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How Are SNAP Benefits Spent? Evidence from a Retail Panel

Justine Hastings and Jesse Shapiro ()

American Economic Review, 2018, vol. 108, issue 12, 3493-3540

Abstract: We 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.

JEL-codes: D12 H75 I12 I18 I38 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20170866
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