The Benefits of the Safety Net

A new working paper (abstract; PDF) by Hilary W. Hoynes, Diane Whitmore Schanzenbach, and Douglas Almond examines the effects of in utero and childhood access to the social safety net, specifically food stamps:

A growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood. Most studies rely on extreme negative shocks such as famine and pandemics. We are the first to examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. In particular, we focus on the introduction of a key element of the U.S. safety net, the Food Stamp Program, which was rolled out across counties in the U.S. between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes. The identification comes from variation across counties and over birth cohorts in exposure to the food stamp program. Our findings indicate that the food stamp program has effects decades after initial exposure. Specifically, access to food stamps in childhood leads to a significant reduction in the incidence of “metabolic syndrome” (obesity, high blood pressure, and diabetes) and, for women, an increase in economic self-sufficiency. Overall, our results suggest substantial internal and external benefits of the safety net that have not previously been quantified.

While the authors can’t pinpoint the exact channels by which food stamps improve long-term health outcomes, they point out that “one clear channel is through an increase in nutrition in the critical in utero and early life period. Additionally, recent work suggests that additional income can lead to reductions in cortisol in mothers, reducing biological harm due to persistent stress (Aizer, Stroud, and Buka, 2009, Evans and Garthwaite 2011).”

Related: in SuperFreakonomics , we wrote about another Almond paper, this one co-authored with Bhashkar Mazumder, which argued that: