Can Financial Incentives Induce Low-Income Consumers to Switch Shopping Locations? Implications for Farmers' Market Incentive Programs

Tuesday, June 14, 2016
Lobby (Annenberg Center)

Author(s): Dr. Lauren E.W. Olsho; Gabe Schwartz; Todd Grindal

Discussant: Laura Argys

Epidemiological evidence has linked underconsumption of fruits and vegetables to increased rates of obesity and overweight. The shortfall in fruit and vegetable intake is particularly pronounced among low-income Americans, including participants in the USDA’s Supplemental Nutrition Assistance Program (SNAP). A recent randomized controlled trial, the USDA Healthy Incentives Pilot (HIP) evaluation, demonstrated that a 30% financial incentive redeemable across a wide variety of retail settings increased fruit and vegetable spending and intake among SNAP participants. However, nationwide, most financial incentive programs targeting SNAP participants have operated more narrowly within farmers’ market settings. In this study, we use administrative spending data from the HIP evaluation to examine characteristics of farmers’ market shoppers, to explore how their spending patterns differ from those of the SNAP population at large, and to examine the extent to which SNAP participants shifted their shopping locations as a result of the HIP financial incentive. We find that only a small fraction of SNAP households—less than half of 1 percent—shopped in farmers’ markets during any given month. In addition, we find larger purchases of fruits and vegetables qualifying to earn the HIP incentive payment among those who were already shopping at HIP-participating retailers prior to the start of the intervention, consistent with the hypothesis that participants did not change their shopping location as a result of the incentive. We conclude that limiting financial incentive programs to farmers’ market settings may limit their effectiveness for meaningfully increasing fruit and vegetable intake.