The effect of the WIC program on consumption patterns in the cereal category

Abstract

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is a federally-funded food assistance program for low income participants who are at nutritional risk. Beneficiaries receive vouchers for specific foods and brands, selected for their nutritional value. While the program is designed to improve nutrition, it may also induce changes in consumption behavior that persist beyond participation in the program. In this paper, we study how participation in WIC impacts the consumption patterns and preferences during and after the program. Our analysis focuses on the cereal category, in which the subsidized brands must meet certain nutritional guidelines. As expected, during the program households increase cereal consumption volume and shift their choices towards the WIC-approved brands. More interesting is that once households exit the program, the higher category consumption rate and elevated share of WIC brands persist. To understand the behavioral mechanism underlying these consumption patterns, we estimate a choice model and find an increased preference for WIC brands after controlling for state dependence. The evidence suggests that this targeted food subsidy program is effective in creating behavior change that persists even after the incentive is withdrawn.

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Notes

  1. 1.

    http://www.fns.usda.gov/pd/wic-program; https://www.fns.usda.gov/sites/default/files/pd/wisummary.pdf

  2. 2.

    ”WIC At A Glance”. http://www.fns.usda.gov/fns

  3. 3.

    The higher income eligibility cutoffs for pregnant women on Medicaid means that women with incomes above the 185% of the poverty level are also included.

  4. 4.

    At the time of data collection, WIC categories were Beans, Cereal, Cheese, Eggs, Fruit Juices, Milk, Peanut Butter, Canned Seafood. More recently fruit, vegetables and whole grains have been added.

  5. 5.

    Information on access to the data is available at http://research.chicagobooth.edu

  6. 6.

    The database actually starts from 2004. Our key household characteristics is participation in the WIC program. Nielsen started recording this information from 2006 onwards.

  7. 7.

    https://aspe.hhs.gov/2010-hhs-poverty-guidelines

  8. 8.

    In the rest of the paper, we refer to brand-flavor combinations as brand, which includes multiple UPCs.

  9. 9.

    Since we are evaluating total category consumption, we only need to know whether a household was in WIC or not, thus we can use information from all states. When we analyze how WIC status impacts consumption at the brand level, we restrict our analysis to the seven states for which the specific brands included in WIC are known.

  10. 10.

    We observe a consumer’s purchases but not consumption from HomeScan data. It is possible that a consumer could share his or her subsidized food with others, but such information is not recorded in our data.

  11. 11.

    Note that previous years income is collected from the HomeScan panel. Our analysis accounts for this as we matched the demographic data to the previous years consumption.

  12. 12.

    For example, the parent brand Cheerios offer a range of products such as Frosted Cheerios and Multigrain Cheerios. Both Frosted Cheerios and Multigrain Cheerios would have the brand ’Cheerios’, and the Multigrain Cheerios product would also have the WICBrand indicator equal to 1.

  13. 13.

    This allows us to avoid an issue related to price, during the WIC progam the product price for participants is essentially 0.

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Acknowledgments

We acknowledge the Kilts Center for Marketing at the University of Chicago Booth School of Business and Frank Piotrowski of AC Nielsen for providing access to the Nielsen Homescan and RMS data.

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Correspondence to Ting Zhu.

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Khan, R., Zhu, T. & Dhar, S. The effect of the WIC program on consumption patterns in the cereal category. Quant Mark Econ 16, 79–109 (2018). https://doi.org/10.1007/s11129-017-9191-z

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Keywords

  • Public policy
  • Food subsidies
  • Brand management

JEL Classification

  • J18
  • H71
  • M30