOt and i.

aimplifying sy analysais Of courss none, are responsible for ary errors.

j/" Althoui. g e thle Consaner ami Marketig Ser.ices ad<miiater: d the progr.m

un.ti 1 969 th 'e bw .reau will be ref.er.reed to as FiS9 for implic"tty o

incoa3 families in Oante rtst- rtieipatin.g l the pirogram, Prior to 1971I it

waE called' the Comodity DIatzraobt,. Progamo.

&e ©a result of the I 971 edrn.iynte (PJm 91-6 7i1) eligibe ousaholds.<* . .

wy now purodha less than the maximm coupon allotmexht( This regulartaion

(tea nxot. affeot the empairial base of ti.s a tu.dyo.

A/l' Until ',n0 [ta1 7/ both, the ,p.w.he.s reu ireme.ait and.t the coupo. allto,

n.:at were f.:tiona. Ccf h.<:unehold sise and inc.om:e,.-. -. . .

.,/. The dema to 'participate in te po^ ra, i de:riegd iis L:i

This is. a .var.iant o.*f a ,fustin t tggeated to me by ttilli.m Niskawen iu

.cowimts oa an earlier dratt, It differs- ftrow. tie "budg.i:-.ut.t funttiOtW:"

::/ 24. po 307 only iw:. tha: t i, COgna.:i t:ht the .P 'has a nuuait: 'c"f

p.it%:ially t.Pnwta foert ff ^t .^tr.-i o;hat '.rrti'ipanttt: .<o,)4 afford ,.

-a Xnl l deterninad to btiW adsequaae :j;43 r iyoni .b tr.tiite tha lmaplioationro i y.ai3g- to eh aS lTh san of:urmi ulLate ,969) is remt fiv'

· tp.t .t trc ''g' t '. h

Eapl^ to L -tr :i~ e, tO, W~. a., .. .,i ,. ' 'e prolgria n e.,tluded f:?m ' ''

' fa Ihsl anet&alja.,^

.:":'."'.:.III.. ,. .. ...' ' ' .~.... -,-": ''" "".:.'."'Z"? .::,. :':..:.'ji"''~:':" /:: ':. ~ - .. I I ..- ~i- ,-' j" - , . ,. 1 .~ ,'~ . .. :'? ': ",' .' .. I . - .~.1. I i:. . -' ~ I .:.- ..1 ' q-~- ::":, ~,~ !~ . .... I 1 I I :

·~~ ii:' i: ' :ri ~. ..- ~ : : , . , ..- ~,~ ~- . . . .. . . . ... . ,I... . a . . . . . . ~ ~ , ~ ~ ~ .,~ .....- 1 .; ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~. .~~~~~~~~~~ ~ .. ..; - . . ., ~....:: . : .I , . 1 . .. . .. . :. .". ' , . .~ :

'".i"~~~~ ~~~~~~~..,." .".: . - .~7 ..~

~~~~~~~~~~~~~~~~~~~~~~~~~~~. .. ... :

. . . ..I.. : : .~ . . i. ! , % ~ . -tW . .1 ~ ~ I. ~ . ~ . : .- .~~ ,;. :-- , ", - .;:,. . .- ~~ ~~~: ~- r ~' - ~,, . . . , : ,:.,:. ...: I......

,. ,.: I . ; : , ~ .1 - . ... ...I , .: ·I . : ." , ... . ,.. I-:.. .. I .I - II . :~ .. . ~ ~ .-. , ~ ~ ... . I .: ..:.. , .I ; ,.~: ,~ . .~ ' L ~ ... .. -I ,. . .I I . .i ; ~ : .. g . ~ ,:, , .I

. I :~~ ~~~~~~,: ~ . .I.,~i'"?" !Ii.i .. , .I,. ~ ..I .. ' ~ - ' .: ./,: % , ii :.r: ,.- :. ". .".I I ..~~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~ :' /.iI I . I. ..I ,. ":. '..1 I . . . . ... -. ~ . "' ....-.'.1 : .I~,, ,_~. , :.".'.~.:. ~I' .::ii"~':"'~'. ,'!r: , .,, .i:':':'':'':.,''~, ,, ~ ,,~,.! oi;, .:..~u ~,.:'. ,

. . . . I I . I " . '- ""'; '" "~'"'"' '"" ', . . . ~ . . ~",'."" . :,... )"." c "~~~~~~~~~~~. " :??,:... '.., I I:.I,'. /. -' . " -'L . ' . ·.. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~" 1:... I.-~...%--~-. ~.-. -.. -. . I, ::-. ~ .:'"; '; ,,?.b?.'.:. '. ~ :..' ".!. .. I .I .''"... ... ., .1. I I, .. . ,I ~ ~ ~ ~ ~ ~ ~ . . .! .~ ~ ~ . d I . . ... I.. I.... I. .I ,~~"' ."..' ;: '' , .. '.. ' .j.'p '' I - ,. I . I ...;..'...

121 a' ft a Con rketingP Service resivas .t 3 f

: o t.r..r to pe* iti and the FS rce e .Section 32 fs

in' ord~er pto prcessand dis~tributS x Congress rom U ttotinz d0es,

putwh rtaWriction o: the use tohithr SectLon 32 f. s: cn be put. For

Weae 9 5PO Lo; 90991 'prohibits Setio: 32 f ae Er being used n the F.P0,.

1:t3/;. T @ 0figur^ :es A frxmvrious agrtultwe; aaopprprt s blll:n

ffP03:> 894556 f 197 1059 r 68; 693 r 1969; 0 L 9127

f;.:r 1970;' 'na'd., ,:?479223 .fo, 1::971o: :. :' "

w bo f'tb-il :d&fe re6itiatitg (6a) wi. th :re-ti peoe; t?, ia the xr'o.ijalnc reltWfJye^. 3 .

) p a /( ) a 8 ¶ f al. i . f..coI. .

j/ A proJect t a a ounty. cit,,y; or an Indiean reservat-ic. a&iih operate

a ThP program independently of otter locdal s-ptes 14 f7

t/ ThiMrtyv--o etatea implexumented thse prOgnas Thange^a in Jalary .l P February0

970, Ten more states implem.ited the bcantgs in ::ar b..d anothor state

ixplaeddmentation 'wae ia d.e-rs:eal-,.

s;j ·g

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