Food Stamps: A Case Study

Beginning in 2008, Dorothy Rosenbaum began to explore the correlation between recent economic slowdowns and the increase in food prices, exacerbating this hardship for many low-income families. Food stamp benefits are supposed to be sufficient so low-income families can afford the “Thrifty Food Plan,” the low cost diet established by the USDA. However, as food prices increase, Congress has cut the supply of food stamps besides this constant demand. Without government intervention, these consumers will be worse off and suffer from the lack of food stamp benefits. According to the law of demand, as price increases, quantity demanded will decrease. This is due to the income effect. As prices of food increase, the income of these families remains constant --- resulting in fewer items bought with their respective incomes. Further, food for these families has a very inelastic demand as the percent change in quantity demanded is less than the percent change in price, meaning that regardless of the price, quantity demanded will remain constant as food is

I believe that this would be efficient as the marginal benefit or each increment of the subsidy will alleviate the struggles of low income families and save them money while equaling the marginal cost of the government losing or expending money for these programs. While this may be a loss of efficiency, these programs create equity, or a fairness of benefits amongst our society. Further, lower rates of hunger in these low income areas will make a great community to live in as children can excel in school and parents at work without having to worry about the necessity of food. In turn, this could create an incentive for producers of food to lower prices to increase the number of people who can afford food with or without food stamp