This week, Scioto Analysis released a new cost-benefit analysis of universal free school meals in Ohio. We found that providing free school meals to all children would result in a net benefit of over $500 million per year. This is somewhat surprising, because Ohio already provides free school lunches to low-income children. This type of expansion would directly benefit children who come from relatively more affluent families.
If we make the broad assumption that universal school lunches would only impact families that have the resources to afford daily lunch on their own, then we might expect to see a different result. The reason for this is that this program would essentially serve as a cash transfer for these families, freeing up resources for them to spend on other things of their choosing. Assuming these families receive diminishing marginal benefits from this additional spending, it’s hard to imagine that we would see such positive results.
However, our study finds that the children who receive free school lunch would still see significant improvements in their current health and future earnings. This suggests that some of the people who are not currently eligible for free school lunches still might need them.
It is a reasonable idea to take certain programs and target them towards the people we expect to benefit the most. We live in a world with real budget constraints that are important and we should maximize the efficiency of our public spending. However, we don’t necessarily know what groups will benefit the most from certain programs.
Additionally, limiting access to social programs requires creating and enforcing enrollment requirements. This is the administrative sludge that is part of the cost of running any program. Stricter restrictions often come with more sludge, which can lead to less efficient outcomes.
One of the benefits of universal programs is that they are relatively simple to administer. Everyone gets it, which minimizes the need to verify enrollment. There needs to be some administration in order to make sure people receive benefits and to make sure people don’t claim benefits multiple times, but those are simpler tasks than doing things like verifying income levels and residency.
Another benefit of universal benefits is that they don’t leave behind any individuals who might benefit from a given program. This may sacrifice some efficiency if policymakers have a very good idea about what groups would receive the greatest marginal benefits, but overall it simplifies this targeting and reduces the risk of mistakes in the analysis process.
One final benefit of universal programs is that they do not suffer from benefit cliffs. This is the phenomenon where an individual may be disincentivized from increasing their wage income because doing so would disqualify them from some benefit, lowering their overall income. Since everyone receives the benefit, there is no incentive to reduce work output to qualify for benefits.
Making public benefits universal is probably not a good strategy for every social program. Some programs are designed to address very specific problems in our society and would not make sense if they were given to everyone (e.g. unemployment insurance, disability insurance, etc.). However, our study shows that there are parts of our social safety net that would be efficient to expand through universal provision. Policymakers should consider evaluating more programs and seeing if they would benefit from becoming provided universally.