How Are SNAP Benefits Spent? Evidence from a Retail Panel

Justine S. Hastings, Jesse M. Shapiro

NBER Working Paper No. 23112
Issued in January 2017, Revised in March 2018
NBER Program(s):Public Economics

We use a novel retail panel with detailed transaction records to study the effect of the Supplemental Nutrition Assistance Program (SNAP) on household 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.

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Document Object Identifier (DOI): 10.3386/w23112

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