The United States spends over $500 billion a year for income-tested programs. Despite this substantial spending, we know relatively little about how these income-tested programs affect poverty and material hardship outcomes. Studies that have evaluated the effect of these programs tend to suffer from at least one of two problems. The first issue relates to methodological weaknesses. Specifically, studies have evaluated a program's effectiveness by simply calculating people's income with and without a particular benefit. The problem here is that programs not only directly affect people's income through the dollar amount of the benefit, but also indirectly through the way they influence behavior. Second, many studies have relied only on the official U.S. poverty measure to evaluate people's economic status, even though this measure has important flaws, such as not capturing benefits families receive from non-cash and tax-related programs (e.g., food stamps and the Earned Income Tax Credit). The goal of this project is to therefore evaluate the effectiveness of five major income-tested programs in the United States using sophisticated statistical methods and multidimensional poverty and material hardship measures. We use data collected from several sources, the main one consisting of six panels of the Survey of Income and Program Participation that provide monthly information from February 1991 through June 2007. We supplement the SIPP data with state-level economic and policy data from multiple sources, such as the Urban Institute's Welfare Rules database. We focus on evaluating the effects of the AFDC/TANF, Food Stamp, Medicaid, SCHIP, and EITC programs on poverty and material hardship. We examine official poverty, a refined income poverty measure based on recommendations by a National Academy of Sciences panel, and measures of material hardship, such as food insecurity and unmet medical need. In addition, we analyze the mechanisms by which programs affect poverty and material hardship by looking specifically at the relationship between programs and (1) employment, (2) earnings, (3) private transfers, and (4) family composition. We use an instrumental variables (IV) approach that allows us to identify the extent to which income-tested program participation affects poverty and material hardship. We also separate the direct from indirect (behavioral) effects of income-tested programs. This approach will provide greater insight than previous studies into how effective social programs have been in improving people's poverty and material hardship over the last 20 years.
This project will provide insight into the effectiveness of social programs in reducing poverty and material hardship (such as food insecurity and unmet medical need) in the United States. We not only look at the direct effect of program benefits on improving poverty and material hardship outcomes, but also on potential indirect harmful effects programs may have if they discourage behavior, such as work, that may improve longer-term economic well-being. Sorting out these positive and negative effects is crucial for informing the design of effective social safety net programs in the U.S.
|Ratcliffe, Caroline; McKernan, Signe-Mary; Zhang, Sisi (2011) How Much Does the Supplemental Nutrition Assistance Program Reduce Food Insecurity? Am J Agric Econ 93:1082-1098|