Chip Taylor

How not to design a food voucher program

From the New York Times:

Federal and state officials are expressing alarm about the proliferation of food stores that cater to low-income people but charge more than other grocery stores, thus driving up the cost of a major federal nutrition program.

The program, the Special Supplemental Nutrition Program for Women, Infants and Children, or W.I.C., helps feed 7.7 million people each month by providing vouchers for infant formula, juice, eggs, milk, cheese, cereal and dried beans. Now a growing number of stores are selling only to W.I.C. families, accepting only the government vouchers, not cash, for payment.

...

"The rise in W.I.C.-only stores is a fairly recent phenomenon," said Eric M. Bost, under secretary of the Agriculture Department, which runs the program. Analysis of food costs in California and Texas shows that "W.I.C.-only stores in these states have higher prices, on average, than other authorized retailers," Mr. Bost said.

So why would people spend their vouchers in stores with higher prices?

The W.I.C. families are not particularly sensitive to shelf prices because their vouchers buy a specific food package, regardless of the amount charged to state agencies, which administer the program with federal money.

Spending other peoples' money thrice-removed.

State officials say the prices at W.I.C. specialty stores are typically 10 percent to 20 percent higher than those at supermarkets and other retail grocers.

The only surprising thing in this situation is that these stores seem to be a realtively new phenomenon.