A transfer is a cash (or cash-like) benefit that governments just distribute out to certain (or all) people. The United States has a variety of transfer programs. The Earned Income Tax Credit transfers money to low-income workers and their families. The Child Tax Credit transfers money to households with dependent children. SNAP transfers food vouchers to low-income people. Social Security transfers money to the retired. And so on.
It should be mentioned from time to time that transfers really do work. For instance, take a look at this fun, interactive post from last year showing how much transfers reduce the poverty rates in OECD countries. The short is that they reduce poverty rates a ton, and countries with the lowest post-transfer poverty rates tend to get there through substantial transfer programs.
A recent USDA report highlights the effects of a temporary increase in the amount of SNAP (aka food stamp) transfers. In 2009, the ARRA temporarily increased SNAP benefits by an average of 17 percent. The program is notoriously stingy, so this was not a dramatic increase. The highest possible increase was for families of four with a net monthly income of $980. Those families saw their benefits increase from $294/month to $374/month, a 27.2 percent increase. If such families ate three meals a day for a 30-day month, these expanded benefits would provide them $1.04 per person per meal.
The USDA tracked the impact of this benefit expansion on food insecurity. A food insecure household is one that has limited or uncertain access to food. People who skip meals because they cannot afford food, do not know whether they will have money for food in the coming days, and so on are food insecure. To determine the impact on food insecurity, the USDA modeled what food insecurity would have been without the benefit increase based on past data. Because 2009 and the years subsequent were in the throes of a massive recession and economic downturn, that model predicted a substantial rise in food insecurity.
That substantial rise did not come. Against the model’s baseline, food insecurity significantly decreased for the SNAP-eligible:
The percentage of likely SNAP-eligible households that were food insecure was 2.2 percentage points lower than expected in late 2009, after adjusting for changes in income, employment, other household characteristics, and food prices. The corresponding improvement for very low food security was 2.0 percentage points.
The improvements in food security rates in 2009 correspond to about 530,000 fewer food-insecure households and 480,000 fewer households with very low food security than would have been expected considering economic and demographic changes from 2008 to 2009. These represent reductions of about 8 percent and 17 percent, respectively.
The USDA went on to do the same modeling and sampling for households that were just above the SNAP cutoff, i.e. households who did not get benefits but were close to getting them. Those households saw no decrease in food insecurity. In fact, those households had rates of food insecurity higher than the model predicted even when taking into consideration the state of the economy.
This is all to say that transfers clearly do work. There were a half million fewer food-insecure households and a half million fewer very food-insecure households over the last few years owing to a fairly modest boost in transfers. We can easily do more of these transfers and we clearly should.