Low program take-up(participation) by the elderly in most means-tested transfer programs is a persistently puzzling phenomenon. Approximately 3.6 million persons ages 65 and older live below the poverty line, of which over 40 percent report experiencing hunger. At the same time, far below 100 percent of the elderly population who are eligible for public assistance programs collect benefits. The Food Stamp Program (FSP, now the Supplemental Nutrition Assistance Program, SNAP), the Nation’s largest program designed to ensure food security and provide adequate nutrition for low-income Americans, has the lowest rate of participation among the major public assistance programs for the elderly. In 2006, only 34 percent of the elderly eligible to participate collected food stamp benefits compared with a take-up rate of 67 percent among the general population.
This study investigates the reasons for the low take-up of food stamps among the elderly and its implications for their well-being. The study considers a broad array of explanations for the low incidence of take-up, including measurement error, behavioral factors, information barriers, and interactions between the FSP and other food assistance programs.
Low food stamp take-up by the elderly should interest policymakers for several reasons. First, poverty is a persistent problem among the elderly. Although the poverty rate has fallen for older adults over the past half century, 40 percent of all individuals will experience a spell of poverty at some point between the ages of 60 and 90. Moreover, the number of the elderly in poverty would be nearly twice as high as the official measure suggests if the poverty measure accounted for medical care costs. Struggling with inadequate income, poor elderly persons often have to curb their spending on food to have money for prescription drugs and so experience hunger and even malnutrition as a result. At the same time, the FSP has the potential to help improve the well-being of the elderly if they were to participate in the program.
In addition, the phenomenon of eligible individuals not participating in Government transfer programs is a topic of general interest that has spurred an extensive literature. However, despite many years of research, relatively little is known about what factors matter most in the participation decision and how enrollments in transfer programs might be increased. A better understanding of the decisions underlying food stamp take-up by the elderly may provide us with some insight into the take-up behavior of this population in other social programs, as well as contribute to studies evaluating the impact of transfer programs.
Using the Panel Study of Income Dynamics (PSID) for the period 1980-2005 and other data sources, this study focuses on several issues. First, the study asks whether measurement error may help explain the low take-up rate of the elderly. After considering this evidence, the study investigates whether low take-up is caused by a low initial entry rate by eligible individuals for the program or by a high exit rate from the program. The study then examines the determinants of participation, using a variety of methods, including pooled logit regression, individual fixed-effects models, and techniques from duration analysis, and looking separately at entry and exit. In many specifications, the study contrasts the participation behavior of the elderly with that of the nonelderly to explore whether these two groups differentially respond to costs and benefits of participation, and if so, whether this difference may help explain the low take-up rate of the elderly. In addition, the study gives special attention to the potential interaction between participation in the FSP and other food assistance programs, such as the Elderly Nutrition Program (ENP), which includes Meals on Wheels and the senior congregate meal programs. Taken as a whole, the study provides a complete picture of factors determining food stamp participation among the elderly.
The study departs from the existing literature in several ways. First, this work emphasizes the importance of confronting measurement error when calculating program eligibility. The study considers several types of measurement error, such as misclassification due to insufficient information, measurement errors of income/asset variables, and misreporting of participation status. While far from perfect, this study improves on the accuracy of take-up estimations compared with many of its predecessors. Second, while most of the existing literature treats take-up as a stock variable, the longitudinal nature of the PSID enables this study to directly study the flow aspect of participation. A major advantage of this approach is that this study is able to estimate two sets of hazard rates for movements into and out of the FSP since both movements may potentially contribute to the low take-up rate. Third, the interaction between the FSP and the ENP has not been examined in the literature. The potential crowding-out effect by the ENP may provide an additional explanation for nonparticipation.
The study finds that the low take-up rate of the elderly is best explained by a low initial rate of entry into the program. Once enrolled, the elderly are no more likely to leave the FSP than the nonelderly. Second, the participation decision is strongly related to economic incentives. The lower expected benefit level and relatively better financial situation of the elderly account for about a third of the difference in take-up between elderly and nonelderly. Third, the evidence also suggests that a lack of information contributes to nonparticipation among the elderly. Responses to survey questions about reasons for nonparticipation indicate that about 60 percent of elderly eligible nonparticipants either believe that they are ineligible or report being unaware of their eligibility status. Finally, the study finds a strong negative correlation between food stamp take-up among the eligible elderly and the Elderly Nutrition Program caseload. This result suggests that, for the elderly seeking food assistance, group and home-delivered meals largely substitute for, rather than supplement, food stamps.
This study finds that, despite the low take-up rate for food stamps, elderly individuals who are eligible for the program but do not participate appear to be less needy than participants. Over 70 percent of eligible nonparticipants report that they have enough food and the types of food they want. Objective measures also indicate that they spend more on food consumption and eat more nutritious foods. Therefore, low participation does not appear to be a concern of nutritional well-being at the population level for the elderly.
Direct inquiries about this study to the Project Contact listed above.