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Whatever Happened to Citicorp?   Extra Credit, Wednesday Edition
Jan 15 2008 6:04PM EST

Giving the Poor More Money: Would They be Able to Cope?

Greg Mankiw reacts today to the CBO's declaration that if you want fiscal stimulus, a temporary increase in food stamp benefits would provide the most bang for the buck.

I wonder if we really want to target such cyclical measures on the poorest members of society. That is, for any mean level of food stamps, wouldn't the poor be better off with a constant stream of benefits than with a benefit that fluctuates over the business cycle? Using food stamps as a cyclical tool seems to risk destabilizing some families' food consumption in an attempt to stabilize the overall business cycle.

I'm sure that if Harvard offered Greg Mankiw a temporary increase in his salary, he wouldn't demur on the grounds that he'd prefer a constant stream of payments to one which fluctuates. But maybe Mankiw is sophisticated enough to cope with such income volatility, unlike those poor people on food stamps.

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