## “Instead of the intended message that being poor is hard, the takeaway is that rich people aren’t very good with money.”

Interesting discussion here from Mark Palko.

I think of Palko’s post as having a lot of statistical content here, although it’s hard for me to say exactly why it feels that way to me. Perhaps it has to do with the challenges of measurement, how something that would seem to be a simple problem of measurement (adding up the cost of staple foods) isn’t so easy after all, in fact it requires a lot of subject-matter knowledge, in this case knowledge that some guy named Ron Shaich whom I’ve never heard of (but that’s ok, I’m sure he’s never heard of me either) doesn’t have. We’ve been talking a lot about measurement on this blog recently (for example, here), and I think this new story fits into these discussions somehow.

1. Anonymous says:

More than measurement, I’d say optimization.

In a repeated scenario he would learn from mistakes/others, develop habit/staple foods.

• jonathan says:

You beat me to it: unfamiliarity breeds mistakes.

You can treat this as he came into this with a set of priors, applied them, found a mismatch that was significant.

• Rahul says:

Admittedly Ron Shaich chose non-optimally. But will the median poor man choose any better? It isn’t a given. Palko judges Ron too harshly.

The typical poor man doesn’t think super analytically every time he goes food shopping and he often lacks the motivation, time and the knowledge to make the sort of globally optimal decisions Palko is making. A human brain isn’t a linear programming algorithm.

• Corey says:

“But will the median poor man choose any better? It isn’t a given.”

That’s a good point: we lack data.

“The typical poor man doesn’t think super analytically every time he goes food shopping and he often lacks the motivation, time and the knowledge to make the sort of globally optimal decisions Palko is making.”

Wait a minute — why is this any more a given than the idea that a typical poor person would chose better than Shaich? After all, a typical poor person would have a lot more experience at making these choices than Shaich does, and the stakes for a poor person are much higher — think “count be wrong, they fuck you up”.

You were doing better just pointing out the lack of relevant information.

2. zbicyclist says:

My own experiment in this area goes back to the 1970s, when my grad school roommate and I figured we could afford \$10 per week each for food and HBA. You need a willingness to eat today what will not be edible tomorrow, and you definitely need to meal plan so there’s little waste. You need to investment spend in some spices (hot sauce is your friend for those leftovers).

As the CEO of Panera, Shaich knows a lot about the food business, but not this side of it. He’s probably never been in an Aldi. My guess is that if he made a good run at this experiment for two months, he’d be able to do it because he’d get better at it week to week.

But we’re talking about a man who’s a type-A+ CEO type. Do we really want to be the type of country that says “Since a highly trained CEO can figure out after a few weeks that you can live on \$3.75 per person per day for food, that’s all we’re going to give you in the future?” Or do we want to be a bit more generous?

Worth another mention is that the local Paneras are generous with providing leftovers to food kitchens.

• Mark Palko says:

Shaich deserves a great deal of credit for his advocacy on this issue but in this case:

1. He’s largely missing the hard parts of eating on a microbudget. He’s doing this with a car, plenty of time, and a secure place to store and prepare his food;

2. He may also be unintentionally implying that SNAP program doesn’t do much good (why keep it going if it still leaves people hungry?). In fact, as Krugman pointed out Monday, the program has been shown to be highly effective not only at reducing hunger but also (take that Paul Ryan) actually made kids less likely to rely on safety net programs when they grew up.

• Chris G says:

Mark:
Good points about cost of potatoes, rice, oatmeal and other staples in your original post. Also a good point that eating on a microbudget is “living on a butte”. A few other comments:
1. \$4.50/day will get you survival rations. What kind of budget do you need to hit the USDA recommended diet? For example, how badly would eating the recommended servings of fresh vegetables and fruit blow a \$31/week budget?
2. How does Shaich’s menu do for calorie count? Is it in the vicinity of 2500 per day? How near-optimal do your choices need to be to get in the 2500 range?
3. How does Shaich’s menu do for nutritional balance?
4. Combining 1-3, what kind of shape would he be in if he ate that diet for a few months? A year? Ten years?

• Mark Palko says:

Chris,

I’m no expert on nutrition but based on a recent survey of LA stores, the answer to 1 is it’s doable under IDEAL conditions. If you mix fresh and frozen, get the best deals at three or four stores (in this case Fresh & Easy, Ralph’s, and the 99 cent store), not be above the 99 cents store and stick with the best deals you should be able to get five or six servings for \$1.50. Items in this price range on my last trip included nectarines, pears, grapes, apples, bananas, carrots, broccoli (frozen, though I have seen it fresh at the 99 cents store), onions, peppers and spinach (frozen).

This is the story we see a lot here: if you have a car, lots of time, great organizational skills, no special needs and considerable luck, you can eat reasonably well on very little money most of the time. Given that most people on food stamps are either the elderly, children or adults with children, these conditions are difficult to meet.

As for Shaich’s diet, I don’t see how it could have been that nutritious and based on his account it certainly wasn’t filling.

• Rahul says:

What about a military issue MRE? Those are scientifically designed to be nutrition complete, right? I believe they are sold ~\$3-4 per MRE on the civilian informal market. So yes, a tad more expensive than the \$4.50 per day benchmark.

An active soldier must have a design caloric intake much higher than a typical user so perhaps a MRE can creatively be made to provide for more than one meal.

I’m not sure of the palataibility / health implications of living on MRE’s alone for an extended period though.

3. ankle says:

Perhaps he eats different cheese than I do (well, we often make our own), but it’s both filling and a good source of protein. For whatever that’s worth.

4. Phil says:

As a grad student, I had a credit card, and if necessary my parents’ bank account was only a desperate phone call away, so I never literally had to worry about where my next meal was coming from. But I never wanted to carry a balance on my card or to have to ask my parents for help, and I wasn’t really trying to save money on \$12K/year (in 1990), so it happened several times that I checked my bank account balance a week before my next paycheck and discovered that I had less than \$40 and sometimes less than \$20 to spend. When I got to that point, I would buy a bunch of potatoes, pasta, several cans of tomato sauce at \$0.70 each, a hunk of cheddar cheese (unfairly maligned by Palko), some frozen broccoli and other vegetables, a carton of eggs, and some of that old staple, ramen noodles. Lunch would be microwaved potato with a hunk of cheese and some broccoli; dinner was pasta with tomato sauce and carrots; late-night snack was ramen noodles with an egg stirred in, or a one-egg omelette with a few vegetables and some cheese… with some minor variations (such as putting tomato sauce on the potatoes) I could get through a week without too much of a feeling of hardship.

But: (1) I definitely agree with Palko’s point that this would be a stressful way to live week after week. As he puts it, “A crushed carton of eggs, a gallon of milk gone bad, an unreliable refrigerator, or just a mistake in planning at the wrong time can leave parents going without food so that the kids can eat.” Yeah…and I didn’t even have kids to worry about. And (2) I felt like I was achieving something \$20/week was an accomplishment to be proud of, but that was \$20/week in 1990 and there has been some inflation since then. And (3) I usually had a few things in the pantry at the start — a can of chili, a box of graham crackers, whatever — so even when I was living for a week on \$20, I wasn’t really, I was living for a week on \$20 plus some food I had at the start of the week. Trying to live week after week, month after month, on \$30/week…. that would be possible but really unpleasant. A bit of that is OK: people should have an incentive to find a job or to find a better job. But if someone has the best job they can find (if any) and they’re doing the best they can, and they have to try to live on \$30/week, they at least have my sympathy, and possibly my support in getting them some more help.

As for that cheese, yeah, it’s not the most nutritious stuff in the world per dollar, but it’s not bad (lots of calcium, riboflavin, and vitamin A, and a decent number of calories per dollar)…but mostly it delivers a lot of satisfaction per dollar. A baked potato with broccoli is OK; a baked potato with broccoli and melted cheese is something I looked forward to. Same with an egg scramble, or an otherwise plain bowl of pasta with tomato sauce. It’s a fast and easy way to add a lot of fat, flavor, and mouthfeel to other foods. If someone who is barely scraping by chooses to spend 10% of his food budget on cheese, I’m not going to call that a bad decision.

• Mark Palko says:

Phil,

My only issue with buying cheese was the prioritization. Shaich described real physical hardships from his diet. I suspect that three-fifty could have alleviated those hardships if spent better or he could have made other choices where the purchase made more sense. For example, switching out the dry cereal (without milk, another questionable choice) for a two egg cheese omelet would have saved money and probably gotten him to lunch without hunger pains.

5. Joseph says:

The cheese issue is interesting. When I was extremely poor (a long time ago now), Kraft Dinner (macaroni and cheese — sometimes made without milk or with dried skim milk) was a dietary stable. Cheese is a comfort food that is actually potentially affordable.

I agree with the lack of potatoes. I would have starved without potatoes and 10 kg bags of rice.

I do think that Shaich may be inadvertently making a more important point — many of the critics of SNAP may well have no idea of the level of discipline and careful planning required to optimize a food budget under these conditions.

There is also an unexplored story as to why a program that is so lean and has a very low rate of overhead costs would be the place that people would focus cuts. Programs like SNAP are inexpensive — 78 million in 2012 on a 2.5 trillion dollar budget. Why is it a focus for reform? Is it too generous? Is it poorly targeted?

• Your point about an unexplored story is really important and this is is an excellent example of trying to do a good job of measuring a completely irrelevant variable. SNAP is relatively efficient and it does its job of keeping children and vulnerable adults from going hungry. A much more interesting thing to measure would be why it draws such negative attention when the program itself is working quite well and meeting a goal “everyone” agrees is worthwhile.

• phonon says:

SNAP had a \$74.6 *billion* budget in 2012, not \$78 million. That’s about double the combined NIH and NSF budget.

6. phonon says:

The conceptual flaw behind this experiment makes the effort moot. SNAP does not expect you to create a well balanced diet at \$4.50 per day. The maximum SNAP benefit for a single person is \$200/m, or about \$6.50 per day. \$4.50 is the *average* for people people who receive partial benefits (because they make enough to only need *supplementary* assistance.)