Managing the Month on Food Stamps

Published on Aug 9 2016 by Common Cents Lab | Common Cents Lab, Improve Cash Flow Management

Managing the Month on Food Stamps

The State of Food Stamps Now

What is SNAP?

The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, is the United States’ federally-funded food assistance program for low-income individuals and families. The United States Department of Agriculture (USDA) sets the national guidelines governing SNAP, but individual state governments are responsible for designing their own application processes and distributing the benefits to their citizens. The Federal Government supplies 100% of the money for SNAP benefits, but splits the administrative costs of the program with individual states.

How much is given?

Benefits are usually deposited on a monthly basis, averaging $126 for an individual and $255 for a household. Since June 2004, all states have transitioned to loading the benefits onto an Electronic Benefits Transfer (EBT) card, similar to a debit card. Unlike a debit card though, the SNAP benefits cannot be redeemed for cash, or used on non-food items like hygiene products or medicines.

How many people participate?

About one in seven Americans participate in SNAP, making SNAP one of the most important government programs in the United States.^[1] In 2015, 45.8 million people relied on SNAP benefits to supplement their food consumption.

Sadly, only 75% of people eligible for SNAP actually participate in the program, which means 13.4 million qualified Americans are missing out on the aid they deserve.^[2][1]

Why do eligible people not participate?

The length and difficulty of the application process is a near insurmountable obstacle for many low-income Americans who already work multiple jobs in order to survive. It’s unsurprising to see that 14% of recipients in a recertification month don’t finish the recertification process, considering what we know about the human shortcomings that can obstruct us from achieving our ideal behavior.^[3] Successful applicants have to overcome the multitude of behavioral biases that work against their favor during the application process, which include hassle factors from the numerous forms, lack motivation due to lack of visualization of progress, and strong natural aversion to uncertainty.

What is the application process like?

The applicant needs to gather a ton of information and documents related to identity, assets, and work in order to give caseworkers a thorough picture of his or her financial situation. This means digging up a lot of your own pay stubs and receipts, but also the Social Security numbers, marital status, incomes of everyone who resides with you, regardless of whether others are also applying to SNAP with you. Every applicant must also schedule an interview and periodically recertify their eligibility, as which can happen as often as monthly.

Although acceptance into the SNAP program could mean putting more food on the table, households have to weigh the costs and benefits of applying and reapplying, with the monetary assistance which needs to be periodically renewed. Successful applicants spent an average of 6.1 hours in the process and made 2.4 required trips to the food stamp office. Some applicants received unscheduled home visits and others were fingerprinted.^[3] Certain offices only open Monday-Friday, 8am to 5pm, making office visits extremely difficult for those who have jobs during the day or young children at home. In all, completing the application process can be a logistical nightmare, where all it takes to fail is one missing part.

What can behavioral economics tell us about the resistance to applying?

Too many decisions make default behavior more appealing.

The complexity of decisions that have to be made while applying to SNAP increases our vulnerability to a number of different behavioral biases. When our intended result is bogged down by multiple decision points, the social norm suddenly becomes far more appealing. The time lag between applying and receiving the benefits can also be too much to bear for some eligible Americans. When these low-income individuals are already just getting by, do they really have the time to complete an application that will only pay off in few weeks? Although food scarcity is a hard default to have, the immense effort of applying can dwarf the difficulty of staying in dire circumstances.

Myopia about application progress makes people quit earlier.

Research on the visualization of progress has shown that setting well defined end points is far more effective for completion than obscuring the finish line. ^[4] Surveys, especially longer ones, exhibit far superior completion rates when there is constant feedback on the progress made (3 questions out of 10 vs. 3 questions) ^[5]. The number of steps in the food stamp application process is very difficult to pin down, resulting in vague boundaries that staggeringly undermine motivation to finish.

Individuals are averse to the uncertainty about their own eligibility

Another reason individuals don’t enroll in the program is the lack of widespread certainty about eligibility requirements. In a USDA survey, 69% of nonparticipants would apply for SNAP benefits if they knew that they were eligible.^[6] Behavioral research has shown that people have a distinct preference for certainty, potentially increasing enrollment in SNAP if eligibility requirements become more common knowledge.^[7] Even more low-income Americans are at risk of being unaware of possible aid due to the 2014 Farm Bill, which prohibits federal funds from being used to pay for television, radio, or billboard advertisements that promote SNAP.

What is the SNAP Cycle?

Though acquiring the benefits appears to be the solution to constant food insecurity, the reality is that another host of difficulties arises after receiving the aid. The low-income individuals who make it through the long and complicated process of applying SNAP still have to carefully budget their small allowances. Contrary to the biweekly deposit schedules of most jobs, SNAP benefits are deposited in a monthly lump sum at the beginning of the month. An individual’s allotted benefit amount is based off the Thrifty Food Plan (TFP), which calculates the cost to buy a minimum basket of goods necessary to have a nutritious diet.

Surviving the month

Talking to SNAP recipients, we often hear stories of recipients who go hungry a few days at the end of the month.^[8] Circumstances like these have been well documented by economists studying SNAP spending, whose research shows that many recipients are trapped in a monthly cycle of eating and starving. Research published by the USDA found that recipients redeem more than 75% of their monthly benefit in the first two weeks after receipt.^[9] Although the deposits are supposed to last an entire month, overwhelmingly, the typical SNAP household tends to run out well before the month is over.

Why don’t the benefits last?

Time is scarce in low-income families

Some of the problems with SNAP benefits stem from the assumptions made by the perfectly optimized Thrifty Food Plan (TFP). The allotments are largely calculated using on raw food items that require significant preparation time.^[10] This makes sense because raw ingredients are cheaper than prepared goods, but the tradeoff unaccounted for is time. Typically, low income households have less free time than higher earning households, which makes this tradeoff especially crucial to consider.^[11] Research from Tulane University found that an average of 16.1 hours per week was needed to prepare and cook recipes based on the TRP.^[12] This means 2.3 hours a day that needs to be spent just to prepare the food, not even including shopping or cleanup time. When a household is struggling to survive, time becomes an extremely scarce resource.

Monthly deposits cause a windfall effect

The long period between deposit cycles also contributes to the cyclical hunger at the end of the month for SNAP recipients. Researchers from Yale termed this the “First of the Month Effect.” ^[13] They found that SNAP recipients do not budget their money regularly throughout the month. Grocery expenditures in the first week are 30% larger than in the last week. This was linked to consuming lower quantities of food, rather than choosing more food of inferior quality. Shapiro from Harvard also found that the caloric intake of Food Stamp recipients declines by 10 or 15 percent over the month.^[14] Low-income individuals on SNAP have difficulty budgeting for the month because they spend when biased by the hunger from last month. The impatience to eat can be immense and make planning for the future of the month.

Health Consequences

Since many so many individuals receive SNAP benefits, their habit of spending big in the beginning of the month causes grocery stores to increase prices to meet the large demand at the beginning of the month. The extreme consumption differences that result from this unbalanced spending cycle can have profound effects upon health and researchers from the Harvard School of Public Health recommend further research on whether the monthly SNAP cycle could be related to the risk of being overweight.^[15]

[1] Supplemental Nutrition Assistance Program Participation and Costs (2016)

[2] Reaching Those in Need: State Supplemental Nutrition Assistance Program Participation Rates in 2010 – USDA

[3] Food Stamp Program Access Study Final Report – Economic Research Service (2004)

[4] National Research Council. Behavioral Modeling and Simulation: From Individuals to Societies. Washington, DC: The National Academies Press, 2008.

[5] The Relationships Among Survey Page Length, Progress Indicators, and Item Completion Rates – Malika Tukibayeva, Shimon Sarraf

[6] Building a Healthy America: A Pro le of the Supplemental Nutrition Assistance Program – USDA

[7] Risk Preferences Are Not Time Preferences – Andreoni, Sprenger (AER)

[8] Cut in Food Stamps Forces Hard Choices on Poor – NY Times

[9] Benefit Redemption Programs in the Supplemental Nutrition Assistance Program – USDA

[10] Food Stamps, the Thrifty Food Plan, and Meal Preparation: The Importance of the Time Dimension for US Nutrition Policy – Rose

[11] Poverty Impedes Cognitive Function – Anandi Mani et al. (Science)

[12] Food Stamps, the Thrifty Food Plan, and Meal Preparation: The Importance of the Time Dimension for US Nutrition Policy – Rose