FOOD STAMP PROGRAM: A BENEFIT-COST ANALYSIS

This dissertation examines the question of why the United States established and operates a Food Stamp Program as a major vehicle for income transfers. The Food Stamp Program is a seemingly complex means of transferring income, if, in fact, that is its only function. The purpose of this dissertation is to examine the economic and historical reasons for having such a program. In this dissertation we examine the benefits from and costs of operating the Food Stamp Program. The dissertation uses a microeconomic framework to illustrate the working of the program and then compares the benefit-cost ratio of the Food Stamp Program to that of the Aid to Families with Dependent Children Program. This comparison reveals that the Food Stamp Program may have the lesser cost. Further investigation of administrative costs and a re-examination of benefits lead to the conclusion that, while the Food Stamp Program may be slightly more cost effective in delivering benefits the reasons why the United States instituted an income transfer program in the guise of a food program can only be explained in an historical context. The historical examination of the development of the Food Stamp Program reveals that the form of the program was substantially influenced by the agricultural political constituencies of Congress. These results suggest that the Food Stamp Program is a likely model for a guaranteed minimum income program and warrants further empirical investigation to determine the costs associated with that or similar modifications of the existing program structure.