Ed Glaeser Argues Against Food Stamps

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Over at Bloomberg View, Ed Glaeser argues that the shift in government aid from cash payments to in-kind transfers like food stamps is a mistake:

We should ask for two things from any redistribution system. It should do as much as possible for society, especially the poor. It should do as little as possible to encourage permanent poverty. And, whenever possible, it should help poor Americans find a path toward self-sustaining prosperity.

The conventional economic logic is that cash transfers are more effective at helping the poor than in-kind gifts, such as food stamps and housing vouchers. I am grateful for the freedom I enjoy when spending my earnings; surely, aid recipients also like autonomy. They can choose the spending that best fits their needs if they are given unrestricted income. 

Glaeser traces the shift to concerns over the misuse of cash transfers, but laments the perverse incentives produced by in-kind transfers.  ”The proliferation of in-kind programs leads aid recipients to spend on things that they value less and creates perverse incentives to earn less and save little,” he writes. “The problem with food stamps isn’t that we are giving too much to the poor.”

(HT: Marginal Revolution)

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  1. Robert Rounthwaite says:

    Couldn’t help but think of this blog entry when I heard about this story in the Detroit News:
    http://www.detroitnews.com/article/20120307/METRO01/203070333/
    It leads:
    “Part of an $11 million grant intended to provide business attire to 400 low-income job-seekers instead helped only two people, an audit of the city’s Department of Human Services has found.”

    The real scandal comes to light only because of the waste: imagine what 400 low-income job-seekers could do with $27,500 apiece. I’ll wager they wouldn’t choose to spend it all on clothes.

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  2. Desmond says:

    Well it seems Mr. Glaeser is assuming that the impoverished will spend the money on what’s best for them. Unfortunately, he falls into the economist’s trap of assuming everyone behaves like him — rationally and maximizing utility. However, if the majority of the impoverished were like him then they probably wouldn’t be impoverished.

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  3. MMa2ts says:

    My problem with food stamps is that it kills individuals survival instincts. Don’t get me wrong I know people who need them personally. People who look for jobs and go to school to better themselves. But then there is this other group of people who don’t want anything for themselves except the assistance. The other side to that is the place where the food stamps are spent. How many super market owners want to see less people on food stamps? How many land lords want to see housing vouchers disappear? It’s a very fragile topic.

    The incentive to get off has to be higher. There needs to be some attrition to benefits for those who don’t seek or find employment. If you don’t find employment or legitimately show that your searching you should be placed in a homeless shelter and let the check go directly to the the shelter until you can contribute to your own well being. There has to be some down side to staying on food stamps for extended periods of time or the problem will never be fixed

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  4. Joanne Rusch says:

    With recent conversations, I wonder if the proposed vouchers for Medicare or for schools actually represent a form of compensation that mirrors food stamps but has no requirement of need. Statistics show that Medicare is more effective and efficient than private insurance models – yet there is a proposal to vouchers it.
    It seems that we should decide if something warrants a government role or not. If it does, why not let government provide the service. If it does not, why divert any funds.
    For food, would it be better for the government to support providing food for all rather than money to transact? New programs like “trees that feed” focus on providing food in a sustainable way. If we don’t want to solve for no one having to be hungry (or having to be homeless) why divert any tax funds to help some people? Seems like providing money even targeted for a purpose has inherent breakdowns.

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  5. gkb says:

    Since food is necessary I would think that food stamps are essentially freeing up cash (otherwise spent on food) to be used on discretionary buying where you can exercise freedom to your hearts content.

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