War on Poverty: Appalachian edition

A useful piece on Appalachia from National Review on-line. It is not smarmy or overly ideological and strikes a good balance between empathy and journalistic distance.

It also does a nice job of illustrating important issues in discussions of poverty. First, if the goal of the war on poverty was solely about "having enough", then the war has largely been won in Appalachia. People are not, generally, starving. They have some cash, some SNAP (the official name of what even most researchers still call food stamps) and some Medicaid or Medicare (and probably some other drugs too). In contrast, if the goal was to have the poor act like middle class people (or, even more ambitiously, to have them become middle class people), well, then, the war has not gone so well. Second, price levels matter. Housing is much cheaper in Appalachia, where the opportunity cost of the land is essentially zero than in most big cites. SNAP does not vary with local price levels and so represents a much more generous transfer in places with low costs of living.

As an aside, the claimed rate at which soda purchased via SNAP can be turned into cash, given at 50 cents on the dollar in the article, seems too low to me. The usual number one hears among researchers is more like 80 cents on the dollar, and the market ought to function particularly well in places like that profiled in the article, in which the market is thick on both sides.

Hat tip: Dan Black

Addendum: A reader suggests the following paper topic:  "We made the Food Stamps move to electronics to avoid their resale, but of course this was ineffective.  It did, however, require a new currency (Pepsi in this case) and may be distorted the price in the process, clearly lowering the welfare of the recipients.  How much?" 

I bet you could even get a grant from the poverty center at Kentucky to fund the writing of such a paper.

Addendum 2: The rate is 50 cents on the dollar at one store in Camden. Hat tip: Lowell Taylor.

Addendum 3: Paul Krugman's take on the article. I have never found the spatial mismatch literature particularly compelling when it is about mismatch within MSAs but there is more to be said, I think, about geographic mismatch on a larger scale, as with the maritime provinces in Canada, about which there is actually a literature, including some evaluations of programs that try to induce people to move to other parts of Canada where there is more economic activity.