Effects of Food Stamp Cash-Out on Administrative Costs, Participation, and Food Retailers in San Diego

A fundamental issue in the design of the Food Stamp Program (FSP) is the form benefits should take. Advocates of the current coupon system argue that coupons are a direct and inexpensive way to ensure that food stamp benefits are used to purchase food. Coupon advocates contend that, despite some evidence of fraud and benefit diversion under the current system, food stamps are used largely to purchase food. In addition, they contend that coupons give household food budgets some measure of protection against other demands on limited household resources. Advocates of cashing out the FSP argue that the current system limits the food-purchasing choices of recipients and places a stigma on participation. Moreover, they cite the cumbersome nature and cost of coupon issuance, transaction, and redemption.