How Costly is Welfare Stigma? Separating Psychological Costs from Time Costs in Food Assistance Programs

This paper empirically decomposes the costs of welfare participation using a model of labor supply and participation in two food assistance programs: food stamp program and WIC. The context allows for the most reliable estimates to date of the relative importance of psychological costs, or stigma, as compared to the effort required to become eligible and maintain eligibility (time costs). The relative size of these two costs has implications for policy. We find that psychological costs are four times larger on average than the time costs associated with participation in food assistance programs. In addition, we find evidence that psychological costs are not necessarily an effective screening mechanism.