Working Paper: NBER ID: w23112
Authors: Justine S. Hastings; Jesse M. Shapiro
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.
Keywords: SNAP; Household Spending; Marginal Propensity to Consume; Mental Accounting
JEL Codes: D12; H31; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| SNAP benefits are treated distinctly from cash income (H53) | spending behavior (D12) |
| SNAP benefits (I38) | food spending (D12) |
| cash income (G29) | food spending (D12) |
| SNAP adoption (H53) | SNAP-eligible spending (H53) |
| SNAP adoption (H53) | marginal propensity to consume (MPC) from SNAP benefits (D19) |
| SNAP adoption (H53) | cash income spending (E21) |