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School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program

Author

Listed:
  • Jessie Handbury
  • Sarah Moshary

Abstract

We study the private market response to the National School Lunch Program, documenting economically meaningful spillovers to non-recipients. We focus on the Community Eligibility Provision (CEP), an expansion of the lunch program under the 2010 Healthy, Hunger-Free Kids Act. Under the CEP, participating schools offer free lunch to all students. We leverage both the staggered roll-out and eligibility criterion for the CEP, which is limited to schools where at least 40% of students participate in other means-tested welfare programs. We find that local adoption of the CEP causes households with children to reduce their grocery purchases, leading to a 10% decline in grocery sales at large retail chains. Retailers respond with chain-level price adjustments: chains with the most exposure lower prices by 2.5% across all outlets in the years following adoption, so that the program's welfare benefits propagate spatially. Using a stylized model of grocery demand, we estimate that, by 2016, the indirect benefit had reduced grocery costs for the median household by approximately 4.5%.

Suggested Citation

  • Jessie Handbury & Sarah Moshary, 2021. "School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program," NBER Working Papers 29384, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29384
    Note: CH ED IO ITI PE
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    Cited by:

    1. Juan Pablo Atal & José Ignacio Cuesta & Felipe González & Cristóbal Otero, 2024. "The Economics of the Public Option: Evidence from Local Pharmaceutical Markets," American Economic Review, American Economic Association, vol. 114(3), pages 615-644, March.
    2. Fernando Borraz & Felipe Carozzi & Nicolás González-Pampillón & Leandro Zipitría, 2021. "Local Retail Prices, Product Varieties and Neighborhood Change," Documentos de Trabajo (working papers) 0821, Department of Economics - dECON.
    3. Davis, Will & Kreisman, Daniel & Musaddiq, Tareena, 2023. "The Effect of Universal Free School Meals on Child BMI," IZA Discussion Papers 16387, Institute of Labor Economics (IZA).
    4. Marcus, Michelle & Yewell, Katherine G., 2022. "The Effect of Free School Meals on Household Food Purchases: Evidence from the Community Eligibility Provision," Journal of Health Economics, Elsevier, vol. 84(C).
    5. Dong, Xiao, 2022. "Lack of local pricing response in national retail chains during large and localized demand peaks: Evidence from college move-ins and instant noodles," Economics Letters, Elsevier, vol. 213(C).

    More about this item

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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