Effects of Potential Modifications to the U.S. Food Stamp Program so as to Allow Only Healthy Food to be Purchased with Food Stamps

Posted: 11 Jun 2007

See all articles by Julian Alston

Julian Alston

University of California, Davis - Department of Agricultural and Resource Economics

Conner Mullally

Inter-American Development Bank (IDB)

Daniel A. Sumner

University of California, Davis - Department of Agricultural and Resource Economics

Stephen A. Vosti

University of California, Davis - Department of Agricultural and Resource Economics

Date Written: June 2007

Abstract

This paper analyzes potential changes to the U.S. food stamp program (FSP) that have been suggested by some nutritionists and others with a view to combating obesity among the poor. Specifically, we use models of consumer behavior, firm supply, and market equilibrium to assess the impacts of allowing FSP participants only to purchase healthy foods when using food stamps. Our analytical results indicate that in response to such a policy change, FSP participants will likely increase their consumption of healthy food, but the effects on their purchases of unhealthy food are not clear. Market-wide consequences are even less clear. Changes in consumer demand will result in a new market equilibrium, after prices have adjusted to equilibrate the supply and demand of each food and the associated food commodities. This market equilibrium will depend on the size and extent of the demand shifts induced by the policy change, and the induced supply responses. These effects are complex and will vary over time since the ability of the food industry to adjust to changes in demand for healthy and unhealthy foods will depend on the amount of time needed to expand or contract supply as needed, and this adjustment period will vary across foods. The main story is intuitive. Changing what may be purchased using food stamps will likely lead to higher prices for healthy foods and lower prices for unhealthy foods. These price effects will feed back into consumer decisions, weakening the direct effects on demand generated by altering the FSP. We conclude that while reforming the FSP may indeed lead to better diets among participants, the FSP is likely to be an ineffective and inefficient instrument for bringing about desired nutritional outcomes unless accompanied by additional policy instruments.

Keywords: obesity, food stamps, USA

Suggested Citation

Alston, Julian and Mullally, Conner and Sumner, Daniel A. and Vosti, Stephen A., Effects of Potential Modifications to the U.S. Food Stamp Program so as to Allow Only Healthy Food to be Purchased with Food Stamps (June 2007). iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=992493

Julian Alston (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States

Conner Mullally

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Daniel A. Sumner

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
530-752-5002 (Phone)
530-752-5614 (Fax)

Stephen A. Vosti

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
(530) 754-6731 (Phone)
(530) 754-9141 (Fax)

HOME PAGE: http://johnmuir.ucdavis.edu/people/faculty_experts.asp?id=vosti

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