Incentives and Food Stamps

The one thing that economics teaches us over and over again–and the one lesson that those who don’t like the implications ignore over and over again as well–is that incentives matter.

Robert Rector and his colleagues at the Heritage Foundation have written a number of important reports over the years showing how participation in welfare programs respond to changes in incentives. And their latest one is a nice addition to the collection.

In response to the growth in food stamp dependence, Maine’s governor, Paul LePage, recently established work requirements on recipients who are without dependents and able-bodied. In Maine, all able-bodied adults without dependents in the food stamp program are now required to take a job, participate in training, or perform community service.

So what happened?

In the first three months after Maine’s work policy went into effect, its caseload of able-bodied adults without dependents plummeted by 80 percent, falling from 13,332 recipients in Dec. 2014 to 2,678 in March 2015.

It’s evidence like this that restores my faith in humankind. We’ll always do what is best for us.

 

Author: George Borjas

I am a Professor of Economics and Social Policy at the Harvard Kennedy School.