IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/23112.html
   My bibliography  Save this paper

How Are SNAP Benefits Spent? Evidence from a Retail Panel

Author

Listed:
  • Justine S. Hastings
  • Jesse M. Shapiro

Abstract

We use a novel retail panel with detailed transaction records to study the effect of the Supplemental Nutrition Assistance Program (SNAP) on household 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.

Suggested Citation

  • Justine S. Hastings & Jesse M. Shapiro, 2017. "How Are SNAP Benefits Spent? Evidence from a Retail Panel," NBER Working Papers 23112, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23112
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w23112.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jonathan D. Ketcham & Nicolai V. Kuminoff & Christopher A. Powers, 2016. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Comment," American Economic Review, American Economic Association, vol. 106(12), pages 3932-3961, December.
    2. Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2009. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 109-139, October.
    3. Milkman, Katherine L. & Beshears, John, 2009. "Mental accounting and small windfalls: Evidence from an online grocer," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 384-394, August.
    4. Bart J. Bronnenberg & Jean-Pierre Dubé & Matthew Gentzkow & Jesse M. Shapiro, 2015. "Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1669-1726.
    5. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-788, September.
    6. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
    7. Jesse M. Shapiro, 2013. "Fungibility and Consumer Choice: Evidence from Commodity Price Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1449-1498.
    8. Pauline Leung & Christopher O'Leary, 2015. "Should UI Eligibility Be Expanded to Low-Earning Workers? Evidence on Employment, Transfer Receipt, and Income from Administrative Data," Working Papers 591, Princeton University, Department of Economics, Industrial Relations Section..
    9. Aviv Nevo & Arlene Wong, 2019. "The Elasticity Of Substitution Between Time And Market Goods: Evidence From The Great Recession," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(1), pages 25-51, February.
    10. Thompson, Samuel B., 2011. "Simple formulas for standard errors that cluster by both firm and time," Journal of Financial Economics, Elsevier, vol. 99(1), pages 1-10, January.
    11. Unknown, 2004. "Effects Of Food Assistance And Nutrition Programs On Nutrition And Health: Volume 3, Literature Review," Food Assistance and Nutrition Research Reports 33863, United States Department of Agriculture, Economic Research Service.
    12. repec:fth:prinin:468 is not listed on IDEAS
    13. Lutz Kilian, 2010. "Explaining Fluctuations in Gasoline Prices: A Joint Model of the Global Crude Oil Market and the U.S. Retail Gasoline Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 87-112.
    14. Kumcu, Aylin & Kaufman, Phillip R., 2011. "Food Spending Adjustments During Recessionary Times," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-8.
    15. Naomi E. Feldman, 2010. "Mental Accounting Effects of Income Tax Shifting," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 70-86, February.
    16. Martin Browning & Thomas F. Crossley & Joachim Winter, 2014. "The Measurement of Household Consumption Expenditures," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 475-501, August.
    17. Timothy K.M. Beatty & Charlotte J. Tuttle, 2015. "Expenditure Response to Increases in In-Kind Transfers: Evidence from the Supplemental Nutrition Assistance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 390-404.
    18. Wilde, Parke E. & Ranney, Christine K., 1996. "The Distinct Impact Of Food Stamps On Food Spending," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-12, July.
    19. Emmanuel Farhi & Xavier Gabaix, 2020. "Optimal Taxation with Behavioral Agents," American Economic Review, American Economic Association, vol. 110(1), pages 298-336, January.
    20. Moffitt, Robert, 1989. "Estimating the Value of an In-Kind Transfer: The Case of Food Stamps," Econometrica, Econometric Society, vol. 57(2), pages 385-409, March.
    21. Richard W. Blundell & Martin Browning & Ian A. Crawford, 2003. "Nonparametric Engel Curves and Revealed Preference," Econometrica, Econometric Society, vol. 71(1), pages 205-240, January.
    22. Diane Whitmore, 2002. "What Are Food Stamps Worth?," Working Papers 847, Princeton University, Department of Economics, Industrial Relations Section..
    23. Fox, Mary Kay & Hamilton, William L. & Lin, Biing-Hwan, 2004. "Effects Of Food Assistance And Nutrition Programs On Nutrition And Health: Volume 4, Executive Summary Of The Literature Review," Food Assistance and Nutrition Research Reports 33871, United States Department of Agriculture, Economic Research Service.
    24. Steven T. Yen & Margaret Andrews & Zhuo Chen & David B. Eastwood, 2008. "Food Stamp Program Participation and Food Insecurity: An Instrumental Variables Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 117-132.
    25. Diane Whitmore, 2002. "What Are Food Stamps Worth?," Working Papers 847, Princeton University, Department of Economics, Industrial Relations Section..
    26. Erich Battistin & Mario Padula, 2016. "Survey instruments and the reports of consumption expenditures: evidence from the consumer expenditure surveys," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 179(2), pages 559-581, February.
    27. Hal R. Varian, 1983. "Non-parametric Tests of Consumer Behaviour," Review of Economic Studies, Oxford University Press, vol. 50(1), pages 99-110.
    28. Laura Castner & James Mabli, "undated". "Low-Income Household Spending Patterns and Measures of Poverty," Mathematica Policy Research Reports 924e1d679b1f4b8aabdf7fca3, Mathematica Policy Research.
    29. Wilde, Parke E., 2001. "The Food Stamp Benefit Formula: Implications For Empirical Research On Food Demand," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(1), pages 1-16, July.
    30. Wilde, Parke E. & Troy, Lisa M. & Rogers, Beatrice L., 2008. "AJAE Appendix for “Food Stamps and Food Spending: an Engel Function Approach”," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 91(2), pages 1-9, June.
    31. Ver Ploeg, Michele & Mancino, Lisa & Todd, Jessica E. & Clay, Dawn Marie & Scharadin, Benjamin, 2015. "Where Do Americans Usually Shop for Food and How Do They Travel To Get There? Initial Findings from the National Household Food Acquisition and Purchase Survey," Economic Information Bulletin 262116, United States Department of Agriculture, Economic Research Service.
    32. Heath, Chip & Soll, Jack B, 1996. "Mental Budgeting and Consumer Decisions," Journal of Consumer Research, Oxford University Press, vol. 23(1), pages 40-52, June.
    33. Nord, Mark & Prell, Mark, 2011. "Food Security Improved Following the 2009 ARRA Increase in SNAP Benefits," Economic Research Report 262242, United States Department of Agriculture, Economic Research Service.
    34. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
    35. Congressional Budget Office, 2012. "The Supplemental Nutrition Assistance Program," Reports 43173, Congressional Budget Office.
    36. repec:mpr:mprres:6601 is not listed on IDEAS
    37. Congressional Budget Office, 2012. "The Supplemental Nutrition Assistance Program," Reports 43173, Congressional Budget Office.
    38. Caroline Ratcliffe & Signe-Mary McKernan & Sisi Zhang, 2011. "How Much Does the Supplemental Nutrition Assistance Program Reduce Food Insecurity?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(4), pages 1082-1098.
    39. Peter Kooreman, 2000. "The Labeling Effect of a Child Benefit System," American Economic Review, American Economic Association, vol. 90(3), pages 571-583, June.
    40. Naeem Ahmed & Matthew Brzozowski & Thomas Crossley, 2006. "Measurement errors in recall food consumption data," IFS Working Papers W06/21, Institute for Fiscal Studies.
    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. Almada, Lorenzo N. & Tchernis, Rusty, 2018. "Measuring effects of SNAP on obesity at the intensive margin," Economics & Human Biology, Elsevier, vol. 31(C), pages 150-163.
    2. Lusk, Jayson L. & Weaver, Amanda, 2017. "An experiment on cash and in-kind transfers with application to food assistance programs," Food Policy, Elsevier, vol. 68(C), pages 186-192.
    3. Tuttle, Charlotte, 2016. "The Stimulus Act of 2009 and Its Effect on Food-At-Home Spending by SNAP Participants," Economic Research Report 262193, United States Department of Agriculture, Economic Research Service.
    4. Partha Deb & Christian A. Gregory, 2016. "Who Benefits Most from SNAP? A Study of Food Security and Food Spending," NBER Working Papers 22977, National Bureau of Economic Research, Inc.
    5. Gregory, Christian & Deb, Partha, 2016. "Who Benefits Most from SNAP?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236648, Agricultural and Applied Economics Association.
    6. James Mabli & Jim Ohls & Lisa Dragoset & Laura Castner & Betsy Santos, "undated". "Measuring the Effect of Supplemental Nutrition Assistance Program (SNAP) Participation on Food Security," Mathematica Policy Research Reports 69d901432c7a46779666a240a, Mathematica Policy Research.
    7. Tiehen, Laura & Jolliffe, Dean & Gundersen, Craig, 2012. "How State Policies Influence the Efficacy of the Supplemental Nutrition Assistance Program in Reducing Poverty," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124937, Agricultural and Applied Economics Association.
    8. Beatty, Timothy K.M. & Blow, Laura & Crossley, Thomas F. & O'Dea, Cormac, 2014. "Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment," Journal of Public Economics, Elsevier, vol. 118(C), pages 86-96.
    9. Griffith, Rachel & von Hinke, Stephanie & Smith, Sarah, 2018. "Getting a healthy start: The effectiveness of targeted benefits for improving dietary choices," Journal of Health Economics, Elsevier, vol. 58(C), pages 176-187.
    10. Jacob Alex Klerman & Anne Wolf & Ann Collins & Stephen Bell & Ronette Briefel, 2017. "The Effects the Summer Electronic Benefits Transfer for Children Demonstration has on Children’s Food Security," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(3), pages 516-532.
    11. Burney, Shaheer, 2018. "In-kind benefits and household behavior: The impact of SNAP on food-away-from-home consumption," Food Policy, Elsevier, vol. 75(C), pages 134-146.
    12. repec:mpr:mprres:7859 is not listed on IDEAS
    13. Burney, Shaheer & Boehm, Rebecca & Lopez, Rigoberto, 2021. "The impact of the ACA Medicaid expansion on SNAP participation," Food Policy, Elsevier, vol. 101(C).
    14. Huang, Jiaqi & Antonides, Gerrit & Nie, Fengying, 2020. "Is mental accounting of farm produce associated with more consumption of own-produced food?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 88(C).
    15. Wang, Julia Shu-Huah & Zhao, Xi & Nam, Jaehyun, 2021. "The effects of welfare participation on parenting stress and parental engagement using an instrumental variables approach: Evidence from the Supplemental Nutrition Assistance Program," Children and Youth Services Review, Elsevier, vol. 121(C).
    16. Irma Arteaga & Colleen Heflin & Leslie Hodges, 2018. "SNAP Benefits and Pregnancy-Related Emergency Room Visits," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 37(6), pages 1031-1052, December.
    17. Oliveira, Victor & Prell, Mark & Tiehen, Laura & Smallwood, David, 2018. "Design Issues in USDA’s Supplemental Nutrition Assistance Program: Looking Ahead by Looking Back," Economic Research Report 276253, United States Department of Agriculture, Economic Research Service.
    18. Sherry Glied, 2022. "Presidential Address: Connecting the Dots: Turning Research Evidence into Evidence for Policymaking," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(3), pages 676-682, June.
    19. Hudak, Katelin M. & Racine, Elizabeth F., 2021. "Do additional SNAP benefits matter for child weight?: Evidence from the 2009 benefit increase," Economics & Human Biology, Elsevier, vol. 41(C).
    20. Rachel Griffith & Sarah Smith & Stephanie von Hinke Kessler Scholder, 2014. "Getting a healthy start? Nudge versus economic incentives," The Centre for Market and Public Organisation 14/328, The Centre for Market and Public Organisation, University of Bristol, UK.
    21. Neeraj Kaushal & Qin Gao, 2011. "Food Stamp Program and Consumption Choices," NBER Chapters, in: Economic Aspects of Obesity, pages 223-247, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • 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:nbr:nberwo:23112. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    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: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.