SNAP Eligible Products and Behavioral Demand

Abstract

This paper evaluates demand and nutrition when making unhealthy products, like soda, ineligible for purchase with Supplemental Nutrition Assistance Program (SNAP) benefits. We utilize policy variation in product eligibility for purchase with SNAP benefits to identify how eligibility contributes to differences in the marginal propensity to consume. Difference-in-Difference estimates suggest a 14 to 21 percent decline in soda purchases if soda was made ineligible for purchase with SNAP benefits. We then estimate a structural behavioral model that incorporates mental accounting to rationalize observed spending patterns. Our model predicts soda purchases would decline by 18 percent if soda were made ineligible for purchase with SNAP benefits. Our model simultaneously predicts that juice purchases would increase by 7 percent, resulting in an almost 7 percent decrease in total sugars purchased from beverages. These findings highlight the potential of modifying SNAP to promote healthier choices and improve public health.

JEL Classification: D12, I12, I18, I38, L66