Policy by Anecdote

On Monday, the Pennsylvania Department of Public Welfare (DPW) announced that, as of May 1, 2012, they will begin an asset test to determine if citizens are eligible for aid under SNAP, the Supplemental Nutritional Assistance Program, better known as food stamps. People under 60 will be ineligible for food stamps if they have more than $2000 in personal savings or other assets. Three items do not count toward the $2000 limit: their home, their retirement benefits, and one car.

In other words, if you lose your job and have $20,000 in the bank, you are not eligible for food stamps until you've spent $18,000 of your savings. This is not just mean-spirited, it is counterproductive. Prevailing theory and research on poverty suggests that poor people are trapped in a vicious cycle of poverty in which low income results in little or no savings, leading to intermediate outcomes such as poor health care and less education, which ultimately cause poverty to persist. Forcing people to be destitute before they qualify for public assistance makes it less likely they will ever break out of cycle. Since poverty has so many social costs, i.e., crime and urban decay, the new policy is not only harmful to poor people, but to society as well.

Pennsylvania's action is unusual during these economic hard times, since many states have eliminated their asset tests. The Rendell administration eliminated Pennsylvania's asset test in 2008. A total of 35 states have no asset test. Pennsylvania will join ten other states allowing maximum assets of $2000. The other four states have higher maximums.

What's going on? The change doesn't seem to be motivated by a desire to save money. SNAP is supported by the federal government. DPW only pays the cost of administering the program. But those costs will go up, because case workers will now have to survey each applicant's assets to determine whether they are eligible. If enforcement of the $2000 limit turns out to be sporadic or inconsistent, as certainly seems possible, this may permit prejudice and discrimination to influence whether people are eligible for food stamps.

What's really going on? Deep into the Post-Gazette article, we find a clue:

Some say the sudden call for an asset test coincides with the widely publicized story late last year of a Michigan man who won millions in a lottery but retained his food stamps.

DPW spokesperson Ann Bale acknowledged that they “constantly” hear from citizens complaining of food stamp abuse. However, Pennsylvania has one of the lowest food stamp fraud rates in the nation—one-tenth of 1%. Perhaps DPW gets phone calls not because of actual fraud, but due to stories such as this one on Fox News.

This case reminds me of Ronald Reagan's campaign fable about a Chicago “welfare queen” who allegedly cheated the government out of $150,000 and drove a new Cadillac. The story inspired a hit country and western song, “Welfare Cadillac,” by Guy Drake. It was a good story, but it was exaggerated and entirely unrepresentative of welfare recipients in this country.

Social psychologists point out that people are more easily persuaded by anecdotes than by statistical evidence. Belief in a statement, such as, “the food stamp program is widely abused,” depends largely on the ease with which we can recall or imagine examples that support the statement. Media exposure is a major source of the availability of anecdotes.

The anecdotes don't have to be true. For example, Melanie Green and Tim Brock did a study in which participants read a story, “Murder at the Mall,” about a young girl being killed by a recently released mental patient. Some were told the story was true; others were told it was a fictional short story. Both groups were more opposed to releasing former mental patients into the community than a control group that didn't read the story at all. There was no difference between those who were told that the story was true and those who were told it was made up.

I suspect Reagan's “welfare queen” played a role in Bill Clinton's eventual acquiescence to the pressure to "end welfare as we know it.” The problem, of course, is that you can make up an anecdote to “prove” virtually anything. In this blog, I'll argue that that public policy should be based on research evidence.

Update (2/1/12)

On February 1, the DPW announced a change in the asset limits.  People under 60 will be able to retain assets of up to $5,500, while those who are over 60 or disabled can keep up to $9,000.