Families who were close to qualifying for food stamps but whose incomes changed a lot were less likely to use this benefit in the years they were eligible.
Families with incomes that changed a lot were more likely to have their eligibility changed, which made them less likely to sign up for the program.
Families in the Eighth District were more likely to get food stamps and had more changes in their eligibility than families in other states.
In the United States, family incomes can change a lot. In 2020, for example, almost 20% of households saw their incomes drop by 25% or more. 1 When a family’s income suddenly drops, they often have trouble paying for important things like food and housing. Food stamps are a good way for people to protect themselves against sudden drops in income, but almost 1 in 5 eligible families don’t sign up for them.
In this article, we show that families close to the food stamp income threshold are less likely to get food stamps in years when they are eligible if their incomes change a lot. One possible reason for this is that families with unstable incomes may switch many times from being eligible to not be eligible.
This makes it hard for them to know when they are eligible for the program and makes it less likely that they will sign up. This effect is felt most by families in the Eighth Federal Reserve District. In 2013, 12.3% of families in the Eighth District got food stamps, while only 9% of families outside of it did.
Determining Food Stamp Eligibility
The Supplemental Nutrition Assistance Program (SNAP), which is also called “food stamps,” is a federal social safety net program that is based on a person’s income. Its goal is to help families buy more food and move toward being self-sufficient. In order to help the neediest families, SNAP has income and asset limits that families must meet.
“People often think that benefit levels are related to meeting some level of minimum need, but this is not the case. The last, and only, official assessment of benefits adequacy was undertaken in the 1960s, and it had little effect on subsequent policy.”
— The Conversation (@ConversationUK) October 26, 2022
Even though states can and often do add their own rules, the federal gross income threshold for participation in the program is 130% of the federal poverty line, which is calculated based on the number of adults and children in the household. In 2013, the first year we looked at, a family of any size who wanted to get SNAP couldn’t have more than $2,250 in “countable assets.
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Assets that can be used to buy food, like money in a bank account, are countable. Home equity and other types of assets are usually not countable. Some families may also be automatically eligible for food stamps if they take part in another program, such as the Temporary Assistance for Needy Families program.
Tracking Families’ Food Stamp Eligibility and Takeup
We used data from the Panel Study of Income Dynamics (PSID), which collects information on family income, assets, household structure, and food stamp use every two years, to study the link between using food stamps and having an unstable income.
The PSID keeps track of the same group of families and any of their members who move on to start new homes. So, we can keep track of certain households, their eligibility for programs, and the benefits they use over a number of years.
We tracked families in the PSID over the last six years, from 2013 to 2019, when data was available every other year. We decided if a family was eligible for SNAP based on how much money they had in their checking and savings accounts and how much money they made as a whole.
The size of the family unit determined the poverty level. 3 Then, we found the ratio between the number of years families in our sample got food stamps and the number of years they were eligible. We took out of the sample any families who had never been able to get food stamps.
The last thing we did was figure out the standard deviation of each family’s income over the six-year period. This is a statistical way to measure how much it changed. 4
SNAP Participation and Income Volatility
The graph below shows how the standard deviation of the log of a family’s total income is related to the share of eligible years that a family got food stamps. To make the binned scatter plot, we split the standard deviation of the log of total household income into 20 equal-sized groups (or bins).
Then, for each bin, we plotted the average of this measure of how unstable a family’s income was and the average of the share of eligible years when a family got food stamps. A line that best fits the points shows that there is a negative relationship between unstable income and getting food stamps (that is, the share of eligible years that households received SNAP benefits).
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The slope of the best-fitting line in the above graph is -0.116. This means that going from the 25th percentile of income volatility to the 75th percentile means that the average number of eligible years that households got food stamps goes down by 6 percentage points. In other words, families whose incomes changed a lot less often were less likely to use the program when they were eligible.
Congratulations to @lisa_scullion and the @DistantWelfare team, who have been shortlisted in this year’s @timeshighered awards! ⭐ #THEAwards
Read more ⬇️https://t.co/8Zyii109mg pic.twitter.com/q72DdcQWbj
— UoS Health & Society (@UoS_HealthSoc) September 1, 2022
Research has shown that signing up for the program is a lot of work from an administrative point of view. In a survey of people who were eligible for a SNAP but weren’t getting benefits, 40% said that the amount of paperwork needed to apply turned them off.
Five states have different ways to apply, but in general, families must show proof of their income, wealth, and the number of people living in their homes. Most SNAP applications are approved or denied within 30 days, but it may take longer to get benefits.
And the process has to be done again and again to keep getting into the program. Households are less likely to pay the administrative costs of signing up for food stamps if they think they might lose their benefits because of a sudden change in their income.
Next, we looked at the link between how often a household’s income changed and how many times it crossed the line that made it eligible for SNAP. We added up each family’s assets and income to figure out if they were elected each year and if their eligibility changed over time.
Each family in our sample could move across the threshold for eligibility up to three times (if its status changed between 2013 and 2015, 2015 and 2017, and again between 2017 and 2019). Then, we used the same method as before to make a second binned scatter plot that shows the same measure of income volatility (the standard deviation of the log of total household income) and the average number of household eligibility changes.
The slope of the line that best fits the points is 0.103, so going from the 25th percentile of income volatility to the 75th percentile means an average increase of 0.046 eligibility switches. So, families whose incomes changed more often were more likely to have their eligibility change. This could explain why they got food stamps less often when they were eligible.
Income Volatility Effects in the Eighth Federal Reserve District
In the last analysis, we looked at how income changes affect who uses SNAP across the United States. But in the states in the Eighth District, 12.3% of families tracked by the PSID were on food stamps at the start of our sample period in 2013, while only 9% of families in other states were on food stamps.
To learn more about how income changes and how often people use food stamps, we compared the average values of the standard deviation of the log of total household income, the share of eligible years when a family got food stamps, and the number of times a family’s eligibility changed for families inside and outside of states in the Eighth District.
We looked at these averages based on where families were in 2013, which was the first year that households who had been eligible for food stamps for at least one year showed up in our window.
For a detailed account of the barriers that people with learning disabilities face in the benefits system, read @NeilCarpenter14 ‘s new book Benefits on Trial – a short summary at https://t.co/PlK6MQ0uh6 and you can find the book at https://t.co/HH0h7ftBu5
— Welfare at a Social Distance (@DistantWelfare) July 25, 2022
As the table shows, both inside and outside of Eighth District states, families’ incomes were unstable and they got food stamps for about the same number of years. But more people changed their eligibility in states in the Eighth District. Over the six years ending in 2019, families in District states had slightly lower household incomes and much lower balances in their checking and savings accounts.
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Families in these states had 25% less money than families in states outside the District in 2013. Because of this, households in the Eighth District switched eligibility more often than households in other states with the same level of income volatility but fewer assets.
Income Volatility May Explain Lower Food Stamp Takeup
The goal of SNAP is to help families become self-sufficient, but it can be hard for families whose incomes change a lot to stay in the program. Families whose incomes changed more often were less likely to use programs even when they were eligible.
In 2019, 18% of eligible families across the country did not take part in the program. One reason could be that their incomes were too unstable. This is important for the Eighth District because more families there use food stamps.
2/ Legacy benefit claimants did not receive the £20/wk uplift. They experienced no change in food insecurity over the period, whereas it fell among UC claimants who received an extra £20/wk. This suggests that the uplift helped. pic.twitter.com/AjPnm1m7mv
— Rachel Loopstra (@rloopstra) April 1, 2022
- See our May 2021 article “Childhood Income Volatility” for more information. In that study, we only looked at households where the head of the household was between 25 and 55 years old. We also got rid of families where the number of working children or adults changed.
- The Panel Study of Income Dynamics (PSID), where we got these data, has been stated as the smallest geographic unit. Because of this, we used data from Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee in our calculations, even though they are not all in the Eighth District.
- We counted families as eligible if they got food stamps, even if they wouldn’t have been eligible otherwise. For example, families who qualified for food stamps through another program but wouldn’t have been eligible otherwise were counted as eligible.
- In math terms, we found the standard deviation of the log of each family’s total household income over the six years in the sample. That is, we made a measure of how much each family’s income changed over time and then took the average of all of those measures.
- See the report from the Center for American Progress from May 2022. How to deal with the administrative problems that make it hard to use the safety net.
- Remember that states are the smallest geographic unit in PSID data, so in our analysis, we counted the states that are all or partly in the Eighth District: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee.
