Back when food stamps actually were stamps (they may still be in some places, but there has been a change to magnetic strip cards), I had an idea for a possible nudge. I had read that there was a problem with people using too much of their allotment at the beginning of each month, then running short of food at the end of each month. I thought that if the stamps were printed in four different colors, people would be subtly encouraged to spend them proportionally by week, with more stamps of one color for the extra days at the end of months over 28 days. Of course, this wouldn't be applicable to cards.
Another problem with buying most groceries at the beginning of the month is that fresh produce and meats would spoil before the later part of the month. The food stamp program, as implemented, encouraged people to buy processed foods that would last longer. This is nutritionally sub-optimal, contributing to health problems that already plague the American poor.
Now, Western Massachusetts is doing an experiment to see if offering a 30% discount on fresh produce will encourage food stamp users to buy more healthy food. That may be a substantial incentive, but it does not overcome the challenges of impulsivity and spoilage. This plan may also have negative unintended consequences, as we already have evidence that making healthy food cheaper just encourages food stamp users to use the savings to buy more junk food, increasing caloric intake and not improving nutrition. If this experiment reproduces the earlier findings that cheaper healthy food worsens obesity or health outcomes for food stamp users, we will have to consider other options, such as making unhealthy food more expensive.
Also, of course, there is the more effective paternalistic approach, which would be to only allow food stamps to be used for healthy foods. Food stamps can be seen as an investment that taxpayers are making into the overall health and well-being of citizens, and indirectly into productivity. If food stamps are being used in such a way that increases health care consumption, such as treatments for diabetes, heart disease, etc..., also on the taxpayer dime through CMS and state-reimbursed uncompensated care as well as increasing health care costs for everyone as hospitals shift costs to other payers, then we are all seeing a smaller and smaller return on the investment. If food stamps were used to help people be healthy, and minimize health care consumption, we are all getting a better return on the investment, and the people using food stamps will have better lives, even if they complain about not being able to buy the junk food they want.