IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp16452.html
   My bibliography  Save this paper

Government Shutdown and SNAP Disbursements: Effects on Household Expenditures

Author

Listed:
  • Marks, Mindy

    (Northeastern University)

  • Prina, Silvia

    (Northeastern University)

  • Gernhardt, Roy

    (Northeastern University)

Abstract

We test the ability of SNAP eligible households to smooth consumption when facing unexpected transitory income shocks stemming from the 2018-19 government shutdown. In response to the shutdown, all states were federally mandated to pay February SNAP benefits on or before January 20th. This created a short-term windfall (two payments very close to each other) followed by a longer than normal gap during which no SNAP disbursements were received. We show that expenditures are lower in the month where benefits where advanced vis-à-vis months with unaltered benefits schedules. We complement this finding by exploiting preexisting state-level differences in disbursement schedules that drove some states to temporarily alter the timing of the 2019 March and April SNAP disbursements. These diff-in-diff results show that households in treated states reduced spending when there was a longer than usual gap between SNAP disbursements. Our findings are inconsistent with the permanent income hypothesis.

Suggested Citation

  • Marks, Mindy & Prina, Silvia & Gernhardt, Roy, 2023. "Government Shutdown and SNAP Disbursements: Effects on Household Expenditures," IZA Discussion Papers 16452, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16452
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp16452.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gray, Colin, 2019. "Leaving benefits on the table: Evidence from SNAP," Journal of Public Economics, Elsevier, vol. 179(C).
    2. Jeffrey H Dorfman & Christian Gregory & Zhongyuan Liu & Ran Huo, 2019. "Re‐Examining the SNAP Benefit Cycle Allowing for Heterogeneity," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(3), pages 404-433, September.
    3. Christian A. Gregory & Travis A. Smith, 2019. "Salience, Food Security, and SNAP Receipt," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(1), pages 124-154, January.
    4. Angelucci, Manuela & Chiapa, Carlos & Prina, Silvia & Rojas, Irvin, 2024. "Transitory income changes and consumption smoothing: Evidence from Mexico," Journal of Public Economics, Elsevier, vol. 230(C).
    5. Einav, Liran & Leibtag, Ephraim S. & Nevo, Aviv, 2008. "On the Accuracy of Nielsen Homescan Data," Economic Research Report 56490, United States Department of Agriculture, Economic Research Service.
    6. Melvin Stephens Jr., 2003. ""3rd of tha Month": Do Social Security Recipients Smooth Consumption Between Checks?," American Economic Review, American Economic Association, vol. 93(1), pages 406-422, March.
    7. Emma Aguila & Arie Kapteyn & Francisco Perez-Arce, 2017. "Consumption Smoothing and Frequency of Benefit Payments of Cash Transfer Programs," American Economic Review, American Economic Association, vol. 107(5), pages 430-435, May.
    8. Kuhn, Michael A., 2018. "Who feels the calorie crunch and when? The impact of school meals on cyclical food insecurity," Journal of Public Economics, Elsevier, vol. 166(C), pages 27-38.
    9. Shapiro, Matthew D & Slemrod, Joel, 1995. "Consumer Response to the Timing of Income: Evidence from a Change in Tax Withholding," American Economic Review, American Economic Association, vol. 85(1), pages 274-283, March.
    10. Amy Finkelstein & Matthew J Notowidigdo, 2019. "Take-Up and Targeting: Experimental Evidence from SNAP," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1505-1556.
    11. East, Chloe N. & Kuka, Elira, 2015. "Reexamining the consumption smoothing benefits of Unemployment Insurance," Journal of Public Economics, Elsevier, vol. 132(C), pages 32-50.
    12. Tullio Jappelli & Luigi Pistaferri, 2010. "The Consumption Response to Income Changes," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 479-506, September.
    13. Carolina Kansikas & Anandi Mani & Paul Niehaus, 2023. "Customized Cash Transfers: Financial Lives and Cash-flow Preferences in Rural Kenya," NBER Working Papers 30930, National Bureau of Economic Research, Inc.
    14. Parke E. Wilde & Christine K. Ranney, 2000. "The Monthly Food Stamp Cycle: Shooping Frequency and Food Intake Decisions in an Endogenous Switching Regression Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 200-213.
    15. Shapiro, Jesse M., 2005. "Is there a daily discount rate? Evidence from the food stamp nutrition cycle," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 303-325, February.
    16. Wilcox, David W, 1989. "Social Security Benefits, Consumption Expenditure, and the Life Cycle Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 288-304, April.
    17. Justine Hastings & Ebonya Washington, 2010. "The First of the Month Effect: Consumer Behavior and Store Responses," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 142-162, May.
    18. Elena Castellari & Chad Cotti & John Gordanier & Orgul Ozturk, 2017. "Does the Timing of Food Stamp Distribution Matter? A Panel‐Data Analysis of Monthly Purchasing Patterns of US Households," Health Economics, John Wiley & Sons, Ltd., vol. 26(11), pages 1380-1393, November.
    19. Nicholas S. Souleles, 1999. "The Response of Household Consumption to Income Tax Refunds," American Economic Review, American Economic Association, vol. 89(4), pages 947-958, September.
    20. repec:mpr:mprres:8036 is not listed on IDEAS
    21. Jessica E. Todd, 2015. "Revisiting the Supplemental Nutrition Assistance Program cycle of food intake: Investigating heterogeneity, diet quality, and a large boost in benefit amounts," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(3), pages 437-458.
    22. Cotti, Chad D. & Gordanier, John M. & Ozturk, Orgul D., 2020. "Hunger pains? SNAP timing and emergency room visits," Journal of Health Economics, Elsevier, vol. 71(C).
    23. Damon, Amy L. & King, Robert P. & Leibtag, Ephraim, 2013. "First of the month effect: Does it apply across food retail channels?," Food Policy, Elsevier, vol. 41(C), pages 18-27.
    24. Leandro S. Carvalho & Stephan Meier & Stephanie W. Wang, 2016. "Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday," American Economic Review, American Economic Association, vol. 106(2), pages 260-284, February.
    25. Anne T. Byrne & David R. Just, 2021. "The Other Half: An Examination of Monthly Food Pantry Cycles in the Context of SNAP Benefits," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 716-731, June.
    26. Jonathan A. Parker, 1999. "The Reaction of Household Consumption to Predictable Changes in Social Security Taxes," American Economic Review, American Economic Association, vol. 89(4), pages 959-973, September.
    27. Mark Aguiar & Erik Hurst, 2007. "Life-Cycle Prices and Production," American Economic Review, American Economic Association, vol. 97(5), pages 1533-1559, December.
    28. Karen S Hamrick & Margaret Andrews, 2016. "SNAP Participants’ Eating Patterns over the Benefit Month: A Time Use Perspective," PLOS ONE, Public Library of Science, vol. 11(7), pages 1-18, July.
    29. Chloe N. East, 2020. "The Effect of Food Stamps on Children’s Health: Evidence from Immigrants’ Changing Eligibility," Journal of Human Resources, University of Wisconsin Press, vol. 55(2), pages 387-427.
    30. Scott Ross Baker & Contantine Yannelis, 2017. "Income Changes and Consumption: Evidence from the 2013 Federal Government Shutdown," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 99-124, January.
    31. Jillian B. Carr & Analisa Packham, 2019. "SNAP Benefits and Crime: Evidence from Changing Disbursement Schedules," The Review of Economics and Statistics, MIT Press, vol. 101(2), pages 310-325, May.
    32. Steve Holt, 2009. "Beyond lump sum: periodic payment of the earned income tax credit," Community Investments, Federal Reserve Bank of San Francisco, vol. 21(Spr), pages 26-3139-40.
    33. Stephens Melvin, 2006. "Paycheque Receipt and the Timing of Consumption," Economic Journal, Royal Economic Society, vol. 116(513), pages 680-701, July.
    34. Tiehen, Laura & Newman, Constance & Kirlin, John A., 2017. "The Food-Spending Patterns of Households Participating in the Supplemental Nutrition Assistance Program: Findings From USDA's FoodAPS," Economic Information Bulletin 262461, United States Department of Agriculture, Economic Research Service.
    35. Cotti, Chad D. & Gordanier, John M. & Ozturk, Orgul D., 2021. "Does distributing SNAP benefits later in the month smooth expenditures?," Food Policy, Elsevier, vol. 104(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marks, Mindy & Prina, Silvia & Tahaj, Redina, 2024. "Short-term labor supply response to the timing of transfer payments: Evidence from the SNAP program," Labour Economics, Elsevier, vol. 91(C).
    2. Dahan, Momi & Sayag, Doron, 2024. "Scarcity and consumption priorities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    3. Cotti, Chad D. & Gordanier, John M. & Ozturk, Orgul D., 2021. "Does distributing SNAP benefits later in the month smooth expenditures?," Food Policy, Elsevier, vol. 104(C).
    4. Marco T. C. Stam & Marike G. Knoef & Anke A. T. Ramakers, 2024. "Crime over the welfare payment cycle," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1309-1334, July.
    5. Pourya Valizadeh & Travis A. Smith & Michele Ver Ploeg, 2021. "Do SNAP Households Pay Different Prices throughout the Benefit Month?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 1051-1075, September.
    6. Lee, Ji Yong & Nayga Jr, Rodolfo M. & Jo, Young & Restrepo, Brandon J., 2022. "Time use and eating patterns of SNAP participants over the benefit month," Food Policy, Elsevier, vol. 106(C).
    7. Melvin Stephens & Takashi Unayama, 2011. "The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 86-118, October.
    8. Michael A. Kuhn, 2021. "Electronic Benefit Transfer and Food Expenditure Cycles," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(3), pages 744-773, June.
    9. Arna Vardardottir & Michaela Pagel, 2016. "The Liquid Hand-to-Mouth: Evidence from a Personal Finance Management Software," 2016 Meeting Papers 789, Society for Economic Dynamics.
    10. Arna Olafsson & Michaela Pagel, 2018. "The Liquid Hand-to-Mouth: Evidence from Personal Finance Management Software," The Review of Financial Studies, Society for Financial Studies, vol. 31(11), pages 4398-4446.
    11. Timothy K. M. Beatty & Marianne P. Bitler & Xinzhe Huang Cheng & Cynthia van der Werf, 2019. "SNAP and Paycheck Cycles," Southern Economic Journal, John Wiley & Sons, vol. 86(1), pages 18-48, July.
    12. Fuchs-Schündeln, N. & Hassan, T.A., 2016. "Natural Experiments in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 923-1012, Elsevier.
    13. Jillian B. Carr & Analisa Packham, 2021. "SNAP Schedules and Domestic Violence," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(2), pages 412-452, March.
    14. Katherine Harris‐Lagoudakis & Hannah Wich, 2024. "Purchases over the SNAP benefit cycle: Evidence from supermarket panel data," Economic Inquiry, Western Economic Association International, vol. 62(4), pages 1426-1448, October.
    15. Todd, Jessica E. & Gregory, Christian, 2018. "Changes in Supplemental Nutrition Assistance Program real benefits and daily caloric intake among adults," Food Policy, Elsevier, vol. 79(C), pages 111-120.
    16. Elena Castellari & Chad Cotti & John Gordanier & Orgul Ozturk, 2017. "Does the Timing of Food Stamp Distribution Matter? A Panel‐Data Analysis of Monthly Purchasing Patterns of US Households," Health Economics, John Wiley & Sons, Ltd., vol. 26(11), pages 1380-1393, November.
    17. Schanzenbach, Diane Whitmore, 2023. "Understanding SNAP: An overview of recent research," Food Policy, Elsevier, vol. 114(C).
    18. Cotti, Chad & Gordanier, John & Ozturk, Orgul, 2018. "When does it count? The timing of food stamp receipt and educational performance," Economics of Education Review, Elsevier, vol. 66(C), pages 40-50.
    19. Tal Gross & Timothy J. Layton & Daniel Prinz, 2022. "The Liquidity Sensitivity of Healthcare Consumption: Evidence from Social Security Payments," American Economic Review: Insights, American Economic Association, vol. 4(2), pages 175-190, June.
    20. Dora Gicheva & Justine Hastings & Sofia Villas-Boas, 2007. "Revisiting the Income Effect: Gasoline Prices and Grocery Purchases," NBER Working Papers 13614, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    consumption smoothing; permanent income hypothesis; SNAP; government shutdown;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp16452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.