Findings

Something to eat

Kevin Lewis

November 28, 2019

Poverty Identity and Preference for Challenge: Evidence from the U.S. and India
Sachin Banker, Syon Bhanot & Aishwarya Deshpande
Journal of Economic Psychology, forthcoming

Abstract:

One's personal identity can play an important role in decision-making. We propose that a key identity that shapes behavior among poor populations is conceptualizing oneself as financially insecure, which we term "poverty identity." Two experiments suggest that this identity can influence one's propensity to engage in challenging tasks. We first demonstrate in a lab experiment with students that making one's financial insecurity temporarily salient can reduce preference for challenging tasks. Subsequently, in a lab-in-field experiment conducted in Dharavi, a slum in Mumbai, India, we show that a verbal self-affirmation intervention involving simple, one-on-one conversations with each individual, can counteract the effects of persistent identity salience for the poor in Dharavi by fostering greater preference for more challenging labor tasks. We suggest that the persistence of scarcity can make poverty a continually salient characteristic by which the truly impoverished define who they are. Further, we outline an identity-based theoretical framework which explains behavior among people who temporarily feel poor but also suggests that similar perturbations in identity salience may have a negligible impact on behavior among the very poor. These findings have important implications for models of identity and policy design aimed at improving well-being for disadvantaged populations.


Food Assistance Take-Up and Infant Health: Evidence from the Adoption of EBT
Leah Shiferaw
University of California Working Paper, November 2019

Abstract:

More than 7 million individuals who were eligible for Supplemental Nutrition Assistance Program (SNAP) benefits in 2017 did not participate in the program. Incomplete take-up is common in many transfer programs, and may limit their effectiveness in reducing economic disparities. In this paper, I use a unique setting to shed light on the role that participation costs play in determining food assistance take-up, and to quantify the effects of increasing take-up on infant health at birth. I do this by studying a reform that made it easier to receive and use food assistance benefits in the US: the adoption of the Electronic Benefit Transfer (EBT) debit card for food stamp benefit disbursement. I estimate event study regressions using the county level rollout of EBT in California between 2002 and 2004 and find that EBT adoption led to a large and persistent increase in caseloads and applications for the program, as well as higher retailer participation in high poverty neighborhoods. I document that this rise in food stamp benefit take-up led to a meaningful increase in average birth weight for births most likely impacted by the policy, with effects concentrated in the bottom half of the birth weight distribution. These estimates provide new evidence that reducing the barriers to participation in food assistance programs can lead to potentially large gains in health for disadvantaged children.


A double safety net? Understanding interactions between disability benefits, formal assistance, and family support
Stephanie Rennane
Journal of Health Economics, forthcoming

Abstract:

While the main insurance sources for individuals with disability are understood, less is known about how family support interacts with federal disability benefits. Using the Health and Retirement Study matched to administrative records, I examine how disability benefits affect family support by comparing accepted and rejected disability applicants before and after benefit receipt. Receipt of disability insurance increases the probability of receiving any assistance from children by 18 percent and more than doubles the amount of in-kind assistance. Disability insurance also increases the probability that children are paid for their help and reduces children's labor supply. These findings are largest for low-income beneficiaries and those who recently lost a spouse, suggesting that child assistance complements income provided by disability insurance, and substitutes for other family assistance. Receipt of disability benefits allows the family to re-optimize how they provide support, and disability insurance is shared within the family in complementary ways.


Cost of Policy Choices: A Microsimulation Analysis of the Impact on Family Welfare of Unemployment and Price Changes
Julie Hotchkiss, Robert Moore & Fernando Rios-Avila
Journal of Macroeconomics, forthcoming

Abstract:

This paper calculates the welfare cost to families of an unemployment shock. Using U.S. data, we find an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by one-percentage point. Relative to single families, the welfare loss is greater for married families and increases with education. We also estimate that a loss in purchasing power of 1.8 percent generates the same amount of welfare loss as a one percentage point rise in the unemployment rate. Additionally, the magnitude of the shock to purchasing power that a family is willing to endure to avoid a one percentage point increases in the aggregate unemployment rate rises with income. The results in this paper informs policy makers about the distributional implications of decisions likely to affect labor markets.


The EITC and the Extensive Margin: A Reappraisal
Henrik Kleven
NBER Working Paper, October 2019

Abstract:

This paper reconsiders the impact of the Earned Income Tax Credit (EITC) on labor supply at the extensive margin. I investigate every EITC reform at the state and federal level since the inception of the policy in 1975. Based on event studies comparing single women with and without children, or comparing single mothers with different numbers of children, I show that the only EITC reform associated with clear employment increases is the expansion enacted in 1993. The employment increases in the mid-late nineties are very large, but they are influenced by the confounding effects of welfare reform and a booming macroeconomy. Based on different approaches that exploit variation in these confounders across household type, space and time, I show that the employment effects align closely with exposure to welfare reform and the business cycle. Single mothers who were unaffected by welfare reform (but eligible for the EITC) did not respond. Overall and contrary to consensus, the case for sizable extensive margin effects of the EITC is fragile. I highlight the presence of informational frictions, widely documented in the literature, as a natural explanation for the absence of extensive margin responses.


Do Energy Burdens Contribute to Economic Poverty in the United States? A Panel Analysis
Jeremiah Bohr & Anna McCreery
Social Forces, forthcoming

Abstract:

For many households, energy consumption represents a non-discretionary portion of their budget and directly relates to quality of life. As researchers continue to study the environmental impacts of energy behavior, it is important to explore how energy consumption relates to socio-economic wellbeing. This paper examines the economic impacts of being energy-burdened in the United States, defined as spending at least 10% of household income on heating and electricity services; energy burdens are partially, but not entirely, driven by income, since energy needs and costs can vary substantially due to housing characteristics, utility rates, and other factors. Using panel data of US household income and energy expenditures during 1999-2017, this analysis demonstrates that energy-burdened households were at about 150%-200% greater risk of transitioning into or extending the duration of economic poverty over a two-year timeframe relative to non-burdened households. This analysis indicates that dedicating inordinate amounts of income to energy services can threaten a household's economic well-being over time, possibly by preventing a household from engaging in other economic activities or compounding existing economic hardship. These results emphasize the importance of energy assistance and energy efficiency for low-income households, drawing attention to how structures of energy consumption, the welfare state, and social stratification intertwine.


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