How are Snap Benefits Spent? Evidence from a Retail Panel

65 Pages Posted: 30 Jan 2017 Last revised: 17 Feb 2017

Justine S. Hastings

Brown University; National Bureau of Economic Research (NBER)

Jesse M. Shapiro

Brown University; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2017

Abstract

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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Suggested Citation

Hastings, Justine and Shapiro, Jesse M., How are Snap Benefits Spent? Evidence from a Retail Panel (January 2017). NBER Working Paper No. w23112. Available at SSRN: https://ssrn.com/abstract=2907915

Justine Hastings (Contact Author)

Brown University ( email )

Box 1860
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jesse M. Shapiro

Brown University ( email )

64 Waterman Street
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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