The Effects of SNAP Sugary Drink Restrictions on Consumption and Welfare

Hunt Allcott, Amy Finkelstein, Anna Grummon and Matthew Notowidigdo

No 35659, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: As of July 2026, 23 states had approved policies that disallow spending of SNAP benefits on sugary drinks. However, since most households can simply switch to buying sugary drinks with non-SNAP funds, the effects of such restrictions on consumption are unclear, and there are concerns that the restrictions could stigmatize SNAP recipients. Using a pre-specified difference-in-differences design with nationwide grocery purchase panel data, we estimate that restrictions in the first 10 states reduced the average SNAP household’s retail purchases of excluded drinks by 12 percent over the first half of 2026. In states that excluded only some sugary drinks, SNAP households partially substituted to non-excluded drinks. In population health and consumer choice models calibrated with our estimated consumption effect and external estimates of health effects and internalities, excluding all sugary drinks from SNAP nationwide would reduce publicly funded health care costs by $800 million per year and increase SNAP recipients’ consumption utility by $340 million per year. However, surveys we carried out before and after implementation show that the restrictions increased SNAP recipients’ perceptions of stigma by 0.17 standard deviations. When monetized via contingent valuation surveys, the stigma costs imposed on SNAP recipients by nationwide restrictions would be $430 to $660 million per year. Restrictions thus appear to harm SNAP recipients but increase social welfare because of the large fiscal externality from health care costs.

JEL-codes: H0 (search for similar items in EconPapers)
Date: 2026-08
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