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Letting People Living in Poverty Decide for Themselves

Allan Lichtenstein
August 12, 2015

Their Decisions Are as Good — or Bad — as Anybody’s

by Allan Lichtenstein

change-20272_640A FEW STATE LEGISLATURES have recently introduced bills intended to restrict the discretion of people with low incomes in their use of SNAP (Food Stamps) monies. Underlying these proposed punitive laws is the assumption that people who draw on the “safety net” to help them make ends meet are not capable of making decisions in their best interest. SNAP beneficiaries, the bills’ backers claim, abuse their assistance by purchasing food that is low in nutritional value or excessive in cost.

Stigmatizing and dehumanizing people of low income has a long history in politics. By blaming the undeserving poor for their own predicament, society is absolved of responsibility. In more subtle ways, commentators such as David Brooks have reinforced the stereotype. By decrying the poor’s lack of a “moral vocabulary,” Brooks attributes their failure to navigate a course of upward mobility to their not appreciating that “one way of behaving is better than another.” Their poverty will thus not be remedied, Brooks writes, by increasing resources and broadening the safety net but by inculcating “the norms that middle-class people take for granted.”

THE EVIDENCE, IN FACT, shows that people living in poverty are just like everyone else, certainly when it comes to budgeting their scarce resources, managing cash money, and purchasing the essentials they need for living. They do not abuse the limited income resources they have. There are “more similarities than differences” in diet quality, according to a U.S. Department of Agriculture (USDA) report that compared SNAP participants with the rest of the population. And recent research, particularly from the developing world, shows that giving people cash may be the very best way to help them overcome their poverty.

Earlier this year legislative initiatives were introduced in Missouri and Wisconsin to restrict the use of SNAP benefits, although in neither state are the bills yet law. Even if enacted, implementation is unlikely, since federal law does not allow states to make new restrictions on who can get SNAP benefits or what they can buy. Nevertheless, these initiatives represent a disturbing turn that could portend legislation in the future at the federal level.

Rick Brattin, a Republican state lawmaker in Missouri, claiming that he had witnessed SNAP users “purchasing filet mignons and crab legs with their EBT cards,” introduced legislation in February that would prevent SNAP users from abusing the system. His bill would make it illegal for SNAP recipients “to purchase cookies, chips, energy drinks, soft drinks, seafood or steak” in order to ensure that they would buy only foods with nutritional value.

Wisconsin’s Assembly approved a bill that prohibits “using SNAP benefits for the purchase of crab, lobster, shrimp, or any other shellfish”. Representative Scott Allen, one of the bill’s sponsors, explained: “we as a country are spending a fortune on health care costs for largely preventable diseases, and a lot of that relates to our habits as people — we’re consuming the wrong foods”. The bill also requires that SNAP recipients allocate at least two-thirds of their monthly SNAP benefit amount to the purchase of “foods that are on the list of foods authorized for the federal special supplemental nutrition program for women, infants, and children (WIC foods); beef; pork; chicken; fish; fresh produce; and fresh, frozen, and canned white potatoes.”

PEOPLE LIVING IN POVERTY use the little income they have to secure the basics necessary for daily survival. They spend a much larger share of their income on food and housing needs than do people with higher incomes. Households with low incomes have very little income to allocate to more discretionary spending, such as entertainment or to save for their family’s future.

In the figure below, households in the lowest income decile (incomes less than $10,693 a year) apportioned 18.5 percent of their income to food and 46.6 percent of their income to housing. This amounts to $3,684 on food and $9,269 on housing, on average, per year. In contrast, the top ten percent of households (incomes above $134,016 a year) spent 10.5 percent of their income on food and 30.8 percent of their income on housing. This amounts to an average of $12,657 a year on food and $37,179 a year on housing.

On the other hand, the top income group expended 16.8 percent of its income on personal insurance and pensions; that is, they were able to set aside an average of $20,319 each year for future use. Households in the lowest 10 percent allocated just 1.4 percent of their income to insurance and savings, an average of $299 a year.

Figure: Annual Expenditure Shares by Income Decile, July 1, 2013 to June 30, 2014

Annual Expenditure Shares

Source: Author’s Analysis of Bureau of Labor Statistics Data, April 2015

A closer comparison of the food budget of households of low incomes with those of high incomes shows that both attach the same importance to the different food categories. All the income groups allocated about the same share of their food budget to each of the different food categories. On average, all households allocated 22 percent of their food expenditures to meats, poultry, fish, and eggs, 10.4 percent to dairy products, 13 percent to cereals and bakery products and 19.5 percent to fruits and vegetables. The differences between the high- and low-income groups were slight, varying a percentage point or two.

Absolutely, though, households with low incomes spent much less in each food category, including the food categories where their spending is alleged to be excessive. For example, on average, households in the bottom income decile spent $139 on beef and $80 on fish and seafood, while households in the top decile spent $338 on beef and $222 on fish and seafood. Households with low incomes also spent much less in food categories considered “unhealthy foods.” For example, on average, the bottom decile spent $95 on sugar and other sweets and $258 on non-alcoholic beverages, while the highest decile spent $258 and $593 on these two, respectively. Households with low incomes were much more likely than were households with higher incomes to eat at home, spending about one-third of their food budget on eating out, compared to one-half for households in the top income decile.

Comparisons of the spending patterns of families receiving means-tested government assistance (housing assistance, Medicaid, TANF, SNAP, SSI) with families receiving no assistance also show that families in need are able to discern their real needs and allocate their expenditure accordingly. The data shows similar trends to those described above, with families receiving assistance allocating 77 percent of the family budget to food, housing, and transportation, compared to 65.5 percent for families not receiving assistance.

The USDA periodically assesses its nutrition assistance programs for the “quality of foods participants can access with program benefits.” Their survey examined SNAP participants, income-eligible nonparticipants, and higher-income individuals. Differences between the three groups were slight. “In general, there are more similarities than differences across the three groups” in terms of nutrient intakes, food choices, and diet quality.

Irrespective of income, the U.S. population overall eats an unhealthy diet. For all income groups, the quality of their diets fell far short of the Dietary Guidelines for Americans. The overall average on the HEI-2005 was 60 out of a possible 100. The differences between the three groups are small. SNAP participants scored 56.8 percent compared to a 60.3 percent for income eligible non-participants and 60.2 percent for higher-income individuals.

Within the details, there were slight differences in nutrient intakes, intake of calories, and weight status and food-consumption patterns. SNAP participants were likely to be more obese but were less likely than higher-income non-participants to consume sweets, desserts, salty snacks, and added fat and oils.

The allegation that SNAP recipients abuse their benefits by eating “crab, lobster, shrimp, or any other shellfish” is fallacious. Only 3 percent of SNAP users reported eating shellfish the previous day compared to 4.4 percent of income-eligible non-participants and 3.9 percent of higher-income individuals. Likewise, there were small differences between SNAP recipients and the two other groups in the consumption of cookies, chips, energy drinks, or soft drinks. For example, 27.3 percent of SNAP recipients reported eating cookies the previous day, compared to 30.2 percent of income-eligible non-participants and 31.3 percent of higher-income participants. On the other hand, SNAP recipients were slightly more likely to have consumed soft drinks the previous day—55.8 percent compared to 48.6 percent and 49.8 percent, respectively.

EVIDENCE FROM PROGRAMS in Latin America, Africa, the Philippines, Cambodia, and elsewhere demonstrates that giving the poor cash is a highly effective way to reduce extreme poverty and to improve the lives of the people living in poverty.

The initial conditional cash transfer program was undertaken in Mexico. The Oportunidades program, initiated in the 1990s, gave cash money to a group of people living in poverty on condition that they sent their children to school and took them for regular health checkups. By 2013, this program had expanded to include six million families, about 30 percent of the population. A similar program in Brazil, the Brazil Bolsa Family, introduced subsequently has grown to be far larger than the Mexican program. It covers 50 million Brazilians, almost a quarter of the country. Not only is it a major tool in reducing poverty; it has also been instrumental in narrowing income inequality.

In the United States, a conditional cash transfer program was launched for the first time in New York City in 2007. The results of the NYC Family Rewards Program were mixed, with some positive effects on some outcomes, but with others left unchanged. A second, expanded U.S. program was begun in July 2011. It is being tested in two locations — in the Bronx in NYC and in Memphis, Tennessee. Although the program is still being assessed, preliminary findings are encouraging. They “suggest that Family Rewards 2.0 was a step in the right direction in the effort to assess whether the conditional cash transfer model can work in the United States.”

Today conditional cash programs exist in at least fourteen Latin American countries and some twenty-six other countries including Philippines, Turkey, Egypt, Bangladesh, and Cambodia. Although, as Tina Rosenberg has written in the New York Times, these “are programs that help the people who most need help, and do so with very little waste, corruption or political interference,” their conditional feature accentuates the stereotype of the poor. It does not allow the poor to decide what is best for them.

Fortunately, more recent initiatives have taken out the conditional requirements. These programs are distributing cash unconditionally. One example is the charity GiveDirectly, working in Kenya. A study of their project found an increase in the consumption of food, medical, and educational expenditures, while there were no increases in alcohol and tobacco spending. In addition, “transfer recipients experienced large increases in psychological well-being” and reductions in stress.

Christopher Blattman, in an op-ed in the New York Times, reports on an unconditional cash-transfer program he and his colleagues undertook in Liberia’s urban slums with men who were homeless or made their living dealing with drugs or stealing. They gave these men $200 in cash and discovered that almost no men wasted it. Their lives improved and they ate and lived better after receiving the cash.

The success of cash-transfer programs have been summarized succinctly by Christopher Blattman and Paul Niehaus, writing in Foreign Affairs. They point to the growing evidence in support of cash-transfer programs.

Studies have shown that the world’s poorest people do not squander cash transfers, even when there are no strings attached.... Study after study has shown that recipients of cash grants invest the money or spend it on such basic items as food and better shelter. Poor people don’t always make the best choices with their money, of course, but fears that they consistently waste it are simply not borne out in the available data.... Nor is there evidence that unconditional cash transfers make recipients lazy.

THE SUCCESSES of cash-transfer programs not only refutes the claim that the poor are incapable of judging best how to spend their monies but calls for thinking whether similar programs can be used more broadly in the United States. The U.S. government could make a real dent in reducing poverty by giving money unconditionally, not only to people living in poverty, but to all Americans. A guaranteed universal basic income would provide a minimum standard of living to all residents.

In a more recent op-ed in the New York Times, Gar Alperovitz and Thomas Hanna point out examples of “socialist” programs that already exist in the United States. Alaska, for example, provides a basic income for all residents: It pays out an annual dividend from oil revenues to all state residents. Matt Bruenig and Elizabeth Stoker, writing in The Atlantic, calculated that giving $2,920 in 2013 to every single American would reduce official poverty in half.

A universal basic income would not replace the government safety net, as libertarians would advocate, but complement it. It would be the foundation on which the safety net, many features of which need to be expanded, would firmly stand.

Allan Lichtenstein, a contributing writer to our website and magazine, has a Ph.D in urban planning from Rutgers University and has been working in the field of poverty research for nine years. He grew up in South Africa, lived in Israel for sixteen years, and has lived in the U.S. since 1986.