Bonus Food Stamps and Cash Income Supplements Their Effectiveness in Expanding Demand for Food

The Food Stamp Program expanded rapidly following liberalizations during 1970 in program benefits and eligibility criteria. In 1969, 3.3 million persons received $264 million in bonus food stamps. By mid-1973, over 12 million persons were receiving bonus stamps valued at about $2 billion annually. In 1969, the average dollar’s worth of bonus stamps appeared to generate from 50 to 65 cents in additional food expenditures, with the balance having an income effect. Under the liberalized program, average effectiveness is approximately the same. Bonus stamps are still about twice as effective as cash income supplements in expanding demand for food. Demand expansion generated through bonus stamps in early 1973 accounted for nearly 1 percent of total U.S. food expenditures ($125 billion in 1972). Substantial portions of bonus stamp dollars have been spent for meats, other protein foods, fruits, vegetables, and bakery products.