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. The effects of such restrictions on consumption are unclear, however, since most households can simply switch to buying sugary drinks with non-SNAP funds. Using a 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 12.4 percent (standard error = 1.0) over the first half of 2026. In states that excluded only some sugary drinks, SNAP households partially substituted to non-excluded drinks. Surveys we carried out before and after implementation show that the restrictions increased SNAP recipients’ perceptions of stigma. We combine our estimated consumption reductions with external parameters to model welfare effects given an over-consumption internality and a fiscal externality via public health care spending. In our model, excluding all sugary drinks from SNAP nationwide would provide benefits of about $1.1 billion per year, of which about 70 percent is from reduced health care costs.

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