Krugman's Graph on Food Stamps

Is this a trick question? It looks like unemployment is a leading indicator of SNAP participation, and (I would assume) that there is a direct causal relationship where more unemployed people => more people qualify/apply for food stamps.

And… that seems to be pretty much what Krugman is saying.

Was I supposed to come to a different conclusion?

According to the graph U6 unemployment has recently declined, and meaning that after a lag SNAP participation should decline too.

Yeah, what gives, David? Seems okay to me too. In part, that’s because we figure a priori that U6 would lead. If you switched the labels I might still suspect that U6 is driving SNAP. I guess SNAP could lead if people planned ahead before quitting their jobs or in anticipation of being fired, but even then they’re moving together as you’d except. In any event, I don’t see where eyeballing the graph gives us any particular reason to doubt Krug’s remarks.

Not sure if this is what you’re getting at, but the response is stronger on the up-swing than the downswing. This isn’t particularly surprising to me since you don’t have to be unemployed to get food stamps and the last several recoveries have been weak – so people may be getting jobs again but still weak enough jobs that they qualify for food stamps.

But I don’t see how that changes the general claim that it follows with a lag.

If a lot of the people are just leaving the labor market (and they are) we might see the same thing in the coming years – a weaker correlation until we have real economic growth again.

That’s the only thing I can think of.

You can’t make a causal relationship claim by just looking at a graph, but assuming there is a causal relationship between the two, I don’t see anything necessarily wrong with his claim.

I’d like to see more about the causal relationship, though. Seems like it would make sense, it also seems reasonable that SNAP participation would not drop as significantly as increase because once on SNAP you may be less likely to come off.

There are plenty of opportunities to show how stunningly wrong Krugman can be – I’m not sure this is one of them.

But I’m also not that smart.

Ummm…. if food stamp participation is dependent on unemployment with a lag, why is the lag 3 years in one case? Unemployment changed from increase to decrease in 2003 yet SNAP didn’t follow until 2006. You can see it once again in 2010. Unemployment decreases, yet 2 years later, still an increase in SNAP participation.

Hopefully some of you also noticed that in 2006-2007, SNAP participation EXCEEDED U6.

What I see from this graph is that increasingly more, fully employed people are continuing to recieve SNAP assistance.

It doesn’t follow with a lag – it follows up with a lag, but the decreases in U6 in the 90’s are cotemporal with the decreases in SNAP, and the decrease in U6 from 2003 – 2006 shows no matching decrease in SNAP, lagged or otherwise.

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My answer: Krugman is right for most of the time series. But look at the last 2 or 3 years. The relationship disappears. As U6 unemployment falls, food stamp participation rises. Krugman could argue that the length of the lag has changed dramatically, but he didn’t argue that.

Krugman has, essentially, made the same mistake that Mitt Romney and Paul Ryan made during the 2012 presidential campaign. All 3 see unemployment driving SNAP, which was the traditional relationship. All 3 failed to take account of the changes in SNAP eligibility that were put permanently into law over George W. Bush’s veto late in his second term. Casey Mulligan has written about this extensively.

There was also a big push to increase participation rates of those eligible which bottomed at 54% in 2002 and were up to 75% by 2010.

There’s an alternative interpretation for the lack of a drop in snap following the u6 drop. Many of those going back to work may have not been eligible for SNAP due to net worth.

Agreed with DJ102010.

He does not mention if graph is lag adjusted.

I am surprised no one referenced commenter “tanstaalf” who noted that U6 rose in 2013 while unemployment dropped in 2013—-thus charging PK with cherry picking data. If true, DH’s argument is stronger. I don’t know who leads or lags between 1994-2000, but slope of U6 is more extreme downward. I assume this is related to “changing welfare in our time” during the Clinton Gingrich détente years. This could mean U6 “led” unemployment during those years.

Also, during 2003-2007, U6 is inversely correlated with unemployment as well as in 2010-2012/2013(if tanstaalf is correct). We should not be surprised there is correlation. The more irritating thing about PK is his insistence on being ideological and not try to explain why the change in “Munching Moochers” is more sticky than unemployment. Further, these two factors are “entangled” and have some mutual cause and effect depending on how U6 is administered.

Inclined to give Krugman the benefit of the doubt on this one. If SNAP fails to respond to declining U6 in the next few years or so, there might be something to this point, but it seems unfair to force an assumed estimation of the lag on him in a one paragraph blog post.

Snap benefits look essentially flat to me from 2005-2008, will be interesting if declining unemployment for this recession continues that trend or if overall snap participation to unemployment will be higher once we get lower unemployment.

To my jaundiced eye, the lag going down is not equivalent to the lag going up. The inflection points on the down swing indicates that unemployed are on food stamps within a year but inflection points on the upswing indicate anywhere from 3 to 4 years to get off food stamps. This relationship would appear consistent. I must be missing something, it cannot be so simple.