Economist Levi Russell explains why the proposed restructuring of the largest food assistance program will end up costing more than its probable worth.
How much will it cost to change the way Supplemental Nutrition Assistance Program (SNAP) recipients obtain and consume food?
President Donald Trump’s administration proposed a new food box delivery approach to the program. The inspiration behind this may seem familiar. Members of food delivery service Blue Apron purchase plans that deliver fresh ingredients and detailed recipes for them to prepare at home. The basic idea of the Trump administration’s plan is that the government would replace roughly half of current SNAP benefits with boxes of food items chosen by program administrators. The other half of the funds would be distributed on electronic benefit cards, which the recipients currently use at grocery stores and other food distributors such as farmers markets.
Currently, there are some restrictions on what beneficiaries can purchase. A couple of examples are food at restaurants, alcoholic beverages and household items such as paper towels. There is potential for both moral and economic arguments for and against this potential change. While I think there are goodhearted people with good intentions on both sides, I want to explain why this idea comes form the wrong place economically.
Assuming that the goal of SNAP is to enhance the economic well-being of the recipients, there are two economic concepts the food box policy ignores: revealed preference and relative efficiency of markets.
Revealed preference: Choosing to buy cheddar instead of provolone gives you purchasing power
Revealed preference refers to the idea that people’s actions in the marketplace are the best guide to what they think is best for them. Providing SNAP recipients with assistance in the form of dollars allows them greater leeway in making purchase decisions that fit the needs of their families. Giving every family a uniform box of food that is presumably base on the number of people in the household needlessly limits choice. Losing autonomy in these small, but significant decisions can have impacts on people’s health. Recipients may have allergies to certain foods or have conditions such as diabetes that require a certain diet. We all have preferences for certain flavors. If the box contains one type of cheese, but some families prefer another that costs the same at the store, they are worse off with the box because it limits their choice.
Government data analyzing the choices of current SNAP recipients indicates that their purchases are roughly the same as the rest of the public, so there is no real justification for centralizing purchase decisions– unless you think these decisions should be centralized for everyone else.
Relative efficiency of markets: The government incentive vs. private incentive
Relative efficiency of markets refers to the idea that private and voluntary transactions lead to investments by businesses that are in line with the needs and wants of consumers to a greater degree than transactions involving the government.
No real-world system of food delivery is perfect, but a general presumption that markets are better than government bureaucracies or contractors makes sense. The well-known example of Soviet breadlines and the tragedy in Venezuela today are indications of the inability of government bureaucracy to properly incentivize food production. These are examples that fall on the more extreme end of the disaster spectrum. But the reality is that the modern food systems as the products of the free market are already highly regulated and subsidized.
Using private or non-profits as food box contractors also has problems. Private grocery stores are incentivized to keep costs under control and put products on shelves that customers want. Food companies share these incentives. Turning these businesses into contractors opens the system up to manipulation by the contractors themselves. Contractors can exaggerate the cost of the food or the delivery process, which would require more oversight, and thus inflate bureaucratic costs to the government.
Private food companies and grocery stores invest in market research to determine what people want to eat. Moving this selection process into the political arena will likely result in decisions being made by people who have little means of understanding what people want or need in their food boxes to fit their specific situations.
Those who favor this food delivery service in place of part of SNAP benefits likely have good intentions. The ideal setup sounds convenient and less stressful for vulnerable populations that receive these benefits. However, specific choices about the types of food, clothing, housing, entertainment, etc. we consume are best made by us as individuals or families. It’s difficult to see how a central authority would have more or better information about those specific choices than the people making them. Even if such information were available, if the central power were all-knowing, the economic cons outweigh the pros. The additional cost due to the inefficiency of the food boxes relative to the distribution of electronic cards likely outweighs the proposed benefits of exerting more control over the consumption and purchasing decisions of SNAP recipients.