How do government transfer payments affect retail prices and welfare? Evidence from SNAP

Justin H. Leung and Hee Kwon Seo

Journal of Public Economics, 2023, vol. 217, issue C

Abstract: We study the effect of the Supplemental Nutrition Assistance Program (SNAP) on retail prices nationwide. State-level program adjustments motivate our identification strategy. A 1% increase in benefits per population raises grocery prices by a persistent 0.08%. A calibrated partial-equilibrium model implies a marginal benefit dollar raises a recipient’s consumer surplus from groceries by $0.7, producer surplus by $0.5, and lowers each non-SNAP consumer’s surplus by $0.05, because of a large marginal-propensity-to-consume-food out of SNAP, low elasticities of demand, and moderate market power. To guarantee the real intended spending power on food, benefits should be increased by 7%.

Keywords: Consumption; SNAP; food stamps; incidence; prices (search for similar items in EconPapers)
JEL-codes: E31 H53 I38 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:217:y:2023:i:c:s0047272722001621

DOI: 10.1016/j.jpubeco.2022.104760

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