How Are SNAP Benefits Spent? Evidence from a Retail Panel
AbstractWe use a novel retail panel with detailed transaction records to study the effect of the Supplemental Nutrition Assistance Program (SNAP) on house-hold spending. We use administrative data to motivate three approaches to causal inference. The marginal propensity to consume SNAP-eligible food (MPCF) out of SNAP benefits is 0.5 to 0.6. The MPCF out of cash is much smaller. These patterns obtain even for households for whom SNAP benefits are economically equivalent to cash because their benefits are below their food spending. Using a semiparametric framework, we reject the hypothesis that households respect the fungibility of money. A model with mental accounting can match the facts.
CitationHastings, Justine, and Jesse M. Shapiro. 2018. "How Are SNAP Benefits Spent? Evidence from a Retail Panel." American Economic Review, 108 (12): 3493-3540. DOI: 10.1257/aer.20170866
- D12 Consumer Economics: Empirical Analysis
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I12 Health Behavior
- I18 Health: Government Policy; Regulation; Public Health
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs