Paycheck to Paycheck

Kevin Lewis

June 06, 2021

The Benefits of Rental Assistance for Children's Health and School Attendance in the United States
Andrew Fenelon et al.
Demography, forthcoming


Programs that provide affordable and stable housing may contribute to better child health and thus to fewer missed days of school. Drawing on a unique linkage of survey and administrative data, we use a quasi-experimental approach to examine the impact of rental assistance programs on missed days of school due to illness. We compare missed school days due to illness among children receiving rental assistance with those who will enter assistance within two years of their interview, the average length of waitlists for federal rental assistance. Overall, we find that children who receive rental assistance miss fewer days of school due to illness relative to those in the pseudo-waitlist group. We demonstrate that rental assistance leads to a reduction in the number of health problems among children and thus to fewer days of school missed due to illness. We find that the effect of rental assistance on missed school days is stronger for adolescents than for younger children. Additionally, race-stratified analyses reveal that rental assistance leads to fewer missed days due to illness among non-Hispanic White and Hispanic/Latino children; this effect, however, is not evident for non-Hispanic Black children, the largest racial/ethnic group receiving assistance. These findings suggest that underinvestment in affordable housing may impede socioeconomic mobility among disadvantaged non-Hispanic White and Hispanic/Latino children. In contrast, increases in rental assistance may widen racial/ethnic disparities in health among disadvantaged children, and future research should examine why this benefit is not evident for Black children.

Proximity to SNAP-Authorized Retailers and Child Maltreatment Reports
Lindsey Rose Bullinger, Julia Fleckman & Kelley Fong
Economics & Human Biology, forthcoming


The Supplemental Nutrition Assistance Program (SNAP) has been shown to have positive benefits for children. Families may face fewer barriers to accessing food they can purchase with their benefits if more stores in their neighborhoods accept SNAP benefits. We examine whether proximity to stores accepting SNAP benefits is related to child maltreatment (abuse and neglect) reports, particularly those related to food insecurity. We combine geographically identified child maltreatment report data from the state of Connecticut from 2011 through 2015 with state SNAP-authorized retailer data. Using within-Census block group changes in the presence of a SNAP-authorized store, we find that in large, rural areas, one additional SNAP store is associated with a 4.4 percent decrease in the child maltreatment report rate (p < 0.05), and an 11.3 percent decrease in substantiated cases of maltreatment (p < 0.10), even net of changing zip code level factors and time-invariant neighborhood characteristics. The relationship between a neighborhood SNAP store and child maltreatment reports in these rural areas is largely driven by neglect, concentrated among young and school-aged children (ages 0-9), and primarily due to fewer reports by medical personnel. We find no effects of a neighborhood SNAP store on child maltreatment reports in smaller, more densely populated neighborhoods. Sensitivity checks affirm these results. Results indicate the benefits of access to SNAP retailers on the child welfare system and child well-being more broadly, especially in rural areas.

Working for Your Bread: The Labor Supply Effects of SNAP
Marianne Bitler, Jason Cook & Jonathan Rothbaum
AEA Papers and Proceedings, May 2021, Pages 496-500


The Supplemental Nutrition Assistance Program (SNAP), the only universal US means-tested safety net program, has a low benefit-reduction rate. Thus, many SNAP recipients are working. We apply recent methods to study whether there is evidence of moral hazard among SNAP recipients. We see if individuals respond to incentives in SNAP eligibility by bunching near kink points in the budget set. While this responsiveness has been shown for various taxes and tax credits, little work has examined responsiveness of safety net program participants to kinks in their eligibility formulae. We use novel administrative data on eligibility determination and find little evidence of responsiveness around these kinks.

Beyond Health: Non-Health Risk and the Value of Disability Insurance
Manasi Deshpande & Lee Lockwood
NBER Working Paper, May 2021


The public debate over disability insurance has centered on concerns about individuals without severe health conditions receiving benefits. We go beyond health risk alone to quantify the overall insurance value of U.S. disability programs, including value from insuring non-health risk. We find that disability recipients, especially those with less-severe health conditions, are much more likely to have experienced a wide variety of non-health shocks than non-recipients. Selection into disability receipt on the basis of non-health shocks is so strong among individuals with less-severe health conditions that by many measures less-severe recipients are worse off than more-severe recipients. As a result, under baseline assumptions, benefits to less-severe recipients have an annual surplus value (insurance benefit less efficiency cost) over cost-equivalent tax cuts of $7,700 per recipient, about three-fourths that of benefits to more-severe recipients ($9,900). Insurance against non-health risk accounts for about one-half of the value of U.S. disability programs.

The Minimum Wage and Consumer Nutrition
Mike Palazzolo & Adithya Pattabhiramaiah
Journal of Marketing Research, forthcoming


The USDA estimates that 1 in 9 U.S. households is “food insecure”: unable to purchase sufficient, or healthy food. Public policy advocates and politicians have pointed to the prevailing federal minimum wage as a culprit, labeling it a “starvation wage.” This study examines whether and to what extent increases to the minimum wage have improved the quantity and nutritional quality of food purchased by minimum wage earners, and what implications these potential changes in consumer behavior have for marketers. We show that households likely to be earning the minimum wage increase their calories purchased in response to minimum wage increases, and that these gains are predominantly found among households purchasing the least amount of food prior to the minimum wage rising. While we do not find evidence that the average household improves the nutritional content of calories purchased, we do find evidence that the least healthful households (as measured by past purchases) buy more healthful foods in response to rising minimum wages. Overall, our findings suggest that higher minimum wages may not only help households afford more calories, but also encourage some households to purchase more healthful calories. Additionally, we find an increased openness among minimum wage households to purchasing new grocery items. This openness to trying previously unpurchased products offers promotion and product line planning opportunities to manufacturers. It also offers retailers with a nutrition-friendly brand image an opportunity to nudge consumers towards purchasing more healthful foods.

Are High-Interest Loans Predatory? Theory and Evidence from Payday Lending
Hunt Allcott et al.
NBER Working Paper, May 2021


It is often argued that people might take on too much high-cost debt because they are present focused and/or overoptimistic about how soon they will repay. We measure borrowers' present focus and overoptimism using an experiment with a large payday lender. Although the most inexperienced quartile of borrowers underestimate their likelihood of future borrowing, the more experienced three quartiles predict correctly on average. This finding contrasts sharply with priors we elicited from 103 payday lending and behavioral economics experts, who believed that the average borrower would be highly overoptimistic about getting out of debt. Borrowers are willing to pay a significant premium for an experimental incentive to avoid future borrowing, which we show implies that they perceive themselves to be time inconsistent. We use borrowers' predicted behavior and valuation of the experimental incentive to estimate a model of present focus and naivete. We then use the model to study common payday lending regulations. In our model, banning payday loans reduces welfare relative to existing regulation, while limits on repeat borrowing might increase welfare by inducing faster repayment that is more consistent with long-run preferences.

Labor Unions and American Poverty
Tom VanHeuvelen & David Brady
ILR Review, forthcoming


American poverty research largely neglects labor unions. The authors use individual-level panel data, incorporate both household union membership and state-level union density, and analyze both working poverty and working-aged poverty (among households led by 18- to 64-year-olds). They estimate three-way fixed effects (person, year, and state) and fixed-effects individual slopes models on the Panel Study of Income Dynamics (PSID), 1976–2015. They exploit the higher quality income data in the Cross-National Equivalent File — an extension of the PSID — to measure relative (<50% of median in current year) and anchored (<50% of median in 1976) poverty. Both union membership and state union density have statistically and substantively significant negative relationships with relative and anchored working and working-aged poverty. Household union membership and state union density significantly negatively interact, augmenting the poverty-reducing effects of each. Higher state union density spills over to reduce poverty among non-union households, and there is no evidence that higher state union density worsens poverty for non-union households or undermines employment.

Temporal Instability of Risk Preference among the Poor: Evidence from Payday Cycles
Mika Akesaka et al.
NBER Working Paper, May 2021


The poor live paycheck to paycheck and are repeatedly exposed to strong cyclical income fluctuations. We investigate whether such income fluctuations affect risk preference among the poor. If risk preference temporarily changes around payday, optimal decisions made before payday may no longer be optimal afterward, which could reinforce poverty. By exploiting Social Security payday cycles in the US, we find that risk preference among the poor relying heavily on Social Security changes around payday. Rather than cognitive decline before payday, the deterioration of mental health and relative deprivation may play a role. We find similar evidence among the Japanese elderly.


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