School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program

51 Pages Posted: 18 Oct 2021 Last revised: 16 Apr 2023

See all articles by Jessie Handbury

Jessie Handbury

University of Pennsylvania, The Wharton School

Sarah Moshary

University of Chicago

Multiple version iconThere are 2 versions of this paper

Date Written: October 2021

Abstract

We study the private market response to the National School Lunch Program, documenting economically meaningful spillovers to non-recipients. We focus on the Community Eligibility Provision (CEP), an expansion of the lunch program under the 2010 Healthy, Hunger-Free Kids Act. Under the CEP, participating schools offer free lunch to all students. We leverage both the staggered roll-out and eligibility criterion for the CEP, which is limited to schools where at least 40% of students participate in other means-tested welfare programs. We find that local adoption of the CEP causes households with children to reduce their grocery purchases, leading to a 10% decline in grocery sales at large retail chains. Retailers respond with chain-level price adjustments: chains with the most exposure lower prices by 2.5% across all outlets in the years following adoption, so that the program's welfare benefits propagate spatially. Using a stylized model of grocery demand, we estimate that, by 2016, the indirect benefit had reduced grocery costs for the median household by approximately 4.5%.

Suggested Citation

Handbury, Jessie and Moshary, Sarah, School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program (October 2021). NBER Working Paper No. w29384, Available at SSRN: https://ssrn.com/abstract=3944432

Jessie Handbury (Contact Author)

University of Pennsylvania, The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104
United States

Sarah Moshary

University of Chicago

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