Federal Food Stamps


 The real world problem that I have choosen to translate
into a collective action problem is that dealing with
federal food stamps. Using the research process I will
outline how this real world problem has become a collective
action problem, predict the outcome of the situation and
then after constructing a model to test the reactions of
the actors involved, I present my hypothesis of the
expected outcome.
Food Stamps are coupons sold to households having incomes
and assets below the guidelines prescribed by the
Department of Agriculture(Food Stamps 2). They can be used
at retail stores to purchase food. People are elegible
based on their income, resources and work registration.
Foodstamps are provided to temporarily give aid to those
falling under certain income levels. Over the past few
years there have been increasing cases in food stamp
related fraud. In many cases food stamps have been sold on
the black market to those not qualifying. They have also
been used as another form of currency to buy drugs(NYT
March 18, 94). This fraud has been said to cost federal and
state governments millions and many suggestions have been
made in dealing with changing the system. In some states,
such as New York and New Jersey, systems have been
installed to check the fingerprints of the recipient
therefore limiting fraudulant exchange or usage of
foodsatmps(NYT March 30, 94). Many in Washington have
called for an end to the allotment of foodstamps
altogether. My hypothesis is that food stamps as a public
good take cooperation to produce and because of one actor's
motivation to abuse this good and not to cooperate the
second actor will also choose not to cooperate. Therefore
this pubulic good will cease to be produced. 

The situation with federal foodstamps creates the
collective action problem. It involves two and the money
and systems necessary to provide them as the good. The
theory I posit is that foodstamps as a temporary assistance
mechanism can carry out its function only if there is
coopertion between two actors. The actors are first those
that are in Washington and those above a certain income
level that provide the tax dollars necessary to run the
federal food stamp program and second those qualifying and
using federal food stamps. In order for cooperation to
occur and this temporary safety net to remain, those
producing the money for this good must be assured that they
are being used accordingly. Conversely, those qualifying to
use food stamps must cooperate by using them only when
needed, not selling them or using them for drugs, and not
transfering them to third parties. 

Extending this real world problem to the theory of rational
choice I predict that both actors are rational and will try
to maximize their utilities. Those qualifying for food
stamps will have an incentive to take a free ride, use them
for other goods than food, and sell them for such things as
drugs. Those providing the money for food stamps will sense
that their money is being abused and being utility
maximiazers will be unwilling to sacrifice their money for
something that gives them no payoff. 

It is possible to test this theory by formalizing it into a
game theory model. Foodstamps have all of the
characteristics of a public good. They are jointly supplied
by public taxpayers and take cooperation to produce.
Altough it is not entirely non-exclusionary, it is not
feasible to exclude those meeting the criteria. Foodstamps
also take cooperation in order to be produced. The
foodstamp recipients and producers both have the choice of
cooperating or not cooperating. 

Game theory predicts that each player will look for a
dominant strategy. The game also assumes that the actors
will have transitive choice outcomes(Ostrom's Notes).
Assuming that player one is rational, his best choice would
be to not cooperate and exploit the full benfits of the
food stamps. Player one's second best choice would be to
cooperate and get the normal value of the good. Player
one's third best outcome would be to not coopertate and get
none of the good. Finally player one's worst alternative
would be to cooperate and have the stamps revoked by a
non-cooperting player two. 

Players two's best alternative would be to not cooperate
and get the full benifit of the dollars saved by not
funding food stamps. Player two's second best alternative
would be to cooperate along with player 1. Player two's
third best choice would be not to cooperate simultaneously
with player 1; therefore revoking funds. Player two's worst
outcome would be to cooperate while player one was not.
With this alternative player two would know that his or her
tax dollers were being misused and thus provide more
incentive not to cooperate. Translating this into a game
matrix we see that following. 

Cooperate Do Not Cooperate 
This is what is called a prisoner's dilemma. The dominant
strategy with these actors and preference orderings becomes
non-cooperation. In this game both players are praticing a
maximmax strategy. They both have an incentive to go for
everything they can. 

The outcome for this situation follows the predictions made
in my hypothesis. The outcome is non-cooperation and
therefore the good , foodstamps, will no longer be
produced. This model predicts the outcome of the the debate
over federal foodstamps by using the scientific research
process. It takes a real world problem, abstracts it into a
theory, formalizes it into a model, and then explains it
and makes predictions through a theoretical and testable
hypothesis. By using this process it was possible to make a
prediction about the outcome of a real world problem. In
this way this proccess was very useful. It would have been
more useful though in preventive applications .
If a process such as this would have been applied to the
problem before the formation of the foodstamp program, the
current problem could have been avoided. Policy makers
could have predicted the unsuccessful outcomes of their
proposed policy therefore avoiding the trouble they face
today. They could have possibly came up with a more
successful solution to assisting those under certain income
levels obtain food therefore using resources in a much more
calculated and successful way. 

It may not be necessary for policy makers to use the exact
process that I have used in this example in order to
predict the outcome of future polcies; but still this
example shows the importance and usefulness in using some
kind of scientific or formalized process in order to
predict the results of policies before they are

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