November 14, 2012 by afrazzini
… is worthless unless you have someone to share it with.
Every argument in favor of SNAP (aka food stamps) is, at least in part, an argument in favor of the redistribution of wealth. The blog entries that have already been posted about the farm bill have done a good job of outlining the importance of SNAP to its recipients; I’d like to step back and examine SNAP’s role in the context of US income inequality.
Documentation of US income inequality
It is no secret that incomes among US workers have become increasingly unequal over the course of several decades; the slogan of the Occupy Wall Street movement – “We are the 99%” – referred to the concentration of wealth in the top 1% of US earners. Data from the Congressional Budget Office shows that income inequality increased steadily from the 1970s to 2007 (latest available figures).
Effects of income inequality on national economic well-being
The effects of income inequality on long-term economic growth have been a matter of debate amongst economists since the 1970s; studies on the topic have different results depending on the methods used and indicators and regions examined (1). However, our current economic recession, which was triggered by the sub-prime mortgage crisis, seems to serve as evidence that economic inequality creates instability. This is totally consistent with models created by IMF economists showing that income inequality can lead to financial crisis because of how it affects consumer spending as well as financial legislation (2,3) .In other words, greater income equality provides economic benefits not only those who would otherwise be at the bottom, but to all ranks of society.
No one is arguing for a classless society; the ability to climb the income ladder is an important incentive for innovation and progress. But it seems obvious that people need to be able to meet their most basic needs – food, housing, health – before they can become entrepreneurs.
Effects of income inequality on health and happiness
Low-income individuals have poorer health, including higher rates of chronic disease, than higher-earning individuals (4,5). This is unsurprising, given that poorer people have less absolute income to spend on preventive care. What is more interesting, however, is research showing that relative wealth also affects overall national health; increases in income inequality lead to higher mortality rates (6), as well as worse physical function among people below the 50th percentile of family income level (7). Income inequality also affects happiness: it is positively associated with higher rates of depression (8), and surveys show that Americans are happier in years where there is less income inequality (9).
How SNAP abates income inequality
In 2011, the Census Bureau reported that SNAP kept 3.9 million people above the poverty line, at a time when the total number of people below the poverty line was 46.2 million (10). That’s more than an 8% reduction in poverty! Additionally, SNAP benefits contribute to a geographic re-distribution of wealth because SNAP recipients use their benefits immediately to buy foods in their local areas, stimulating their local economies. In fact, the USDA estimates that every 1$ spent in SNAP benefits generates nearly double that same amount in local economic activity (11). Because SNAP recipients use the money right away, rather than let it sit in a bank as wealthier taxpayers might, its use has immediate positive effects.
I didn’t join Wall Street Occupiers, mostly because I never did figure out exactly what specific changes they were protesting for. But I do believe that cuts to our social safety nets would increase sickness, distress, and economic instability in America. Maintenance of SNAP funding is one important method for preventing the desperate heights of protest and promoting wellness and opportunity for our most disadvantaged citizens. It appears most other Americans agree: approval ratings for SNAP are consistently well-above 50% (12) – therefore, politicians would do well to find a different program to cut.
1) Boushey H, Hersh A. The American Middle Class, Income Inequality, and the Strength of Our Economy: New Evidence in Economics. Center for American Progress, May 2012. http://www.americanprogress.org/issues/economy/report/2012/05/17/11628/the-american-middle-class-income-inequality-and-the-strength-of-our-economy/
2) Kumhof M, Ranciere R. Inequality, leverage and crises. IMF Working Paper, November 2010.
3) Bertrand M, Morse A. Trickle-down consumption. Working Paper, February 2012.
4) Braveman P, Cubbin C, Egerter S, Williams D, Pamuk E. Socioeconomic Disparities in Health in the United States: What the Patterns Tell Us. American Journal of Public Health (2010) 100:S186-S196.
5) Schmeiser MD. Expanding Waistlines and Wallets: The Impact of Family Income on the BMI of Women and Men Eligible for the Earned Income Tax Credit. Health Economics (2009). 18:1277–94.
6) Zheng H. Do people die from income inequality of a decade ago? Social Science & Medicine (2012). 75:36-45.
7) Zheng H, George L. Rising U.S. income inequality and the changing gradient of socioeconomic status on physical functioning and activity limitations, 1984–2007. Social Science & Medicine (2012). Available online 24 August 2012, ISSN 0277-9536, 10.1016/j.socscimed.2012.08.014.
8) Cifuentes M et al. The association of major depressive episodes with income inequality and the human development index. Social Science & Medicine (2008) 67:529-539.
9) Oishi S. Income Inequality and Happiness. Psychological Science (2011) 22:1095-1100.
10) Statement: Robert Greenstein, President, on Census’ 2010 Poverty, Income, and Health Insurance Data. Center on Budget and Policy Priorities, September 2011.
11) Hanson K, Golan E. Effects of Changes in Food Stamp Expenditures Across the U.S. Economy. Washington, DC: U.S. Department of Agriculture, Economic Research Service (2002). Available at www.ers.usda.gov/ publications/fanrr26/fanrr26-6/fanrr26-6.pdf.
12) Nischan N. “The Economic Case for Food Stamps,” The Atlantic. July 18 2012.