Food Stamp Program: Options for Delivering Financial Incentives
to Participants for Purchasing Targeted Foods (30-JUL-08,
GAO-08-415).
In fiscal year 2007, the Food Stamp Program provided about $30.4
billion in nutrition assistance benefits to 26.5 million
individuals. Benefits are issued through Electronic Benefit
Transfer (EBT) cards, similar to debit cards, to purchase
eligible foods at authorized retail stores. The diets of many
low-income individuals, like the U.S. population overall, do not
meet federal dietary guidelines. One potential strategy for
increasing the purchases of targeted foods that contribute to a
healthy diet is to incorporate into the program financial
incentives for purchasing these foods. GAO was asked to identify
(1) what is known about the effectiveness of financial incentives
and other approaches intended to increase the purchase of
targeted foods, (2) the key factors to consider in designing a
financial incentive program, and (3) options available to the
U.S. Department of Agriculture's Food and Nutrition Service (FNS)
for implementing financial incentives. GAO interviewed agency and
state officials, retailers and associations, private EBT
contractors, and other stakeholders; convened a panel of 17
experts; and conducted a literature review. In commenting on this
report, FNS generally agreed with GAO's findings and concluding
observations.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-415
ACCNO: A83158
TITLE: Food Stamp Program: Options for Delivering Financial
Incentives to Participants for Purchasing Targeted Foods
DATE: 07/30/2008
SUBJECT: Agricultural industry
Agricultural programs
Child nutrition
Children
Cost analysis
Cost control
Disadvantaged persons
Financial management
Food and drug law
Food and drug legislation
Food industry
Food programs for children
Food relief programs
Nutrition research
Program evaluation
Program management
Software
Software specifications
State-administered programs
Strategic planning
Program costs
Program goals or objectives
Program implementation
Social programs
Electronic Benefit Transfer (EBT) cards
Food Stamp Program
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GAO-08-415
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Report to the Chairman, Committee on Agriculture, Nutrition, and
Forestry, U.S. Senate:
United States Government Accountability Office:
GAO:
July 2008:
Food Stamp Program:
Options for Delivering Financial Incentives to Participants for
Purchasing Targeted Foods:
GAO-08-415:
GAO Highlights:
Highlights of GAO-08-415, a report to the Chairman, Committee on
Agriculture, Nutrition, and Forestry, U.S. Senate.
Why GAO Did This Study:
In fiscal year 2007, the Food Stamp Program provided about $30.4
billion in nutrition assistance benefits to 26.5 million individuals.
Benefits are issued through Electronic Benefit Transfer (EBT) cards,
similar to debit cards, to purchase eligible foods at authorized retail
stores. The diets of many low-income individuals, like the U.S.
population overall, do not meet federal dietary guidelines. One
potential strategy for increasing the purchases of targeted foods that
contribute to a healthy diet is to incorporate into the program
financial incentives for purchasing these foods. GAO was asked to
identify (1) what is known about the effectiveness of financial
incentives and other approaches intended to increase the purchase of
targeted foods, (2) the key factors to consider in designing a
financial incentive program, and (3) options available to the U.S.
Department of Agriculture�s Food and Nutrition Service (FNS) for
implementing financial incentives. GAO interviewed agency and state
officials, retailers and associations, private EBT contractors, and
other stakeholders; convened a panel of 17 experts; and conducted a
literature review.
In commenting on this report, FNS generally agreed with GAO�s findings
and concluding observations.
What GAO Found:
A variety of approaches, including financial incentives and nutrition
education, can increase the consumption of targeted foods, but little
is known about the effectiveness of efforts to increase access to
targeted foods. A few studies examining the effectiveness of financial
incentives have demonstrated short-term positive effects on purchases,
consumption, or weight loss. A study that reviewed 92 nutrition
education studies found that most studies reported significant positive
effects on consumption. Because of a lack of reported research, little
is known about the effectiveness of approaches intended to improve
access to targeted foods.
Factors to consider in designing a program that delivers financial
incentives through an additional food stamp allotment tied to the
purchase of targeted foods include the following:
* Selection of foods: Selecting which foods to promote could be a
controversial and challenging part of designing an incentive program.
* Incentive amount: The amount of the incentive will affect participant
response and program costs.
* Informing participants: Participants must be informed of the
availability of incentives to take full advantage of a new incentive
program.
* Program monitoring and evaluation: Monitoring and evaluating the
incentive program is critical to maintaining program integrity and
determining the effects of the program.
An incentive program could be implemented through either electronic or
paper methods, and the different options would have implications for
ease of implementation, program integrity, and cost. Electronic options
include adding food benefits to the EBT cards currently used or to a
separate card on the basis of the amount that participants spend on
targeted foods. Providing incentives using existing EBT cards would
build on the current checkout technology and process, and could require
less time to complete transactions compared with using a separate card.
However, delivering financial incentives to participants� EBT accounts
on the basis of their purchases of certain foods would require several
changes to the EBT system, such as modifications to retailer and EBT
contractor software to separately track the amount spent on the
targeted food items. Administering incentives using a separate card,
such as an additional EBT card, may be more costly and complicated to
implement. Alternatively, providing participants with paper vouchers
for the purchase of targeted foods would not require changes to the EBT
system, but could be more burdensome to use, increase fraud risk, and
increase state administrative costs. With the new authority provided as
part of the Food, Conservation, and Energy Act of 2008, FNS will have
the opportunity to develop and administer a pilot incentive program and
to determine both its effects on participant purchasing and consumption
patterns and the costs associated with such a program.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-415]. For more
information, contact Kay Brown at (202) 512-7215 or [email protected].
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Variety of Approaches Can Increase the Consumption of Targeted Foods:
Factors to Consider Include the Selection of Targeted Foods, Incentive
Amount, Participant Education, and Monitoring and Evaluation:
Financial Incentives Could Be Implemented Electronically or Using Paper
Methods, but Each Option Has Potential Implications for Ease of
Implementation, Program Integrity, and Cost:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Percentage of Authorized Firms and FSP Redemptions, by
Category, for Fiscal Year 2007:
Table 2: Required Changes to Implement the Option Preferred by Expert
Panelists:
Figures:
Figure 1: Example of a FSP EBT Transaction:
Figure 2: Percentage of U.S. Population Aged 2 Years and Older, Meeting
Specific Dietary Guidelines for the Consumption of Food Groups (Data
Collected between 1988 and 1996):
Figure 3: Theoretical Relationships between Nutrition Promotion
Approaches and Outcomes and Impacts:
Figure 4: Number of Studies Reporting Significant Nutrition Education
Effects:
Figure 5: Incentive Amount Added to Existing EBT Card on the Basis of
the Amount Spent on Targeted Foods:
Figure 6: Incentive Amount Added to a Separate Targeted Foods Card on
the Basis of the Amount Spent on Targeted Foods:
Figure 7: Incentive Provided to Participants Using Paper Vouchers as a
Fixed Amount to Be Spent on Targeted Foods:
Abbreviations:
EBT: Electronic Benefit Transfer:
EFNEP: Expanded Food and Nutrition Education Program:
ERS: Economic Research Service:
FNS: Food and Nutrition Service:
FSNE: Food Stamp Nutrition Education:
FSP: Food Stamp Program:
PIN: personal identification number:
PLU: Price Look-Up code:
POS: point of sale:
TANF: Temporary Assistance for Needy Families:
UPC: Universal Product Code:
USDA: U.S. Department of Agriculture:
WIC: Special Supplemental Nutrition Program for Women, Infants, and
Children:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
July 30, 2008:
The Honorable Tom Harkin:
Chairman:
Committee on Agriculture, Nutrition, and Forestry:
United States Senate:
Dear Mr. Chairman:
The diets of many low-income individuals, like the U.S. population
overall, do not meet federal dietary guidelines. The typical American
diet includes higher-than-recommended intakes of fat, added sugars, and
sodium and lower-than-recommended servings of milk, whole grains,
fruits, and vegetables. Poor eating habits can increase the risk of
serious health problems, such as heart disease, cancer, stroke,
diabetes, and hypertension. Changing food purchasing and consumption
patterns, therefore, might produce improvements in the nation's health.
The Food Stamp Program (FSP), whose mission is to improve the nutrition
of low-income families, provides one possible vehicle for influencing
dietary patterns for large numbers of individuals. This program
provided about $30.4 billion in food benefits to about 26.5 million
individuals each month during fiscal year 2007.
The FSP is jointly administered by the U.S. Department of Agriculture's
(USDA) Food and Nutrition Service (FNS) and states. States generally
administer the program from local offices where caseworkers determine
whether households meet the program's eligibility requirements,
calculate monthly benefits for qualified households, and issue benefits
through Electronic Benefit Transfer (EBT) cards. These cards, similar
to debit cards, allow participants to purchase eligible foods at retail
stores authorized by FNS to accept FSP benefits. At the end of fiscal
year 2007, about 165,000 retailers--ranging from large supermarkets to
convenience stores and farmers' markets--were authorized to accept FSP
benefits. In addition to providing food assistance, states have the
option to offer federally funded nutrition education to FSP
participants and eligible nonparticipants. FNS also administers the
Special Supplemental Nutrition Program for Women, Infants, and Children
(WIC) through grants to the states. Although benefits in this program
are primarily delivered through a paper-based voucher system, FNS has
recently provided some states with funds to pilot an EBT system. The
WIC program provides food, nutrition education, and health care
referrals to low-income pregnant and postpartum women, infants, and
children under aged 5 years who are determined to be at nutritional
risk. In fiscal year 2007, the WIC program served an average of about
8.3 million women, infants, and children per month, and federal program
costs amounted to over $5.5 billion.
The Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill)
includes provisions authorizing USDA to fund pilot projects in the FSP
to assess whether healthier food purchases result from projects that
provide financial incentives, nutrition education, and improved access
to healthy foods, among other options.[Footnote 1] Given the variety of
approaches available to influence food purchases, you asked us to
assess what is known about their effectiveness in increasing purchases
of targeted foods that could contribute to a healthy diet. In addition,
because the technical and operational challenges of implementing a
system of financial incentives at the point of sale (POS) are largely
unknown, you asked us to determine the key factors to consider in
designing such a program, options available to implement financial
incentives, and advantages and challenges involved in their
implementation. To address these issues, we examined the following:
1. What is known about the effectiveness of financial incentives and
other approaches intended to increase the purchase of targeted foods
that could contribute to a healthy diet?
2. What are the key factors to consider in designing a program that
provides FSP participants with financial incentives to purchase certain
foods?
3. What options are available to FNS for implementing financial
incentives, and what are the advantages and challenges involved in
implementing such options?
To identify recent studies that examine the effectiveness of nutrition
promotion approaches, we conducted a literature review and consulted
with USDA staff. We identified related studies published from January
2000 through February 2008 and conducted detailed reviews of 16
studies, including reviews or summaries of original research from peer-
reviewed journals, published research from USDA's Economic Research
Service (ERS), and studies of WIC farmers' market programs. We reviewed
each study's research methodology and determined that the studies were
reliable for the purposes of our work.
To understand the issues involved in designing a financial incentive
program, we interviewed representatives of stakeholder groups that
would be affected by implementation of an incentive program, including
USDA officials; officials from four states with WIC EBT experience
(Ohio, Texas, Washington, and Wyoming); officials from one state
(California) that passed legislation authorizing the provision of
financial incentives to FSP participants for purchasing targeted foods;
three EBT contractors serving almost all of the states; retailer
associations and retailers representing large chain and smaller
independent grocery stores; food and nutrition advocacy groups; and
researchers. We also facilitated group discussions about the options
for delivering financial incentives and implementation issues with
state officials, retailers, and industry representatives at three
national conferences. To further explore financial incentive options
and implementation issues, we convened a panel of 17 experts
representing stakeholder groups that would be involved in implementing
an incentive program, including FNS, states, state EBT contractors,
retailers, and manufacturers of retailer checkout systems. Appendix I
explains our scope and methodology in more detail. We conducted this
performance audit from May 2007 through July 2008 in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Results in Brief:
A variety of approaches, including financial incentives and nutrition
education, can increase the consumption of targeted foods that could
contribute to a healthy diet, but little is known about the
effectiveness of efforts to increase access to such foods. A few
studies examining the effectiveness of financial incentives have
demonstrated short-term positive effects on purchases of targeted
foods, consumption, or weight loss. For example, an evaluation of a
Farmers' Market Nutrition Program implemented in a county in Michigan
found that after giving $20 in farmers' market coupons to 564 low-
income women, they self-reported a significant increase in fruit and
vegetable consumption. Nutrition education approaches, such as
individual counseling and group classes, can positively affect fruit
and vegetable consumption, particularly among populations at risk of or
diagnosed with disease. Providing nutrition information at the point of
purchase--such as posters, brochures, and shelf and food labels--is
another nutrition education approach that can influence food purchasing
behavior and consumption, although the results from reported research
on these approaches are mixed. Little is known about the effectiveness
of approaches aimed at improving access to targeted foods because of a
lack of reported research. Study limitations, including a lack of
information on costs and sustained effects as well as methodological
differences among studies, make it difficult to compare approaches or
determine which approaches are most effective.
Factors to consider in designing a financial incentive program include
the foods to target for promotion, the incentive amount, how
participants would be informed of the new benefit, and how the program
would be monitored and evaluated.
* Selection of foods: Expert panelists and many stakeholders we
interviewed agreed that an incentive program would be easier to
implement if incentives were provided for a general food category, such
as fruits and vegetables, rather than for individual food items that
either meet certain nutritional criteria or contain a particular
ingredient, such as whole grains. Even using general food categories
could be challenging, however, since some foods with less nutritive
value might be included in a category. Another issue to consider is the
availability of the targeted foods, which could vary by retailer.
* Incentive amount: Although the optimal value of an incentive to
increase targeted food purchases has not been determined, ERS estimated
in a study that a 20 percent reduction in the price of fruits and
vegetables would result in a modest increase in these purchases by
average FSP participants. The incentive amount would affect overall
program costs.
* Informing participants: Participants must be informed of the
availability of incentives to take full advantage of a new incentive
program, but reaching them could be a challenge and would likely
increase the workload of local assistance offices and nutrition
education providers.
* Program monitoring and evaluation: FNS indicated it would need to
incorporate any new incentive program into its existing oversight
activities by monitoring the total amount spent with the incentive
benefits on the targeted foods and developing criteria to flag
suspicious transactions since opportunities for fraud may be increased.
Expert panelists agreed that evaluating the incentive program is
critical to ensure that program integrity is not eroded and to
determine the effects of the incentives on participants' food choices.
A financial incentive program--defined as an additional FSP allotment
tied to the purchase of certain foods targeted for promotion--could be
implemented through electronic or paper methods, and the different
options would have implications for ease of implementation, program
integrity, and cost. Electronic options include providing additional
FSP benefits to the cards currently used or to a separate card on the
basis of the amount that participants spend on targeted foods.
Providing incentives using existing EBT cards would build on the
current checkout technology and process, and could require less time to
complete transactions compared with using a separate card. Implementing
incentives electronically on EBT cards could also minimize fraud risk
by requiring entry of a personal identification number (PIN) to
complete transactions. However, delivering financial incentives to
participants' EBT accounts on the basis of their purchases of certain
foods would require several changes to the EBT system. For example, it
would require modifications to retailer and EBT contractor software to
separately track the amount spent on the targeted food items.
Administering incentives using a separate card, such as an additional
EBT card, may be more costly and complicated to implement.
Alternatively, providing FSP participants with paper vouchers for the
purchase of targeted foods would not require changes to the EBT system,
but could be more burdensome to use, increase fraud risk, and increase
state administrative costs. With the new authority provided as part of
the 2008 Farm Bill, FNS will have the opportunity to develop and
administer a pilot incentive program and to determine both the
program's effects on participant purchasing and consumption patterns
and the costs associated with such a program.
In commenting on this report, FNS officials agreed with our findings
and concluding observations. However, they raised concerns about the
opportunity for fraud in a financial incentive program as well as the
potential cost of such a program.
Background:
The FSP is intended to help low-income individuals and families obtain
a more nutritious diet by supplementing their income with benefits to
purchase food. Most food items sold in grocery stores can be purchased
with FSP benefits, except for hot foods, tobacco products, and
alcoholic beverages.[Footnote 2] FNS pays the full cost of FSP benefits
and shares the states' administrative costs--with FNS usually paying
approximately 50 percent. FNS is responsible for promulgating program
regulations and ensuring that state officials administer the program in
compliance with program rules. States usually administer the program
from local assistance offices where staff determine whether households
meet the program's income and asset requirements, calculate monthly
benefits for qualified households, and issue benefits to participants
on an EBT card. The local assistance offices often administer other
benefit programs as well, such as Temporary Assistance for Needy
Families (TANF) and Medicaid.[Footnote 3]
Determination of Eligibility and Benefits:
FSP eligibility is largely based on a household's income and assets. To
determine a household's eligibility, a caseworker first determines the
household's gross income and net income. Gross income cannot exceed 130
percent of the federal poverty level for that year as determined by the
Department of Health and Human Services, and net income cannot exceed
100 percent of the federal poverty level (or about $20,652 annually for
a family of four living in the continental United States in fiscal year
2008). Net income is determined by deducting a portion of specified
expenses from gross income, such as dependent care, medical needs,
utilities, and housing.
Use of Electronic Benefit Transfer Cards to Redeem FSP Benefits:
Prior to EBT, participants used paper coupons to pay for allowable
foods. The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 required each state agency to implement an EBT system to
electronically distribute FSP benefits. The last state completed its
implementation in fiscal year 2004. States are responsible for
coordinating and managing the EBT system in their state, but they
generally award contracts to private sector companies to develop and
operate the system. Under the EBT system, FSP participants receive an
EBT card imprinted with their name and account number. FSP benefits are
automatically credited to the participants' accounts once a month.
According to FNS, more than half of the states use EBT cards to
distribute benefits from other federal programs, such as TANF cash
assistance.[Footnote 4]
The EBT system uses magnetic strip EBT cards that work like commercial
debit cards and an online system where transactions are processed as
they occur. As shown in figure 1, to complete a FSP EBT purchase, the
store clerk totals the amount of eligible items on the cash register,
and the amount of the EBT purchase is entered into the retailer's POS
device. The EBT card is then swiped through the POS device at the
grocery checkout counter, and the participant enters a PIN to access
the account. POS devices read the recipient identification information
from the magnetic strip on the back of the EBT card. That information,
along with the total amount of the EBT purchase, is sent to the state's
EBT contractor for approval. Information about the items purchased is
not transmitted through the FSP EBT system. Electronically, the EBT
contractor verifies certain information and sends an authorization or
denial back to the retailer. The purchase amount is then subtracted
from the participant's account balance and added to the retailer's bank
account through a settlement process at the end of each business day.
Retailers can also be reimbursed for EBT purchases by using manual
paper procedures if the EBT system or an EBT card is inoperable or if
the retailer does not have access to telephone lines and electricity.
Figure 1: Example of a FSP EBT Transaction:
[See PDF for image]
This figure is an illustration of an FSP EBT transaction, as follows:
Customer-retailer interaction:
* Retailer rings up $50 worth of groceries;
* Customer swipes EBT card and enters PIN to access account;
* Customer received $50 worth of groceries.
Request for payment is sent to State EBT contractor:
* State EBT contractor verifies retailer�s license number and
customer�s account number, PIN, and account balance, then authorizes
transaction;
* Approval is returned to retailer.
Federal Reserve Bank:
* State EBT contractor orders $50 reimbursement for retailer from FNS�s
Federal Reserve Bank account.
Retailer's bank:
* Retailer is reimbursed $50 as part of the daily settlement process at
end of business day.
Source: GAO, Nova Development Corporation.
[End of figure]
Retailers use different checkout systems to process EBT transactions.
Many large volume retailers have integrated checkout systems that
automatically identify and subtotal the FSP-eligible items when items
are scanned and display the EBT purchase amount on the POS device.
Retailers with scanning systems develop and maintain a computer file
that contains the prices associated with the Universal Product Codes
(UPC) and Price Look-Up (PLU) codes of the items sold in the store.
[Footnote 5] The computer file can be programmed to contain a FSP
eligibility "flag" associated with each item, which can help the
retailer ensure that only FSP-eligible items are purchased with EBT
cards. Some retailers use commercial POS equipment that can accept
multiple payment types, such as EBT, debit, and credit cards. Retailers
that do not accept debit or credit cards but average more than $100 in
monthly FSP sales often have state-provided, stand-alone POS equipment
that can only process EBT transactions. These stand-alone devices are
not integrated with the retailer's cash register system. Without a
scanner and an integrated checkout system, store clerks have to
manually separate and subtotal the eligible and ineligible items and
manually enter the EBT purchase amount in the POS device.
Characteristics of Authorized Retailers:
FNS has the primary responsibility for authorizing and overseeing
retailers that accept FSP benefits. To become an authorized retailer, a
store must offer on a continuing basis a variety of foods in each of
the four staple food categories--meats, poultry, or fish; breads or
cereals; vegetables or fruits; and dairy products--or 50 percent of its
sales must be in a staple group, such as meat or bakery items. At the
end of fiscal year 2007, about 165,000 retailers were authorized to
accept FSP benefits. Large stores redeem most of the FSP benefits, as
shown in table 1. In fiscal year 2007, supermarkets and superstores
accounted for about 21 percent of the authorized stores but redeemed
about 85 percent of FSP benefits.[Footnote 6]
Table 1: Percentage of Authorized Firms and FSP Redemptions, by
Category, for Fiscal Year 2007:
Type of firm: Supermarkets;
Percentage of total authorized firms: 13.16%;
Percentage of total FSP dollars redeemed: 49.98%.
Type of firm: Superstores;
Percentage of total authorized firms: 7.83%;
Percentage of total FSP dollars redeemed: 35.18%.
Type of firm: Grocery stores[A];
Percentage of total authorized firms: 17.65%;
Percentage of total FSP dollars redeemed: 6.24%.
Type of firm: Convenience stores;
Percentage of total authorized firms: 35.45%;
Percentage of total FSP dollars redeemed: 4.32%.
Type of firm: Combination stores[B];
Percentage of total authorized firms: 15.48%;
Percentage of total FSP dollars redeemed: 1.62%.
Type of firm: All other stores[C];
Percentage of total authorized firms: 8.72%;
Percentage of total FSP dollars redeemed: 2.43%.
Type of firm: Meal services[D];
Percentage of total authorized firms: 1.71%;
Percentage of total FSP dollars redeemed: 0.23%.
Type of firm: Total;
Percentage of total authorized firms: 100%;
Percentage of total FSP dollars redeemed: 100%.
Source: Food and Nutrition Service data.
[A] This category includes small, medium, and large grocery stores.
[B] This category includes stores such as independent drug stores,
dollar stores, and general stores.
[C] This category includes farmers' markets, wholesalers, specialty
food stores, health/natural food stores, nonprofit food-buying co-ops,
military commissaries, and delivery routes.
[D] This category includes drug and alcohol treatment centers, group
homes, and communal dining facilities or meals-on-wheels for seniors.
[End of table]
In addition to approving retailers to participate in the program, FNS
headquarters officials collect and monitor EBT transaction data to
detect suspicious patterns of transactions by retailers. As part of the
monitoring process, FNS collects each day's FSP transaction data from
the states' EBT contractors and adds these data to its EBT transaction
database for analysis. Information on the amount of the transaction is
reported. Information on the items being purchased is not available
through EBT. The system scans these data to identify transactions or
sets of transactions that fit a certain set of criteria defined by
established patterns of fraudulent activity.
Adherence to Federal Dietary Guidelines:
According to ERS, research has shown that the diets of most Americans
do not follow the pattern recommended by the 2005 Dietary Guidelines
for Americans and USDA's MyPyramid. The federal dietary guidelines
describe a healthy diet as one that emphasizes fruits, vegetables,
whole grains, and fat-free or low-fat milk and milk products; that
includes lean meats, poultry, fish, beans, eggs, and nuts; and that is
low in saturated fats, trans fats, cholesterol, salt, and added sugars.
Two cups of fruit (4 servings) and 2� cups of vegetables (5 servings)
per day are recommended for a reference 2,000-calorie intake, with
higher or lower amounts depending on the calorie level. The federal
guidelines recommend that total fat intake be between 20 percent and 35
percent of daily calories, with most fats coming from sources of
polyunsaturated and monounsaturated fatty acids, such as fish, nuts,
and vegetable oils.
As shown in figure 2, less than half of the U.S. population met
specific dietary guidelines for the consumption of many of the
recommended food groups and nutrients.[Footnote 7] A greater percentage
of people in higher-income households met recommendations for the
consumption of certain food groups and nutrients than did people living
in lower-income households. For example, 50 percent of those living in
higher-income households met the vegetable recommendations, compared
with 42 percent in lower-income households.
Figure 2: Percentage of U.S. Population Aged 2 Years and Older, Meeting
Specific Dietary Guidelines for the Consumption of Food Groups (Data
Collected between 1988 and 1996):
[See PDF for image]
This figure is a multiple vertical bar graph depicting the following
data:
Food groups and nutrients: Fruits;
Lower-income households meeting dietary guidelines: 23%;
Higher-income households meeting dietary guidelines: 29%.
Food groups and nutrients: Vegetables;
Lower-income households meeting dietary guidelines: 42%;
Higher-income households meeting dietary guidelines: 50%.
Food groups and nutrients: Grains;
Lower-income households meeting dietary guidelines: 44%;
Higher-income households meeting dietary guidelines: 53%.
Food groups and nutrients: Whole grains;
Lower-income households meeting dietary guidelines: 4%;
Higher-income households meeting dietary guidelines: 7%.
Food groups and nutrients: Total fat;
Lower-income households meeting dietary guidelines: 30%;
Higher-income households meeting dietary guidelines: 34%.
Food groups and nutrients: Saturated fat;
Lower-income households meeting dietary guidelines: 33%;
Higher-income households meeting dietary guidelines: 36%.
Food groups and nutrients: Sodium;
Lower-income households meeting dietary guidelines: 25%;
Higher-income households meeting dietary guidelines: 20%.
Food groups and nutrients: Calcium;
Lower-income households meeting dietary guidelines: 39%;
Higher-income households meeting dietary guidelines: 47%.
Source: Ronette R. Briefel, �The Changing Consumption Patterrns and
Health and Nutritional Status in the United States: Evidence from
National Surveys, �The Nation�s Nutrition, International Life Sciences
Institute (Washington, D.C.: 2007).
Notes:
Data are from the 1994 to 1996 Continuing Survey of Food Intakes by
Individuals for fruits, vegetables, grains, whole grains, total fat,
and saturated fat and from the 1988 to 1994 National Health and
Nutrition Examination Survey for sodium and calcium.
Lower-income households have income at or below 130 percent of the
federal poverty threshold.
[End of figure]
Other research has examined how the diets of FSP participants compare
with the diets of low-income and higher-income individuals not
participating in the FSP. This research suggests that the diets of FSP
participants and income-eligible nonparticipants do not differ
significantly. An ERS-funded study found that FSP participants were
more likely than higher-income nonparticipants to have poor diets, on
the basis of an assessment of the intake of grains, vegetables, fruits,
dairy, meats, fat, cholesterol, and sodium as well as on the variety of
foods consumed.[Footnote 8]
Nutrition Education:
Nutrition education can be defined as any set of learning experiences
designed to facilitate the voluntary adoption of eating and other
nutrition-related behaviors that are conducive to health and well-
being.[Footnote 9] USDA, the lead agency for the nation's nutrition
education efforts, funds and administers a variety of nutrition
education efforts. One program, the Expanded Food and Nutrition
Education Program (EFNEP), is specifically designed to educate low-
income families and youths about nutrition and nutrition-related
subjects. EFNEP is administered at the state level by Cooperative
Extension Service offices, which oversee the allocation of federal
EFNEP funds. In 2006, USDA reported that EFNEP delivered nutrition
education to 150,270 adults and 409,389 youths, and that 84 percent of
the families served were at or below the federal poverty level.
While there is no legislative mandate for nutrition education, states
can provide nutrition education to FSP participants and eligible
nonparticipants, known as Food Stamp Nutrition Education (FSNE). USDA
reimburses states 50 percent of allowable nutrition education costs. To
provide nutrition education, the state agency administering the FSP
submits a state nutrition education plan. About one-half of the 93
agencies implementing FSNE are affiliated with the Cooperative
Extension Service, which is the same entity that administers EFNEP. In
2007, 52 state agencies had approved nutrition education plans for
which more than $270 million in federal funds were approved.
Variety of Approaches Can Increase the Consumption of Targeted Foods:
Recent research describes a variety of approaches to encourage healthy
eating habits, such as providing financial incentives and nutrition
education as well as improving access to targeted foods. Studies show
that financial incentives and nutrition education can increase the
consumption of targeted foods, although there is less reported research
on financial incentives. Little is known about the effectiveness of
access approaches due to a lack of reported research. Study
limitations, including a lack of data regarding cost and information on
sustained effects, as well as methodological differences among studies,
make it difficult to compare approaches or determine which approaches
are the most effective.
Recent Research Describes a Variety of Approaches:
A variety of approaches have been undertaken to increase the purchase
and consumption of targeted foods, and many combinations of approaches
have been studied. Financial incentives are used to make the purchase
and consumption of the targeted foods more affordable and appealing
than alternative food choices. Examples of financial incentives include
providing additional unrestricted food or cash benefits; providing
targeted financial incentives (e.g., price discounts at the POS,
coupons or vouchers for targeted foods, or financial rewards based on
the adoption of the desired behavior); or taxing foods on the basis of
nutrient content. Nutrition education approaches--including nutrition
classes, counseling, point-of-purchase information, and social
marketing--attempt to increase individual knowledge and skills (e.g.,
reading food labels and shopping) as well as influence underlying food
preferences.[Footnote 10] Access approaches focus on increasing the
availability of targeted foods or limiting the availability of foods
with low nutritional value. These approaches can vary by setting (e.g.,
grocery stores, schools, workplaces, or communities); scope (e.g.,
individual or larger scale); target population (e.g., healthy or at
risk of or diagnosed with diet-related disease); and targeted foods.
The goal of these approaches is to influence one or more of the many
factors that affect adult food purchasing decisions, such as food
prices, household income, knowledge about food choices that contribute
to a healthy diet, and food availability. Taste and convenience also
influence food purchasing decisions. Figure 3 illustrates the
theoretical effects of these approaches on household food expenditures,
eating habits, and health.
Figure 3: Theoretical Relationships between Nutrition Promotion
Approaches and Outcomes and Impacts:
[See PDF for image]
This figure is an illustration of the theoretical relationships between
nutrition promotion approaches and outcomes and impacts, as follows:
Type of Nutrition Promotion Approach:
* Financial incentives:
- Increased cash or food benefits;
- Targeted price reductions/subsidies;
- Targeted taxes;
Expected Outcomes and Impacts:
* Increase food purchasing power;
* Change relative prices favoring targeted healthy foods;
* Increased household expenditures on targeted healthy foods;
* Improved individual dietary intake;
* Improved weight status and other health outcomes.
Type of Nutrition Promotion Approach:
* Nutrition education:
- Point-of-purchase information (e.g., shelf labels and signs);
- Nutrition classes and counseling;
- Social marketing;
Expected Outcomes and Impacts:
* Improve nutrition knowledge, attitudes, and skills;
* Increased household expenditures on targeted healthy foods;
* Improved individual dietary intake;
* Improved weight status and other health outcomes.
Type of Nutrition Promotion Approach:
* Access:
- Use EBT at farmers� markets;
- Develop new stores;
- Increase capacity of existing stores;
- Prohibit use of FSP benefits for certain types of food;
Expected Outcomes and Impacts:
* Increase availability of targeted healthy foods;
* Reduce availability of less healthy foods;
* Increased household expenditures on targeted healthy foods;
* Improved individual dietary intake;
* Improved weight status and other health outcomes.
Source: GAO.
[End of figure]
Studies Show Financial Incentives and Nutrition Education Can
Positively Affect the Consumption of Targeted Foods, but Little Is
Known about Efforts to Improve Access:
Several nutrition promotion studies have demonstrated positive effects
on the purchase or consumption of targeted foods. However, results vary
and changes in consumption patterns as a result of approaches may not
be substantial enough to meet federal dietary guidelines.
Financial Incentives:
A review of research published as of April 2005 identified four studies
of financial incentive programs that were able to compare a group of
participants that received incentives with a similar group that did not
in order to identify program impact. All four studies demonstrated
short-term positive effects on the purchases of targeted foods,
consumption, or weight loss.[Footnote 11] The studies evaluated the
provision of WIC farmers' market coupons, price discounts on low-fat
items offered in school and work-site vending machines, and payments
contingent on weight loss. For example, an evaluation of a Farmers'
Market Nutrition Program implemented in a county in Michigan studied
the following approaches with WIC and Commodity Supplemental Food
Program participants: education about the use, storage, and nutritional
value of fruits and vegetables; farmers' market coupons; both education
and coupons; and no education or coupons.[Footnote 12] The study found
that after $20 in farmers' market coupons were given to 564 low-income
women, they self-reported a statistically significant increase in fruit
and vegetable consumption. This study also found that the maximum
impact of the intervention on attitudes about fruit and vegetable
consumption and intake was achieved through a combination of education
and coupons. Additional evidence from the WIC program suggests that
providing cash value vouchers for purchasing fruits and vegetables can
increase the consumption of these items. New York State found that 81
percent of the $5 checks that were provided to households with children
in the WIC program for the purchase of fruits and vegetables were
redeemed.[Footnote 13] Another study evaluated the effect of providing
$10 vouchers once a week for 6 months for fresh fruit and vegetable
purchases at a farmers' market or supermarket.[Footnote 14]
Participants in this study included 602 low-income women from the WIC
program in Los Angeles. This study found that participants increased
their consumption of fruits and vegetables and sustained the increase 6
months after the program ended. The results of this study show that 90
percent of the coupons were redeemed; farmers' market participants
showed an increase in the consumption of 1.4 servings per 1,000
calories of consumed food, and supermarket participants showed an
increase of 0.8 servings per 1,000 calories of consumed food.[Footnote
15]
Economic research suggests that providing low-income households with
targeted financial incentives may be more effective at increasing fruit
and vegetable consumption than providing additional unrestricted cash
or food benefits. In a 2007 study, ERS estimated how spending on fruits
and vegetables by low-income households would change in response to
changes in the prices of fruits and vegetables, using statistical
models and data from the 1987-88 Nationwide Food Consumption Survey.
[Footnote 16] Specifically, ERS estimated that a 10 percent reduction
in the price of fruits and vegetables would result in increases in the
amount purchased, ranging from 6 percent to 7 percent, and would
increase consumption by the average FSP participant from 1.95 cups per
day to an estimated 2.08 cups per day. A 20 percent reduction in price
would raise consumption by about 1/4 cup, bringing total daily
consumption up to 2.20 cups.[Footnote 17]
In contrast, another ERS study suggested that a modest increase in
income would not result in increased spending on fruits and vegetables
in low-income households. ERS examined the relationship between
increased income, which could be spent on any food or nonfood item, and
fruit and vegetable expenditures in low-income households. This study
found no relationship between a 10 percent increase in income and
expenditures on fruits, vegetables, eggs, dairy products, or baked
foods among low-income households.[Footnote 18] However, ERS found a
statistically significant relationship between the additional income
and expenditures for beef and frozen entrees and other frozen prepared
foods among low-income households, possibly because of taste
preferences and convenience.
California passed legislation in September 2006 authorizing the Healthy
Food Purchase Pilot Program, which includes the delivery of financial
incentives to FSP participants for purchases of fresh produce; however,
the pilot program has not been implemented. The pilot program aims to
increase access to fresh produce in selected low-income communities, in
part by adding a percentage of what FSP participants' spend on fresh
produce back to their EBT accounts. The law requires the state agency
to consult with USDA's ERS to design the pilot evaluation. The state
convened a workgroup made up of state and local health and FSP
administrators, information systems staff, retailers, and advocacy
organizations to begin discussions about the pilot. However, the
California state legislature did not provide funding as part of the
legislation, and implementation is on hold until funding is made
available.
Nutrition Education:
A review of 92 studies analyzed the results of nutrition education
approaches, including individual counseling; support groups; and
classes provided in school-based, work-site, community, and health care
settings.[Footnote 19] The review compared the results of studies that
used similar outcome measures and found that most studies reported that
the approaches had statistically significant effects on consumption, as
shown in figure 4. For example, more than three quarters of the studies
reporting changes in fruit and vegetable consumption (17 of 22) found
significant increases in the consumption of these foods, with an
average increase of 0.6 servings per day. Similarly, 86 percent of the
studies reporting results for total fat and 87 percent of the studies
reporting results for saturated fat found that the approaches had a
significant effect in reducing fat consumption. Of the studies
reporting results for total fat, groups receiving nutrition education
decreased fat intake more than groups that did not receive nutrition
education, representing an average decrease of 7.3 percent of daily
calories from fat. According to this review, approaches may be more
effective if educators help participants set goals and involve small
groups of participants.
Figure 4: Number of Studies Reporting Significant Nutrition Education
Effects:
[See PDF for image]
This figure is a stacked vertical bar graph depicting the following
data:
Number of Studies Reporting Significant Nutrition Education Effects:
Outcome: Total fat;
Number of studies that did not report significant effect: 7;
Number of studies that reported significant effect: 42.
Outcome: Saturated fat;
Number of studies that did not report significant effect: 4;
Number of studies that reported significant effect: 26.
Outcome: Fruit and vegetable intake;
Number of studies that did not report significant effect: 5;
Number of studies that reported significant effect: 17.
Source: Alice Ammerman, et al., �The Efficacy of Behavioral
Interventions to Modify Dietary Fat and Fruit and Vegetable Intake: A
Review of the Evidence,� Preventive Medicine 35, 25-41 (2002).
Note: Total fat and saturated fat are measured as either a percentage
of daily energy intake or in grams per day. Fruit and vegetable intake
is measured as servings per day or in other units, such as fruit and
vegetable intake scores.
[End of figure]
Another review of 15 community-based nutrition education studies found
that increased fruit and vegetable consumption was reported in many
studies.[Footnote 20] According to the authors, the most effective
approaches gave clear messages, incorporated multiple strategies that
reinforced the messages, involved the family, were more intensive
(e.g., multiple contacts and multiple components) and provided over a
longer period, and were based on a theoretical framework. Another
review of 44 nutrition education studies suggested that small increases
in the consumption of fruits and vegetables can be achieved in a
variety of ways. This review found that fruit and vegetable consumption
increased when participants were provided with face-to-face education
or counseling. Less intense approaches, such as telephone contacts and
computer-generated information tailored to the participant, can also be
effective.[Footnote 21] Increases in fruit and vegetable consumption
ranged from 0.1 to 1.4 servings per day in approaches used for healthy
adults.[Footnote 22] Nutrition education approaches appeared to be more
successful at positively changing dietary behavior among populations at
risk of or diagnosed with disease than among general, healthy
populations, according to two study reviews.[Footnote 23] According to
the study reviews, these approaches may be more successful because (1)
higher-risk individuals are more motivated to change and (2) approaches
with higher-risk populations, such as those offered in health care
settings, may be more intense than approaches used with lower-risk
populations in community, workplace, or school settings.
Providing nutrition information at the point of purchase--such as
posters, brochures, and shelf and food labels--is another nutrition
education approach that can positively affect food purchasing behavior,
although the results from reported research on this approach are mixed.
In another review of eight studies that used only information
strategies (e.g., labels and signs) to promote targeted items in a
grocery store setting, five studies reported increased sales of some of
the targeted items.[Footnote 24] The grocery store intervention studies
that showed the greatest changes in behavior lasted for 2 years,
involved a large supermarket chain, and involved multiple components.
One of the studies reviewed found significant increases in the sales of
low-calorie or reduced-calorie foods after a 2-year effort involving
shelf labeling, pamphlets, and advertisements on television and radio
and in newspapers. The authors of this review concluded that nutrition
information approaches and financial incentives appear to be more
successful in settings where food choices are limited, such as
workplace cafeterias or school settings, rather than in grocery stores.
Food labels may also have an effect on dietary intake. In a study
estimating the effect of the Nutrition Labeling and Education Act of
1990, which took effect in 1994 and made nutrition labeling mandatory
for most processed foods, researchers found that the new labels were
associated with a decrease in body weight and the probability of
obesity among non-Hispanic white women. The new labels were not
associated with a statistically significant decrease in body weight or
the probability of obesity among other groups of women or among men.
[Footnote 25]
Access:
We did not identify any recent studies evaluating the effects of
approaches designed to improve access to targeted foods, but there have
been efforts to address the availability of foods that contribute to a
healthy diet. California's Healthy Food Purchase Pilot Program, which
was not funded, included proposed assistance for retailers to obtain
refrigerated produce display cases and technical assistance on the
purchase, storage, marketing, and display of fresh produce. The FSP
authorizes farmers' markets to accept FSP benefits, an approach that
may increase the availability of fresh fruits and vegetables. In 2007,
532 authorized farmers' markets redeemed $1.6 million in FSP benefits,
according to FNS.
Another access strategy that has been proposed but not implemented or
evaluated is to prohibit FSP participants from using their benefits to
buy foods with limited nutritional value. This strategy would require
an FNS-approved waiver of FSP regulations. For example, Minnesota
proposed prohibiting the purchase of candy and soft drinks with FSP
benefits. While this strategy has not been implemented, FNS and ERS
reports have described several challenges to implementing this idea.
[Footnote 26] For example, FNS reported that food restrictions would
increase program complexity and cost, since either FNS or food
manufacturers and producers would need to assess and certify a large
number of food products that meet new federal standards. ERS reported
that restricting purchases of "unhealthful" foods and beverages may not
be a promising strategy for dietary improvement, in part because FSP
participants may use their own money to buy prohibited items or
substitute the prohibited foods for other foods similar to the
prohibited items.
Lack of Information on Costs and Sustained Effects and Methodological
Differences among Studies Make It Difficult to Identify the Most
Effective Approaches:
The studies reviewed provided little information about the cost or
sustainability of the nutrition promotion approaches. Five reviews of
studies found that cost information, such as total costs, cost per
participant, and the cost-effectiveness of the approach, was not
reported. In addition, few approaches were shown to be effective over a
sustained period of time, such as a year or more. For example, one
review of studies found that many approaches last only a few weeks, and
studies have short durations, which prevents researchers from
identifying long-term effects.
The studies reviewed were designed differently, and they often used
different outcome measures to evaluate effects, thereby making it
difficult to compare the results of the approaches. For example, not
all studies used a control group to compare individuals receiving the
intervention with similar individuals who did not. Although measures of
changes during and after an intervention provide useful insights,
without a control group that does not participate in the intervention,
it is difficult to directly attribute any changes the researchers
observed to the intervention. In addition, three reviews of studies
found that various outcome measures were used, which prevented study
comparisons and conclusions about the most effective approaches. For
example, one review found that studies used various self-reported
dietary assessment tools or sales data to measure changes in
consumption. A lack of standardized outcome data has also been
identified as a barrier to evaluating the effectiveness of nutrition
education activities, according to ERS. One review of studies that was
able to compare study results found that the dissimilarity across
studies was a major barrier to drawing comparisons and reaching broad
conclusions about the effectiveness of approaches.
The 2008 Farm Bill authorizes funding for pilot projects to evaluate
health and nutrition promotion in the FSP. The pilot projects may
include increased benefit allotments to participating households,
increased access to farmers markets, incentives for authorized
retailers to increase the availability of healthy foods, stricter
retailer requirements to stock healthy foods, incentives at the point
of purchase for targeted foods, and select school-based nutrition
education strategies. All pilot projects require an independent
evaluation using rigorous methodologies, particularly random assignment
or other methods that are capable of producing scientifically valid
information regarding which activities are effective.
Factors to Consider Include the Selection of Targeted Foods, Incentive
Amount, Participant Education, and Monitoring and Evaluation:
There are several factors that must be taken into consideration in
designing a program that provides financial incentives for the purchase
of targeted foods in the FSP. These factors include the selection of
foods to target for promotion, the incentive amount, how participants
would be informed of the new benefit, and how the program would be
monitored and evaluated.
Selection of Foods to Promote Could Be Controversial and Challenging:
Selecting the foods an incentive program is designed to promote could
be controversial. Various interests--such as food manufacturers,
nutritionists, participant advocacy groups, and states--may have
differing opinions about which foods should be targeted for promotion
and which should be excluded. Food manufacturers may want the targeted
foods to include a wide variety of products because they could see
financial gain, nutritionists may not agree on which foods are the
healthiest, and advocacy groups may not want FSP participants to be
restricted in their food choices. States may also advocate for locally
grown or produced foods to be targeted for promotion.
Developing a list of individual food items that either meet certain
nutritional criteria or contain a particular ingredient, such as whole
grains, would be challenging because the nutritive content of thousands
of food items would need to be evaluated to identify the eligible
items. For example, if low-fat items were targeted, retailers would
need to identify each of the items sold in their stores that meet that
criteria. Similarly, targeting all foods that contain whole grains may
be difficult, given the variety of foods that have whole grains as
ingredients.
Expert panelists and many stakeholders we interviewed agreed that
providing incentives for a general food category that is relatively
easy to identify--such as fruits and vegetables--would be easier for
participants and retailers, rather than identifying and selecting
specific items on a list. However, using a general food category could
allow some foods with less nutritive value to be included in that
category. For example, the nutritive value of fruits and vegetables
varies extensively from one to the other. Offering incentives for
purchasing all fruits and vegetables would include frozen or canned
items that may contain added sugar or salt, thereby making them less
healthy.
In addition, availability of the targeted foods may be limited in some
areas, depending on the foods selected. Some stakeholders we
interviewed said small retailers serving large urban areas may not
stock certain foods, such as fresh produce. State officials we
interviewed commented that if fruits and vegetables were the targeted
foods, they should be eligible in any form--canned, frozen, and fresh-
-because fresh produce may not be equally available throughout the year
or throughout the country.
Amount of the Incentive Will Affect Participant Response and Program
Costs:
Although financial incentives could take many forms, the amount would
need to be large enough to motivate FSP participants to change their
purchasing patterns by buying more of the targeted foods.[Footnote 27]
The optimal value of an incentive to increase purchases of targeted
foods is not known at this time, but as we have previously noted, ERS
estimated in a study that a 10 percent reduction in the price of fruits
and vegetables would result in a modest increase in fruit and vegetable
consumption by the average FSP participant, and that a 20 percent price
reduction would have a slightly larger effect.[Footnote 28] California
proposed providing a larger incentive as part of its Healthy Food
Purchase Pilot Program, pending the availability of state funds, equal
to 30 percent or 40 percent of the amount that participants spend for
fresh produce.
The amount of the incentive would also affect the cost of the program.
ERS estimated that with a FSP caseload of 25.7 million participants at
the time of the study, the annual cost of a 10 percent price reduction
would range from $300 million, if the price reduction was restricted to
fresh produce, to $500 million, if all fruits and vegetables were
discounted.[Footnote 29] The cost of a financial incentive program
could be contained somewhat by setting a limit on the amount of
targeted food purchases that would be eligible for the incentive. The
ERS study did not estimate how much of the targeted foods participants
would buy if there were a limit on the amount of fruit and vegetable
purchases that would be discounted. Depending on the amount of funding
available for such a program, policymakers may have to choose between
offering a small and potentially ineffective incentive to a greater
number of participants and offering a more substantial incentive to a
smaller number of participants.
Informing Participants Could Add to Caseworker and Nutrition Educator
Responsibilities:
To motivate participants to change their purchasing habits in response
to financial incentives, participants must first be informed of the
availability of incentives. Informing participants may increase the
workload of the local assistance offices. Caseworkers from local
assistance offices could inform new FSP participants when they apply
for benefits and inform existing participants when they visit the
office to reapply for benefits. Providing information through the mail
is one way to advertise the incentive to existing participants;
however, processes would need to be in place to correct home addresses
if mail is returned. Information could also be posted on FNS and state
FSP Web sites. Other marketing options include advertising in print,
broadcast, and electronic mediums. Another marketing idea, suggested by
a few retailers, is to use shelf tags to identify the targeted foods.
However, use of this strategy would vary by retailer.
Educating participants on the nutrition and health benefits of buying
more of the targeted foods could enhance the effectiveness of financial
incentives, according to some research and stakeholders. An evaluation
of the effects of providing WIC participants with farmers' market
coupons found that those who received both coupons and nutrition
education showed the greatest changes in attitudes about fruit and
vegetable consumption and intake. Expert panelists said that having an
education component is crucial to the success of an incentive program.
In addition, a retailer we interviewed emphasized that if the goal of
this program is to change purchasing patterns, participants need to
understand why the program is important to their families and their
health. Officials from one state also suggested it would be helpful to
provide nutrition education activities, such as food demonstrations,
healthy recipe books, cooking classes, and giveaways (e.g., cooking
utensils). However, the FSNE program does not currently reach all FSP
participants. Educating all FSP participants would be challenging and
would likely increase the workload of nutrition educators.
Decisions about Program Monitoring and Evaluation Would Affect USDA's
Ability to Protect Program Integrity and Determine the Effect of
Incentives on Participant Food Choices:
Program monitoring of day-to-day activities would be necessary to
ensure that providing financial incentives for targeted foods to FSP
participants does not erode program integrity. According to FNS
officials, any new incentive program would pose an increased risk of
fraud. For example, a FSP participant and retailer could agree to
fraudulently claim that the participant spent a certain amount of their
EBT benefits on the targeted foods. In this scenario, the retailer
would ring up the targeted food purchases, the participant would swipe
their EBT card for the purchase amount, and the retailer would give the
participant a portion of the purchase amount in cash and pocket the
difference. FNS officials suggested that limiting the amount of
targeted food purchases that would trigger the incentive may reduce the
risk of fraud and the cost of the incentive program (e.g., participants
can receive incentives for purchasing up to $50 of the targeted foods
per month). FNS indicated that it would need to incorporate any new
program into its existing oversight activities by monitoring the total
amount spent on the targeted foods and developing criteria to flag
suspicious transactions. Since individual food purchases cannot be
monitored through the existing FSP EBT system and USDA has a limited
number of fraud investigators nationwide, any additional oversight
responsibility would create a new challenge, according to FNS
officials.
Piloting the program prior to full implementation and evaluating the
impact of the program are important steps to determining its
effectiveness.[Footnote 30] Two important considerations in evaluating
a financial incentive program are the research design and how results
would be measured.
* Research design: Ideally, impact evaluations allow a reasonable
comparison of a participant group that received the financial
incentives with a similar group that did not receive the incentives to
accurately gauge the effect of the intervention. Appropriate sample
sizes would need to be determined to allow meaningful comparisons of
these two groups. However, alternative research designs could be used
if randomly assigning participants to comparison groups is not
possible. For example, researchers could use statistical techniques to
isolate the effect of financial incentives from other factors that
affect purchasing behavior. One expert panelist commented that
isolating the impact of this price change from other store promotions
may be difficult given the many factors involved. Any research design
would have to take into account an appropriate time frame for the
pilot, allowing time for retailers to change their operations to be
able to implement the pilot and for participants to change their
purchasing habits in response to the incentives. In light of these
concerns, when ERS was consulted by California on its proposed pilot,
ERS suggested that the evaluation include a before-and-after review of
the purchases made by participants and nonparticipants, and that pilot
counties be randomly selected.
* Measuring results: Researchers could measure changes in participants'
food purchases, consumption, or health outcomes to determine the
effects of a financial incentive program. Measuring health outcomes
would require tracking participants over an extended period.
California's legislation authorizing a pilot incentive program requires
researchers to assess whether the pilot program resulted in FSP
participants' increased purchases of fresh fruits and vegetables. FNS
officials suggested that a study could compare FSP participants'
purchases with federal dietary guideline recommendations before and
after an incentive program was piloted. If the purpose of the program
were to encourage a diet that meets federal dietary guidelines and
improves the health of participants, the effect on participant's
consumption and health could also be examined.
Options for measuring changes in food purchasing behavior include
collecting participant-reported information or collecting food purchase
records from retailers.[Footnote 31] Understanding whether participants
increased their purchases of targeted foods would require gathering
information on how the participants spent their entire food budget,
since participants may pay for food several ways (e.g., cash, TANF cash
benefits, EBT, or credit cards) and shop at multiple stores.
Researchers would need this information to know if more targeted foods
were being purchased or if participants were substituting the new
targeted benefits for money they were already spending on those foods.
Gathering this information may be challenging, depending on how the
financial incentives are delivered. For example, FNS officials said one
disadvantage of using paper vouchers is that the redeemed vouchers may
not be linked to the rest of the family's purchases or household
demographic information. Using participant-reported information on
purchases to measure effectiveness can be problematic if participants
cannot recall the information or if they otherwise misreport purchases.
Using purchase data to analyze changes in purchases would be more
accurate but could be difficult to collect and analyze. For example,
collecting purchase data would likely require researchers to enter into
data-sharing agreements with multiple retailers, which would need to
include provisions to protect participants' privacy. Data would need to
be collected from multiple retailers on all of the food items purchased
by participants using all payment types. Also, food purchases may not
accurately reflect consumption.
Financial Incentives Could Be Implemented Electronically or Using Paper
Methods, but Each Option Has Potential Implications for Ease of
Implementation, Program Integrity, and Cost:
An incentive program--delivered in the form of an additional FSP
allotment tied to the purchase of certain foods targeted for promotion-
-could be implemented through electronic or paper methods, and each of
the options would have implications for ease of implementation, program
integrity, and cost. Electronic options include providing additional
FSP benefits to the EBT cards currently used by FSP participants or to
a separate card on the basis of the amount participants spend on the
foods targeted for promotion. Alternatively, paper options for
delivering incentives include providing vouchers to be spent on the
targeted foods or coupons that would discount the prices of those
foods.
Electronic Delivery of Incentives to Existing EBT Cards May Be Easy for
Participants to Use, but Would Require Several Changes to the EBT
System:
Incentives provided electronically by using existing EBT cards would
build on the current checkout technology and process, may not require
as much time to check out as using a separate card, and could minimize
the risk of fraud. Online EBT for processing FSP transactions is
operational nationwide and national standards have been developed to
promote consistent transaction processing and allow interoperability,
which means that participants may use their EBT cards at any FNS-
authorized retailer in any state. According to expert panelists,
financial incentives could be added to existing EBT cards without
requiring an additional card swipe and PIN entry, thereby minimizing
checkout time. Providing incentives electronically on EBT cards could
also minimize fraud risk by requiring entry of a PIN to complete
transactions.
Expert panelists preferred this option and cited its advantages in ease
of use for participants and program integrity. With this option, the
retailer would electronically or manually separate and subtotal the
targeted food purchases and the purchases of other eligible items, and
the participant would swipe the EBT card and enter the PIN once into
the POS device, as shown in figure 5. The purchase amount of the
targeted foods and the purchase amount of other FSP-eligible items
would be communicated to the EBT contractor who would calculate the
financial incentive amount and either immediately add it to the
participant's EBT account or periodically add to the account after the
purchase, such as at the end of each business day. Participants could
leave the store with a receipt showing the amount of the financial
incentive they just received or can expect to receive.
Figure 5: Incentive Amount Added to Existing EBT Card on the Basis of
the Amount Spent on Targeted Foods:
[See PDF for image]
This figure is an illustration of how an incentive amount is added to
existing EBT card on the basis of the amount spent on targeted foods,
as follows:
One Card:
Customer-retailer interaction:
* Retailer rings up $50 worth of groceries, including $10 in �targeted
foods� and $40 in other eligible items.
* Customer swipes EBT card and enters PIN to access account, with $10
of the $50 purchase identified as a targeted foods transaction and $40
identified as an other eligible foods transaction.
* Customer receives $50 worth of groceries.
One EBT food account: Includes targeted food transaction type and other
eligible items transaction type;
EBT contractor:
* State EBT contractor verifies retailer�s license number and
customer's account number, PIN, and account balance, then authorizes
transaction.
* On a real-time or periodic basis, state EBT contractor calculates the
incentive (e.g., 20 percent) and adds the incentive (e.g., $2) to
participant�s benefit account.
Federal Reserve Bank:
* State EBT contractor orders $50 reimbursement for retailer from FNS�s
Federal Reserve Bank account.
Retailer's bank:
* Retailer is reimbursed $50 as part of the daily settlement process at
end of business day.
Sources: GAO, Nova Development Corporation.
[End of figure]
This method may be relatively easy for a participant to use, but expert
panelists agreed that their preferred option would be a significant
undertaking and would require several changes to the EBT system, as
described in the following text:
* Identifying purchases of targeted foods: To identify and subtotal
purchases of the targeted foods at the POS, retailers with scanning
systems would need to update the software used on their electronic cash
registers to include an additional field that would flag particular
items as the targeted foods eligible for incentives. Programming the
additional field would enable the cash register system to automatically
ring up and subtotal the targeted food purchase when the items' product
codes are scanned. Maintaining an updated list of the eligible items
could be challenging because UPC and PLU codes can change when new
products are added or certain foods are included in special promotions.
Also, fresh produce vendors use varying PLU codes for the same fruits
and vegetables. Smaller retailers without scanning technology and a
computerized price file system would need to manually sort out and
subtotal up to three piles of food: one for the targeted foods that are
eligible for the incentive, one for other FSP-eligible items, and one
for non-FSP-eligible items.
Successfully implementing an incentive program depends in part on the
level of guidance retailers receive regarding foods that qualify for
the incentives. Generally, there are two ways that retailers could
identify which foods sold in their stores are the targeted foods
eligible for incentives: that is, (1) FNS or states could develop a
detailed list of the targeted foods and associated product codes or (2)
FNS or states could provide a broad definition of the targeted foods
and retailers could decide which of the foods in their stores would
qualify. Retailer representatives and state officials we interviewed
preferred that the foods eligible for incentives be defined at the
federal level to assist retailers operating in multiple states and to
minimize the burden on states. Retailer representatives on the expert
panel said it would help retailers implement the program if FNS
provided a detailed list of the targeted foods and associated product
codes. However, FNS officials on the panel said FNS lacks the resources
to develop and maintain a detailed list and would prefer to provide a
more general definition of the foods targeted for promotion.
* Tracking purchases of targeted foods: The total amount spent on the
targeted foods must be tracked separately from other purchases to
calculate and apply the incentives to participants' EBT accounts. To
process the transactions, expert panelists agreed that the total amount
spent on the targeted foods should be communicated through the EBT
system, rather than requiring retailers to complete additional
reporting. A few retailers commented that any ongoing reporting on
individual purchases in addition to the reporting that takes place
during EBT transactions at the POS would be burdensome, especially for
smaller retailers that may not have detailed accounting procedures.
Tracking the total amount spent on the targeted foods separately from
other FSP-eligible items would require software modifications to
retailers' POS devices.
* Calculating and applying the incentive: To apply incentives to
participants' EBT accounts, EBT contractors would need to develop
software for calculating and applying the incentives and to modify
their software to include a new transaction type that tracks the amount
spent on the targeted foods. The interface between the EBT contractors'
systems and state information systems that contain benefit issuance
data may need to be modified. EBT contractors would also need to modify
their retailer and participant complaint processes, modify automated
telephone systems, and train customer service representatives to
support the new benefit.
Modifying and updating the retailer cash register systems and POS
devices could be challenging with different types of equipment and
varying levels of technical support. Smaller independent grocery stores
that install and maintain their own equipment may face significant
challenges in making technical changes if they do not have ongoing
technical support. Some smaller retailers with outdated equipment may
need new equipment to use updated software. However, supermarkets,
which account for about 85 percent of FSP redemptions nationwide, may
not experience as much difficulty in modifying their systems because of
in-house information technology support. Table 2 summarizes the changes
that would need to be made by each affected group to implement the
option preferred by expert panelists. Some stakeholders, such as third-
party processors that help process EBT transactions, may also need to
make operational changes to implement this option. This broad list of
required changes points to the types of costs involved in developing an
incentive program. Expert panelists did not provide information on how
much it would cost to implement these changes because the costs would
vary, depending on the many program design decisions that would need to
be made; however, the costs could be significant. FNS officials said
that they believe this option may be more costly to implement than a
paper voucher system.
Table 2: Required Changes to Implement the Option Preferred by Expert
Panelists:
Stakeholder: FNS;
Required changes, by role:
* Monitor whether eligible foods were purchased and if the bonus is
being calculated and applied properly;
* Modify retailer monitoring systems to identify potential fraud;
* Develop and impose regulations on both system standards and client
and retailer sanctions related to administration of this program;
* Provide information and training to federal, state, and local
investigative staff and participating retailers.
Stakeholder: States;
Required changes, by role:
* Modify the state information system to include up-to-date information
on the amount of benefits participants have in their EBT accounts, if
needed.
Stakeholder: EBT contractors;
Required changes, by role:
* Develop EBT transaction standards to ensure that the transactions are
implemented the same way across the country;
* Develop software to calculate and apply the incentive for online and
manual transactions;
* Revise manuals and procedures;
* Modify claims and error processes;
* Modify the process for how to handle cross-state transactions (one
EBT contractor serves the state where the participant has been provided
benefits, while another EBT contractor serves a different state where
the purchase occurred);
* Modify retailer and customer complaint processes. Update customer
support systems to support questions about this new benefit. Modify
automated telephone systems and train customer service representatives;
* Modify the software for the POS devices that the EBT contractors
provide to retailers on behalf of the states, to include an additional
targeted foods transaction field. Install the updated software and
replace outdated devices.
Stakeholder: Retailers;
Required changes, by role:
* Update POS device software to include a new targeted foods
transaction type;
* Modify software used on the electronic cash register systems to
include an additional flag to allow targeted foods to be identified and
subtotaled so that the subtotal of targeted foods can either
automatically be communicated to the POS device or manually entered in
by the retailer;
* Flag the targeted foods in the information systems, and keep the
database up to date, as with identifying WIC-or FSP-eligible items;
* Develop new procedures for cashiers, and train cashiers on the new
system.
Source: GAO.
[End of table]
Incentives Could Be Delivered Electronically to Separate Cards, but
Implementation Could Add Cost and Complexity:
Several types of cards separate from participants' existing EBT cards
could be used to deliver financial incentives.[Footnote 32] Two
alternatives include issuing participants a new magnetic strip or smart
EBT card that would be used for purchases of the targeted foods.
[Footnote 33] Under this type of system, a FSP participant would
receive additional benefits in a new targeted foods account and be
issued a new card to access the benefits. At check out, the participant
would swipe the new card and enter a PIN to purchase the targeted foods
and swipe their existing EBT card and enter that PIN for the other FSP-
eligible items. An amount equal to a percentage of what a participant
spends on the targeted foods could be added to a targeted food account,
as shown in figure 6.
Figure 6: Incentive Amount Added to a Separate Targeted Foods Card on
the Basis of the Amount Spent on Targeted Foods:
[See PDF for image]
This figure is an illustration of how an incentive amount is added to a
separate targeted foods card on the basis of the amount spent on
targeted foods, as follows:
Two Cards:
Customer-retailer interaction:
* Retailer rings up $50 worth of groceries, including $10 in �targeted
foods� and $40 in other eligible items.
* Customer swipes the regular EBT card and enters PIN for the $40 in
other eligible items.
* Customer swipes the �targeted foods� card and enters PIN to access
account.
* Customer receives $50 worth of groceries.
Two accounts: Includes targeted food account and other eligible items
account;
EBT contractor:
* State EBT contractor verifies retailer�s license number and
customer's account number, PIN, and account balance, then authorizes
transaction.
* Customer receives a $2 incentive added to their �targeted foods�
account ($2 is a 20 percent incentive for spending $10 on �targeted
foods�).
Federal Reserve Bank/Retailer's bank:
* Retailer reimbursed for $50 as part of the daily settlement process
at end of business day. The state EBT contractor orders reimbursement
for retailer from FNS�s Federal Reserve Bank account.
Sources: GAO, Nova Development Corporation.
[End of figure]
A few stakeholders we interviewed suggested using smart cards to
deliver incentives because these cards have the capacity to record and
track purchases of individual items, which would be useful for
monitoring and evaluation purposes.[Footnote 34] The computer chip on
the smart card could contain the product codes of the specific targeted
items. The grocery store clerk would scan the items at check out, and
the system could match each item's product code to a list of approved
targeted food product codes. This system would help ensure that only
authorized food items are purchased and receive the financial
incentives. The smart card transaction would require participants to
enter a PIN, and the card could calculate and apply the incentive
amount.
Using separate cards to deliver incentives would be a more costly and
complicated option than using existing EBT cards, according to expert
panelists and some stakeholders we interviewed. State administrative
costs could increase to purchase and replace the new cards,
particularly smart cards, which cost more than magnetic strip EBT
cards. Using a separate magnetic strip EBT card would require the same
technical changes as using existing EBT cards; however, using smart
cards would require greater changes to the EBT system. Currently, only
the total amount spent on FSP-eligible items is tracked through the EBT
system. Changing the FSP EBT system to one that communicates
information on the individual items purchased would require significant
and costly modifications to retailer and EBT contractor information
systems. In addition, using a separate card may be more complicated for
participants and grocery store clerks to implement and add time at the
register to process the additional transactions, according to some
stakeholders we interviewed.
Paper Delivery of Incentives Would Not Require Changes to the EBT
System, but Could Increase State Administrative Costs and Fraud Risk:
Delivering incentives using paper methods, such as vouchers or coupons,
may be easier and less costly for some retailers to pilot because these
methods would not require changes to the EBT system, according to a few
of the retailers we interviewed. For example, one retailer suggested
that the state provide participants with paper coupons that would
discount the prices of certain foods because it would eliminate the
need for retailers to modify their checkout systems, and retailers
could use a system similar to the current process for redeeming
manufacturers' coupons. A retailer representative that works with small
grocery stores suggested that the easiest and least expensive method to
pilot an incentive program would be for the state to provide
participants with the coupons and reimburse retailers when the coupons
are redeemed, since none of the EBT-related systems would need to be
changed. Figure 7 illustrates one way that financial incentives could
be delivered using paper vouchers. In this example, participants are
provided with paper vouchers valued at $10, which are to be spent on
the targeted foods, rather than with a bonus that is based on the
amount spent on the targeted foods.
Figure 7: Incentive Provided to Participants Using Paper Vouchers as a
Fixed Amount to Be Spent on Targeted Foods:
[See PDF for image]
This figure is an illustration of how an incentive amount is provided
to participants using paper vouchers as a fixed amount to be spent on
targeted foods, as follows:
One card and paper vouchers:
Customer-retailer interaction:
* Retailer rings up $50 worth of groceries, including $10 in �targeted
foods� and $40 in other eligible items.
* Customer pays for the targeted foods with the vouchers received from
the state.
* Customer pays for other eligible items with their EBT card.
* Customer receives $50 worth of groceries.
* The retailer mails redeemed vouchers to state or EBT contractor, who
tracks and reports on the amount of the vouchers used by participant.
Two accounts: Includes targeted food account and other eligible items
account;
EBT contractor:
* For EBT: The state EBT contractor verifies retailer�s license number
and customer�s account number and PIN, and account balance, then
authorizes transaction.
* For vouchers: The state or EBT contractor collects vouchers and
orders reimbursement for vouchers.
Federal Reserve Bank/Retailer's bank:
* The state EBT contractor orders reimbursement for purchases made on
EBT card for retailer from FNS�s Federal Reserve Bank account.
Sources: GAO, Nova Development Corporation.
[End of figure]
Paper vouchers have been used successfully to facilitate the purchase
of fruits and vegetables in other programs. FNS's farmers' market
programs and the WIC fruit and vegetable pilot program provided paper
vouchers to WIC participants and elderly individuals so that they could
purchase fruits and vegetables. For example, California piloted a
program that provided vouchers for fruit and vegetable purchases for
low-income women participating in the WIC program. A study evaluating
the California WIC fruit and vegetable pilot reported that low-income
women used the supplement almost fully and purchased a wide variety of
fresh fruits and vegetables with the vouchers. Stakeholders we
interviewed also identified projects funded with nonfederal dollars
that provide supplemental coupons to FSP participants to encourage them
to purchase fresh produce at farmers markets. For example, New York
City's Department of Health and Mental Hygiene is partnering with
farmers' markets to distribute Health Bucks--$2 coupons for fresh
produce--to EBT customers who spend $5 in local produce at the markets.
However, there are potential disadvantages to using paper methods to
deliver incentives. Participants might find paper options more
burdensome because they cannot carry over balances and may have to
spend the entire amount of the voucher in one shopping trip. In
addition, participants may not use the financial incentives if they
perceive that a stigma is associated with using paper vouchers at the
grocery store. Although paper methods would spare retailers from making
software modifications, some of the burden would be shifted to states
to develop systems to collect the coupons and reimburse retailers,
which could increase state administrative costs. Although any incentive
program could affect fraud risk, expert panelists and stakeholders we
interviewed said paper options could increase the risk of fraud because
coupons can be exchanged for cash or used by ineligible individuals
more easily.
Concluding Observations:
Changing individuals' eating habits is difficult, given the many
factors that influence food choices. However, the pilot projects
authorized in the recent Farm Bill provide FNS with a unique
opportunity to test whether financial incentives would help low-income
Americans purchase and consume more of the foods that contribute to a
healthy diet. Although research has found that financial incentives and
nutrition education both show promise, not enough is known about the
costs and long-term effectiveness of these approaches, either alone or
in combination. Moreover, the financial incentives studied included
coupons. Incentives using the current EBT technology, although
technically feasible, are largely untested at this point. Also, the
success of efforts to improve dietary intake may hinge in part on the
availability of targeted foods, which may be limited in certain areas,
such as small stores in large urban areas. Little is known about
efforts to increase access to healthy foods. Only by testing these
approaches, either alone or in combination, can the costs of such a
program be estimated. Depending on the approaches selected for testing,
estimates would need to include the costs of developing and
administering the program, changing retailer checkout systems, training
employees, educating participants, and providing increased benefit
amounts. Program outcomes, such as changes to participant purchasing
and consumption patterns, will also be challenging to assess and will
not be useful unless similar outcome measures are developed that can be
used across different projects to allow comparison. Evaluating the long-
term effect of the changes on the health of program participants will
likely prove to be even more difficult to assess. However, given the
evidence linking poor nutrition to adverse health outcomes, finding
cost-effective approaches to improve nutritional intake is important.
Unless careful attention is paid to estimating both program and
administrative costs as well as the effects, Congress and USDA will not
have the information required to judge whether the benefits outweigh
the costs.
Agency Comments and Our Evaluation:
We provided a draft of this report to the U.S. Department of
Agriculture for review and comment. On June 20, 2008, we met with FNS
officials and an ERS official to obtain their comments. In general, the
officials agreed with our findings and concluding observations.
However, the officials made some suggestions to enhance and clarify our
report findings, which we incorporated. First, FNS officials suggested
that we further emphasize the potential for fraud inherent in a
financial incentive program and the challenge FNS believes it would
face in incorporating any additional oversight responsibilities. FNS
officials believe that any new incentive program that involves the
issuance of an additional benefit once targeted foods are purchased
would open up a new avenue for food stamp trafficking. Second, FNS
officials believe that the preferred option for delivering financial
incentives through the EBT system would be costly to implement, perhaps
even more costly than a paper voucher system. We believe that each
option for delivering the incentive would have cost implications;
however, without piloting such a program, it is not clear which
delivery method would be most costly. Third, FNS officials suggested
that we incorporate additional references to FNS reports that directly
relate to the topic of our report. Finally, FNS officials suggested we
incorporate full information about the assumptions and limitations of
ERS estimates of the cost of delivering financial incentives to FSP
participants on the basis of their purchases of fruits and vegetables.
FNS officials identified the following issues that may affect the
accuracy of the estimates: the age of the data, assumptions about
participants' purchasing decisions, recent increases in food prices,
continuing increases in FSP participation, and whether the program
would affect FSP participation. We acknowledged the limitations of the
ERS estimates in the report. FNS also provided us with technical
comments, which we incorporated where appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Agriculture, and other interested parties.
We will also make copies available to others upon request. In addition,
the report will be available at no charge on GAO's Web site at
[hyperlink http://www.gao.gov].
If you or your staff have any questions regarding this report, please
contact me at (202) 512-7215 or [email protected]. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributors to
this report are listed in appendix II.
Sincerely yours,
Signed by:
Kay Brown:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The objectives of this report were to identify (1) what is known about
the effectiveness of financial incentives and other approaches intended
to increase purchases of targeted foods that could contribute to a
healthy diet; (2) the key factors to consider in designing a program
that provides Food Stamp Program (FSP) participants with financial
incentives to purchase certain foods; and (3) options available to the
U.S. Department of Agriculture's (USDA) Food and Nutrition Service
(FNS) for implementing financial incentives, and the advantages and
challenges involved in implementing such options.
To address the first objective, we searched relevant databases, such as
ProQuest, National Technical Information Service, Wilson Social Science
Abstracts, and Sociological Abstracts. We also consulted with USDA's
Economic Research Service (ERS) and FNS staff. We limited the scope of
our work by looking at studies published since 2000. Through this
process, we identified more than 100 studies published from January
2000 through February 2008. We further narrowed the scope of our work
to those findings from studies published as reviews or summaries of
original research, ERS-published research, and studies of Special
Supplemental Nutrition Program for Women, Infants, and Children (WIC)
farmers' market programs. We conducted detailed reviews of the 16
studies that met these criteria. Therefore, our results are not an
exhaustive or historical treatment of the topic. The studies reviewed
included both randomized controlled trials and nonrandomized controlled
trials. Our reviews entailed an assessment of each study's research
methodology, including its data quality, research design, and analytic
techniques, as well as a summary of each study's major findings and
conclusions. We also assessed the extent to which each study's data and
methods support its findings and conclusions.
To address the second and third objectives, we interviewed
representatives of stakeholder groups that would be affected by
implementation of an incentive program, including USDA officials;
officials from four states with WIC Electronic Benefit Transfer (EBT)
(Ohio, Texas, Washington, and Wyoming); officials from one state
(California) that passed legislation authorizing the provision of
financial incentives to FSP participants for purchasing targeted foods;
the three EBT contractors serving almost all of the states; retailer
associations and retailers representing large chain and smaller
independent grocery stores; food and nutrition advocacy groups; and
researchers. We also facilitated group discussions about the options
for delivering incentives and implementation issues with state
officials, retailers, and industry representatives at three national
conferences.
To further explore targeted food incentive options and implementation
issues, we convened a panel of 17 experts representing USDA, states,
retailers, EBT contractors, and manufacturers of retailer check out
systems. On November 6, 2007, we held a half-day meeting with these
panelists at our headquarters office in Washington, D.C. Before the day
of the meeting, we provided each panel member with a set of discussion
questions that covered specific topics, including the definition of
foods targeted for promotion, incentive delivery options, tracking
purchases, applying the incentive, and monitoring and evaluation. Each
panelist was provided with time to respond to each question and discuss
the impact of other panelists' responses on the panelist's stakeholder
group interests. We transcribed responses and made verifications to
ensure that we had accurately captured panel member statements. We
identified the panelists through external parties who work on the
issues covered in this report. We selected individuals who represent
the different stakeholder groups that would likely be involved in
developing a targeted foods incentive program for the FSP, if such a
program was initiated. The panel included representatives from USDA;
two states (Maryland and Washington); four retailers or retailer
associations (Krasdale Foods, Kroger, National Grocers Association, and
Safeway); the three EBT contractors serving almost all states
(Affiliated Computer Systems, eFunds, and JPMorganChase); and three
other industry representatives (Electronic Funds Transfer Association,
IBM, and Verifone).
We conducted this performance audit from May 2007 through July 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
Kay Brown, (202) 512-7215, [email protected]:
Staff Acknowledgments:
In addition to the contact named above, individuals making key
contributions to this report include Kathy Larin (Assistant Director),
Susannah Compton, Neil Doherty, Kevin Jackson, Avani Locke, Ashley
McCall, Luann Moy, Andrew Nelson, Susan Offutt, Barbara Oliver, Scott
Pettis, Cathy Roark, Max Sawicky, Daniel Schwimer, Jay Smale, Rosemary
Torres-Lerma, and Kate van Gelder.
[End of section]
Related GAO Products:
Electronic Payments: Many Programs Electronically Disburse Federal
Benefits, and More Outreach Could Increase Use. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-645]. Washington, D.C.: June
23, 2008.
Food Stamp Program: Use of Alternative Methods to Apply for and
Maintain Benefits Could Be Enhanced by Additional Evaluation and
Information on Promising Practices. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-573]. Washington, D.C.: May 3, 2007.
Food Stamp Program: FNS Could Improve Guidance and Monitoring to Help
Ensure Appropriate Use of Noncash Categorical Eligibility. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-465]. Washington, D.C.: March
28, 2007.
Food Stamp Program: Payment Errors and Trafficking Have Declined
despite Increased Program Participation. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-422T]. Washington, D.C.:
January 31, 2007.
Food Stamp Trafficking: FNS Could Enhance Program Integrity by Better
Targeting Stores Likely to Traffic and Increasing Penalties.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-53]. Washington,
D.C.: October 13, 2006.
Food Stamp Program: States Have Made Progress Reducing Payment Errors,
and Further Challenges Remain. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-245]. Washington, D.C.: May 5, 2005.
Food Stamp Program: Farm Bill Options Ease Administrative Burden, but
Opportunities Exist to Streamline Participant Reporting Rules among
Programs. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-916].
Washington, D.C.: September 16, 2004.
Nutrition Education: USDA Provides Services through Multiple Programs,
but Stronger Linkages among Efforts Are Needed. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-528]. Washington, D.C.: April
27, 2004.
Food Stamp Program: Steps Have Been Taken to Increase Participation of
Working Families, but Better Tracking of Efforts Is Needed. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-346]. Washington, D.C.: March
5, 2004.
[End of section]
Footnotes:
[1] The act also includes a provision changing the name of the Food
Stamp Program to the Supplemental Nutrition Assistance Program,
effective October 1, 2008.
[2] Current regulations define "eligible foods" as any food or food
product intended for human consumption, except alcoholic beverages,
tobacco, and hot foods and hot food products prepared for immediate
consumption. Eligible foods are further defined as seeds and plants
that are used to grow food for the personal consumption of eligible
households, and meals prepared and delivered or served to eligible food
stamp recipients as well as equipment for hunting and fishing in
certain specified areas in Alaska (7 C.F.R. � 271.2).
[3] TANF is a federal block grant program that provides federal funding
to states and tribes to operate programs that deliver cash assistance
and services, such as transportation and child care assistance, to
needy families.
[4] For more information on the use of EBT and other electronic means
of distributing government benefits, see GAO, Electronic Payments: Many
Programs Electronically Disburse Federal Benefits, and More Outreach
Could Increase Use, GAO-08-645 (Washington, D.C.: June 23, 2008).
[5] Bar codes on most prepackaged items adhere to a UPC format that
enables retailers to uniquely identify the items. Food items with UPC
codes are prepackaged, with a fixed weight, count, or volume, and are
distributed by national suppliers or large regional suppliers.
Retailers with scanning systems can also create their own unique bar
codes for non-UPC items, referred to as PLU codes. Retailers use PLU
codes for foods supplied by local independent suppliers and foods that
are purchased by weight, such as fresh produce.
[6] FNS defines a "supermarket" as a store with between $2 million and
$5 million of annual retail sales and, typically, 10 or more checkout
lanes with cash registers and bar code scanners. A "superstore" is a
very large supermarket with $5 million or more of annual retail sales.
Both supermarkets and superstores have staple food sales greater than
or equal to 65 percent of their retail food sales.
[7] The figure 2 data on the consumption of fruits, vegetables, grains,
and fat reflect the percentage of the population meeting USDA's 2000
Dietary Guidelines for Americans, which has since been revised. Sodium
consumption data reflect the percentage of the population meeting a
standard tracked by Healthy People 2010, a project managed by the
Department of Health and Human Services. Calcium consumption data
reflect the percentage of the population meeting the recommended
adequate intakes for calcium developed by the Institute of Medicine of
the National Academy of Sciences.
[8] Mary Kay Fox and Nancy Cole, Nutrition and Health Characteristics
of Low-Income Populations, Volume 1, Food Stamp Program Participants
and Nonparticipants, U.S. Department of Agriculture, Economic Research
Service, (Alexandria, Va.: December 2004). An analysis of more recent
data to be published by FNS will report similar findings, according to
FNS officials. The forthcoming FNS report is entitled Diet Quality of
Americans by Food Stamp Program Participation: Data from the National
Health and Nutrition Examination Survey - 1999-2004.
[9] For more information on USDA nutrition education programs, see GAO,
Nutrition Education: USDA Provides Services Through Multiple Programs,
but Stronger Linkages Among Efforts Are Needed, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-528] (Washington, D.C.: Apr.
27, 2004).
[10] Social marketing is a private sector marketing model that can be
adapted to social services, which often makes use of television, radio
ads, videos, and brochures. These materials by themselves do not
constitute social marketing; rather, social marketing entails a
comprehensive program in which these materials are employed as part of
tactics to reach a target audience. Social marketing also emphasizes
the importance of keeping the target audience and network partners
involved in needs assessment, message development, and refinement of
messages and delivery strategies.
[11] Joanne Wall, et al., "Effectiveness of Monetary Incentives in
Modifying Dietary Behavior: A Review," Nutrition Reviews (Health
Module: 2006), 64, 12. These randomized controlled trials involved
random assignment of study participants to two or more interventions,
including a standard of comparison or control, and a comparison of
outcomes after the participants received the interventions. For
example, participants could be randomly selected to receive financial
incentives and compared with an appropriate control group that did not
receive the incentives.
[12] See the following citation for the original study: Judith V.
Anderson, et al., "5 a Day Fruit and Vegetable Intervention Improves
Consumption in a Low Income Population," Journal of the American
Dietary Association (2001), 101(2). The Commodity Supplemental Food
Program provides food and administrative funds to supplement the diets
of low-income pregnant, postpartum, and breastfeeding women; infants;
children up to aged 6 years; and individuals over aged 60 years.
[13] The Bureau of Supplemental Food Programs Food Delivery Systems
Unit, New York State Department of Health, New York State WIC Program
2006 Vegetable and Fruit Demonstration Project (February 2007).
[14] Dena R. Herman, et al., "Effect of a Targeted Subsidy on Intake of
Fruits and Vegetables Among Low-Income Women in the Special
Supplemental Nutrition Program for Women, Infants, and Children,"
American Journal of Public Health (2008), 98. For more information, see
an earlier evaluation of the same approach: Dena R. Herman, et al.,
"Choices Made by Low Income Women Provided with Economic Supplement for
Fresh Fruits and Vegetables," Journal of the American Dietetic
Association (2006), 106: 740-744.
[15] The 2005 Dietary Guidelines for Americans recommends 2 cups of
fruit (4 servings) and 2� cups of vegetables (5 servings) per day for
individuals consuming 2,000 calories per day. A serving of vegetables
is 1 cup of raw leafy vegetables, � cup of cooked vegetables, or � cup
of vegetable juice. A serving of fruit is 1 medium-sized fruit; � cup
of dried fruit; a � cup of fresh, frozen, or canned fruit; or � cup of
fruit juice.
[16] Joanne F. Guthrie, et al., Can Food Stamps Do More To Improve Food
Choices? An Economic Perspective, U.S. Department of Agriculture,
Economic Research Service (Alexandria, Va.: September 2007). To develop
the estimates, ERS applied the estimated rate of change in fruit and
vegetable expenditures in response to the price changes to what
households in the poorest one-fifth of the population spent per person
on fruits and vegetables in 2004, using data collected by the Bureau of
Labor Statistics' Consumer Expenditure Survey.
[17] Given the age of the data used and the assumptions underlying the
analysis, the magnitudes of the estimates of how low-income households
would respond to fruit and vegetable price reductions may be
inaccurate, either understated or overstated. Food stamp participants
and policies have undergone changes since 1988, which may influence the
results of this type of analysis. In addition, no single study can
provide great confidence in the application of its conclusions to a
policy question. ERS has replicated this analysis with more recent
data; however, the findings were not published prior to us completing
our work.
[18] Hayden Stewart and Noel Blisard, Are Lower Income Households
Willing and Able to Budget for Fruits and Vegetables?, U.S. Department
of Agriculture, Economic Research Service (Alexandria, Va.: January
2008).
[19] Alice Ammerman, et al., "The Efficacy of Behavioral Interventions
to Modify Dietary Fat and Fruit and Vegetable Intake: A Review of the
Evidence," Preventive Medicine (2002), 35 (1). For more details about
this study, see Alice Ammerman, et al., Efficacy of interventions to
modify dietary behavior related to cancer risk. Evidence Report/
Technology Assessment No. 25, Publication No. 01-E029 (Rockville, Md.:
February 2001).
[20] Donna Ciliska, et al., "Effectiveness of Community-Based
Interventions to Increase Fruit and Vegetable Consumption," Journal of
Nutrition Education, Health Module (2000), 32, 6.
[21] FNS developed a report reviewing the research on the effectiveness
of computer-tailored nutrition education. See Dawn Aldridge,
Interactive Computer-Tailored Nutrition Education, U.S. Department of
Agriculture, Food and Nutrition Service (Alexandria, Va.: 2006).
[22] Joceline Pomerleau, et al., "Interventions Designed to Increase
Adult Fruit and Vegetable Intake Can Be Effective: A Systematic Review
of the Literature," Journal of Nutrition (2005), 135 (10).
[23] Another study we reviewed found that approaches involving
individual or group counseling were successful in changing dietary
behaviors and most were conducted with individuals with existing risk
factors for heart disease. See Deborah Bowen and Shirley Beresford,
"Dietary Interventions to Prevent Disease," Annual Review of Public
Health (2002), 23:255-86.
[24] Jennifer D. Seymour, et al., "Impact of nutrition environmental
interventions on point-of-purchase behavior in adults: A Review,"
Preventive Medicine (2004), Vol. 39. For more information about
approaches implemented in a grocery store setting, see Karen Glanz and
Amy Yaroch, "Strategies for increasing fruit and vegetable intake in
grocery stores and communities: policy, pricing, and environmental
change," Preventive Medicine (2004), Vol. 39.
[25] J.N. Variyam and John Cawley, "Nutrition Labels and Obesity,"
National Bureau of Economic Research, Working Paper No. 11956
(Cambridge, Massachusetts: 2006).
[26] For more information, see U.S. Department of Agriculture, Food and
Nutrition Service, Implications of Restricting the Use of Food Stamp
Benefits (Alexandria, Va.: March 2007).
[27] Similarly, research suggests that disincentives must be
substantial enough to motivate individuals to avoid purchasing foods
with low nutritional value. An ERS study found that adding a relatively
low tax on salty snacks of 1 cent per pound and 1 percent of value
would not appreciably reduce the consumption of salty snacks and would
have little effect on diet quality or health outcomes. For more
information, see Fred Kuchler, et al., Taxing Snack Foods: What to
Expect for Diet and Tax Revenues, U.S. Department of Agriculture,
Economic Research Service (Alexandria, Va.: August 2004).
[28] ERS estimates indicate that a 10 percent reduction in the price of
fruits and vegetables would increase the amount purchased by 6 to 7
percent. Fruit and vegetable consumption of the average food stamp
participant is estimated at 1.95 cups per day. A 10 percent reduction
in fruit and vegetable prices, therefore, would raise consumption to an
estimated 2.08 cups per day. A 20 percent reduction in the price of
fruits and vegetables would raise fruit and vegetable consumption to
2.20 cups per day.
[29] As we have previously stated, given the age of the data used and
the assumptions underlying the analysis, the magnitudes of the
estimates may be inaccurate, either understated or overstated.
[30] FNS developed a document that describes issues to consider when
evaluating nutrition education approaches. See U.S. Department of
Agriculture, Food and Nutrition Service, Nutrition Education:
Principles of Sound Impact Evaluation (Alexandria, Va.: September
2005).
[31] A FNS-funded study found that it is technically feasible to
collect bar-code data on the products purchased with food stamp
benefits and to link those data with demographic information about the
food stamp household. For details, see John Kirlin, et al., Feasibility
Study of Capturing Food Data at Checkout, U.S. Department of
Agriculture, Food and Nutrition Service (Alexandria, Va.: September
1999).
[32] For a detailed description of card-based alternatives, see U.S.
Department of Agriculture, Food and Nutrition Service, Analysis of
Alternatives for Implementing a Cash Value Voucher Program, prepared by
the State Information Technology Consortium (Herndon, Va.: March 2007).
[33] Providing participants with gift cards containing a financial
incentive amount that is stored on the card is another option. While
this option may require fewer technical changes to the checkout system
because some retailers already have systems in place to process gift
card transactions, store gift cards can only be used at a limited
number of store locations. Ensuring that only allowable foods are
purchased may be more difficult with a store gift card because,
typically, there is no limitation on what can be purchased in the
participating stores with the gift cards and neither a PIN nor a
signature is required to complete a transaction.
[34] Smart cards are embedded with a computer chip that can perform
calculations and store significant amounts of data. These cards are
currently used in four states to process WIC EBT transactions.
[End of section]
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