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Review of Economics of the Household

, Volume 8, Issue 4, pp 505–526 | Cite as

The effect of income shocks on food insufficiency

  • Laura Leete
  • Neil Bania
Article

Abstract

In this paper we investigate the relationship between income shocks and food insufficiency for U.S. households. Using Survey of Income and Program Participation data on U.S. households, we test the importance of both stable and transitory income components in determining food insufficiency. In a logistic regression model, we find that both the level of income and negative income shocks affect the predicted probability of food insufficiency, while positive income shocks do not. Although we do not have a definitive measure of a household’s liquidity constraint status, our work suggests that negative shocks may matter more for households that face liquidity constraints. Understanding the role of income shocks in determining food insufficiency is especially important in light of recent policy changes. It is likely that welfare reform in the U.S. increased the volatility of income in the low-income population. Our findings here suggest that this increase in volatility may not be without consequence.

Keywords

Food insufficiency Income shocks Consumption Deprivation Material well-being 

JEL codes

D12 I30 

Notes

Acknowledgments

The authors thank Jessica Greene, Craig Gundersen, Kathryn Magnuson, Joe Stone, Parke Wilde, and two anonymous referees, as well as participants at the following workshops for their detailed and useful comments: April 2006 IRP-USDA Small Grants Workshop, October 2006 USDA RIDGE Conference, November 2006 National Poverty Center/ERS-USDA Conference on ‘Income Volatility and Implications for Food Assistance II’ and the Spring 2007 Oregon State University Contemporary Rural Issues Seminar. This work was partially funded by the University of Wisconsin—Institute for Research on Poverty/USDA Small Grants Program under Agreement Number: F184516. Additional funding provided by the National Poverty Center, University of Michigan. An earlier version of this work appeared as a working paper at the University of Wisconsin Institute for Research on Poverty (WP# 1325-07). All remaining errors are the responsibility of the authors, however. The views and opinions expressed herein are those of the authors and do not necessarily reflect those of the Food Assistance and Nutrition Research Program, the Economic Research Service, or the United States Department of Agriculture.

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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of Planning, Public Policy and ManagementUniversity of OregonEugeneUSA

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