Should Taxpayers Pay Low Income Parents $14 Hourly To Feed Their Children Nutritious Meals? – Forbes
My local paper on Sunday reported ”Food stamps don’t cover the cost of healthy eating” . Well that doesn’t sound good. But is it true?
Being intrigued (but admittedly skeptical), I decided to dive a little deeper. The study, conducted by Kranti Mulik at the Union of Concerned Scientists and Lindsey Haynes-Maslow, an assistant professor at N.C. State, seems solid at first glance. But after unpacking the details, I discovered that the study’s central conclusion–that food stamps don’t cover the cost of a healthy diet–dead wrong (or at minimum, grossly overstated) and its policy implications–that we should be paying low income parents $14 or more hourly to cook their children nutritious meals–somewhat troubling.
What the Study Tried to Measure
Previous studies have attempted to determine whether food stamps (now renamed the Supplemental Nutrition Assistance Program, or SNAP) are sufficient to cover the cost of previous dietary recommendations (e.g., the Food Pyramid). But this is the first attempt to do so for the most current dietary recommendations (MyPlate), which replaced the familiar food pyramid in 2010.
I am no nutrition expert, so it is not my place to challenge whether the MyPlate recommendations represent solid science or good nutritional advice. I’m well aware of the sorry history of what even the New York Times–hardly a bastion of limited-government thinking–has characterized as “the government’s bad diet advice.” So any sensible citizen should at least use caution in following the suggestions of government experts in this (or any other) domain.
My purpose instead is to explain the underlying assumptions that resulted in this particular study’s yielding questionable conclusions.
The Methodology in a Nutshell
Fortunately, this study is open-source, so a full account can be read by anyone interested in the details. The study appears to use reliable sources and methods to tote up the average estimated cost of of the MyPlate diet using an impressive degree of granularity (it calculates these costs 4 using USDA price data that spanned 99 market groups, 4 regions, and 9 divisions for 5 different food categories and 12 different age/sex groupings as well as 2 different 4-person family types using 6 different scenarios reflecting different assumptions about the mix of fresh vs. frozen vs. canned fruits/vegetables and allowing for vegetarian diets etc.).
Its strengths notwithstanding, this study has two glaring errors that entirely undercut its conclusions.
The Study Entirely Ignores School Lunch and Breakfast Programs
First there is a major (and somewhat puzzling omission): the study takes no account of school-age children who may be eating one or more free or reduced-price meals at school. A recent report by the inspector general at U.S. Department of Agriculture found that the National School Lunch Program serves 32 million children a year, while the National Breakfast Program serves 10.6 million. SNAP serves about 20 million children .
Given that both these programs as well as SNAP target households with income below 130% of poverty, it is reasonable to assume a sizable amount of overlap between these figures. Since school lunches are designed to cover 33% of of a child’s daily nutritional requirement and breakfasts another 25%, it is clear that estimating SNAP costs on the assumption that SNAP has to cover 100% of nutritional needs of these children rather grossly overestimates the amounts needed.
The inspector general report conceded that the exact degree of overlap between the programs currently is unknown. But we do know that in FY2012, SNAP provided $88.6 billion in benefits: given that average per capita SNAP benefits are higher for children than adults (Table 4), we can reasonably infer that at least 44% of the $88.6 billion went to children, for a total of $39 billion. That same year, the school lunch and breakfast programs provided $18 billion in assistance to largely the same population. Ignoring the latter assistance–i.e., assuming that only $39 billion in taxpayer assistance is available to provide such children with 100% of their daily nutritional needs–essentially ignores 31% of the funds actually available ($18/$57 b.)and thus overstates by 46% ($18/$39) the amount of SNAP funds needed for this purpose.
This omission is bad enough. Worse is that the authors do not even mention this omission at all in either their methodology or as a limitation of the study.
The Study Grossly Overestimates the Labor Costs of Adequate Nutrition
In contrast, the authors are quite open about the inclusion of labor costs in their estimation of the resources required to comply with federal dietary recommendations. But perhaps because they were less than transparent about the implications of the assumptions they made regarding such costs, even the authors may not realize the implausible implications underlying their own assumptions.
The authors estimate food costs for a “young” family (parents age 18-30 with 1 child age 2-4 and another age 5-7) and an “older” family (parents age 31-49 with 1 child age 8-11 and another age 12-17). The monthly food costs for the young family range from $930 for a completely vegetarian diet (in which beans do not count as vegetables and one third of fruit/vegetable needs are met using fresh, frozen and canned fruits and vegetables) to $1,098 for a diet in which all fruits and vegetables are fresh (i.e., nothing frozen or canned); for the older couple, these costs range from $1,110 to $1,249.
However–based on the results of another study that used data from the American Time Use Study (ATUS) to examine the actual time used by families to prepare meals (inclusive of shopping, meal preparation and clean-up)–the authors assumed that 40% of these costs represented the cost of family labor. That is, to calculate the totals reported in the preceding paragraph, the authors used their very fine-grained estimates of actual food expenditures required to meet federal dietary requirements and divided this total by 0.6.
This means we can multiply these same totals by 40% to recover the implicit amount of labor costs that were included. These ranged from $372 to $439 for the young family and $444-500 for the older family . We can further convert these to an implicit hourly labor cost by relying on the same study the authors did in arriving at their 40% assumption. That study showed that the average time to prepare a sample 2-wk meal plan for a family of 4 (providing healthy meals meeting federal dietary requirements for each family member every day) was 16 hours per week or 2.8 hours per day.
Thus, we can convert monthly labor costs into a daily amount and divide the latter by 2.8 to arrive at an implicit hourly labor cost “needed” to meet dietary requirements. This implicit hourly cost ranges from $5.35 to $6.32 for the young family and $6.38 to $7.19 for the older family.
At face value these appear like very reasonable estimates for low income families (82% of SNAP recipients are poor and the rest have incomes below 130% of poverty). But the same study also used 8 hours as a sensitivity analysis in recognition that actual experience might be different than the estimated times to prepare a meal. For example, the sample menus assume every meal is cooked from scratch whereas in reality, many families would invest roughly the equivalent time to cook twice the amount of food, thereby providing a second meal the following day at little added time cost.
Of equal importance, when they looked at actual time-use data, the researchers found that on average, even the 8 hours a week assumption overstated the actual amount of time Americans devote to meal preparation by 63%. The 16 hours a week figure was literally triple the average amount of time spent by the typical U.s. family!
But if we assume 8 hours a week, suddenly the hourly costs of meal preparation jump to double the amounts earlier cited, to as high as $14.38 per hour. Moreover, it gets much worse.
In reality, 45% of SNAP households with children have no earned income. Such individuals have no “opportunity cost” (in terms of foregone wages) of spending their time preparing healthy meals for their children. For the average SNAP family with children, gross wage income averages only $693 (Table A.18). But since only 45% of such families have earned income, it means that the “average” family has only $312 in earned income. Whether this is averaged over a single full-time worker working 2000 hours a year or 2 half-time workers, this amounts to an average opportunity cost of $1.87 per hour.
Yet the study implicitly values this foregone time at several multiples of this amount. Under the assumption that families must devote 16 hours weekly to preparing nutritious meals, the study implicitly assumes this time is worth $5.35 to $6.32 for young families and $6.38 to $7.19 for older families. But when we more realistically assume families would devote closer to 8 hours to the task, these valuations double to anywhere from $10.70 to $14.38 an hour.
In short, what we have here is not a minor methodological quibble, but a rather sizable estimation error that results in overstating the opportunity cost of meal preparation by a factor of 2.7 to 7.7 (i.e., assumed costs are 2.7 to 7.7 times as large as we actually know they are based on empirical evidence).
What is the Value of Leisure Time for Low Income Families?
For someone who is working, it is straightforward to estimate the value they attach at leisure time since at the margin, it is presumed people will work up until the last hour of leisure given up is equivalent to whatever hourly wage they earn. Thus for the 45% of SNAP families with children that report earned income, my analysis is a reasonable approach to estimating the value of foregone leisure time.
Obviously this hypersimplifies a real world in which workers cannot necessarily make incremental adjustments to their work hours to earn additional money either because they are paid a flat salary or because their job is structured to be paid a fixed hourly rate for a specified number of hours, no more, no less.
The situation is more complicated for families with no earnings. Economic theory would suggest that prospective workers in such families must value their leisure time at a rate greater than the prevailing wage rate, else they’d already be working. If so, one could argue that valuing their time at $14.38 is not demonstrably incorrect based on the evidence at hand. And if that’s true, then at least for these families, the authors’ conclusion that current SNAP benefits fall short of covering the full cost (time and money) of meeting federal dietary guidelines may be correct.
Should Taxpayers Compensate Low Income Families for Lost Leisure Time?
But here’s what’s illuminating about the authors’ analysis. Nearly all of the purported shortfall between current SNAP benefits and the actual cost (including time and money) to meet federal dietary guidelines is accounted for by labor costs (i.e., the value of time used in meeting those guidelines).
Fig. 1 shows that for nearly every diet scenario for young families, the shortfall between SNAP benefits and the total costs (time and money) of meeting federal dietary recommendations is exceeded by the labor cost (i.e., value of time) used to meet the MyPlate nutritional guidelines. The biggest exception is for the most expensive diet, Scenario 1, which is the one in which all fruit/vegetable servings are obtained exclusively by reliance on fresh fruits and vegetables rather than less expensive frozen or canned versions that supply the equivalent amount of nutrition.
For older families, the story is similar except that in no case can the SNAP shortfall be entirely explained by labor costs. However, remember my earlier caution that the SNAP shortfall has been exaggerated in this study by the failure to account for the federally subsidized school lunches and breakfasts available to school-age children. As a rough approximation, the SNAP shortfalls shown for older families would be smaller by an amount roughly equivalent to one-quarter of labor costs if the school meal programs had been properly accounted for . For younger families the shortfalls should be reduced by about one-eighth of labor costs to correct this omission.
But once we have made these corrections, two things become clear:
- SNAP benefits more than cover the costs required to meet MyPlate recommendations even for the most expensive diet preferred by nutrition purists;
- If SNAP benefits were increased by the amounts recommended by the authors more than 100% of the increase would be to compensate low income families for the lost leisure time required to prepare nutritionally adequate meals.
I think most Americans are comfortable with the idea of using taxpayer dollars to fill the gap when a family’s ability to pay for adequate nutrition falls short: a shortage of monetary resources for food can straightforwardly be addressed by Uncle Sam (who has done so since 1939) with whatever attendant work requirements are necessary to address concerns about welfare disincentivizing work.
In contrast, low income families have no shortage of leisure time. Economics professors Mark Aguiar (University of Rochester) and Erik Hurst (University of Chicago) have documented that since 1965, the average male has gained 5 hours weekly in leisure time and the average woman has gained 3 hours. During the same period, leisure time for Americans without a high school diploma grew by 8 hours a week while leisure college-educated Americans fell by 6 hours. Overall leisure is roughly 100 hours a week for both males and females. Admittedly, this includes about 60 hours for sleeping and another 8 for meals, but even after subtracting 68 hours, this leaves ample time for adequate meal preparation. Moreover, those with the lowest education–which roughly corresponds to income–have about 10 more weekly hours of leisure than those with the highest levels of education.
Which is to say that free time is not the scarce resource facing low income Americans when it comes to providing nutritious meals for their families. And now that we have fixed the problems with the Mulik/Haynes-Maslow study, we can see from its own results that SNAP evidently more than compensates such families for any lack of ability to pay for nutritious meals. What appears to be missing is a willingness-to-pay (in terms of leisure time foregone) to make the time investment in nutritious meals.
Obviously, one could chalk this up to lack of education about the need for adequate nutrition etc. But if that were the problem, then the solution recommended by the authors–to increase SNAP benefits to fully cover the time costs of adhering the nutrition guidelines–would make little sense. Instead, what the authors implicitly are saying is that unless federal taxpayers pay low income parents for their loss of leisure time in preparing nutritious meals, we have no good reason to expect such families to do so.
I’m no expert on the motivations of low income parents, so I’m not in a position to say whether the authors are correct in their rather dismal view of parental unwillingness to ensure adequate nutrition for themselves and their children. I will say that if lack of willingness to forego leisure time is the explanation, that is a serious policy issue worthy of a lot of attention and further study.
But I also believe that if that really is the problem, most Americans are unlikely to support the idea that taxpayer resources should be used to, in essence, bribe such parents to do the right thing when it comes to raising their children. For if it makes sense to do this to ensure that children get adequately fed, then why not to ensure that parents spend enough time working with their children on homework or similar duties that increase the odds of a happy and successful life? The slippery slope should be pretty obvious to any reader who has invested the time to get to this point.
But by the same token, it is not even obvious that enhancing the generosity of SNAP benefits would even achieve the desired objective. If such poorly motivated parents receive additional dollar resources to cover their food costs, why would be believe this would in any way alter how they allocate their leisure time? One could as easily (and plausibly) imagine such parents using these added resources (since they obviously are not needed for food) to make their leisure time even more attractive and hence even more resistant to change. Until and unless we better understand the problem we are trying to solve and think clearly about the merits of alternative solutions to address it, it is clear to me that simply throwing more money at it is likely to yield yet one more government program that overpromises and underdelivers even while costing taxpayers a fortune. We can do better than this.
READ CHRIS’ BOOK, The American Health Economy Illustrated (AEI Press, 2012), available at Amazon and other major retailers or as a pdf at AEI. With generous support from the National Research Initiative at the American Enterprise Institute, an online version complete with downloadable Powerpoint slides and companion spreadsheets has been made available through the Medical Industry Institute’s Open Education Hub at the University of Minnesota.
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