SNAP Take-Up and Transaction Costs: An Analysis Using the Food Security Survey

Abstract

SNAP, commonly known as food stamps, has relatively low take up by eligible participants. In this paper, I exploit a pseudopanel of SNAP-eligible households created from the Food Security Survey, as well as the FDA's Economic Research Service's SNAP Policy Index, to explore how different households respond to changes in transaction costs. I find that middle-quintile households tend to be the most marginal households and will respond to an increase in cost by not applying for SNAP benefits. Lowest-quintile households tend to be less responsive to a change in cost and thus bare a greater burden when transaction costs are increased. Highest-quintile households are unaffected as they generally do not participate in the market for SNAP benefits. I then discuss implications of this heterogeneity for public policy.

Keywords: Transaction Costs, Welfare Economics, Food Stamps, Poverty

JEL Classification: D12, D61, H42, H75, I38, K32