Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: Are Household Food Expenditures Responsive to Entry Onto the Supplemental Nutrition Assistance Program

Saturday, November 14, 2015 : 9:10 AM
Zamora (Hyatt Regency Miami)

*Names in bold indicate Presenter

Jiyoon Kim, University of Michigan
Because of growing size of the Supplemental Nutrition Assistance Program (SNAP) and unprecedented number of recipients, there has been substantial policy interest in evaluating the effects of program on individual and family outcomes. Among a wide range of outcomes, SNAP’s effect on households’ food security has been highlighted in the literature. The mechanism by which SNAP would reduce food insecurity is through expanding recipient households’ food budgets. Accordingly, direct evidence of SNAP’s ameliorative effect should be apparent in the food expenditures of these households, pre- and post-SNAP entry. Do food expenditures rise, fall, or remain stable in the months following program entry? Do SNAP dollars replace or supplement out-of-pocket spending? What other changes happen to a family around the time of SNAP entry? This paper delves into these questions by adopting an event-study framework to draw a month-to-month trends in food expenditures before and after SNAP entry. We use the Panel Study of Income Dynamics (PSID), the only panel dataset with measures of both household food expenditures and SNAP participation by month. Taking advantage of the PSID’s panel structure, we create an event-study analysis sample identified by the month relative to the SNAP entry. We then use these observations to track trends in household food expenditures for the twelve months prior to SNAP entry, and the twelve months. following SNAP entry. Our findings suggest that the SNAP shields new entrants from a substantial fall in food expenditures. Even after controlling for demographic characteristics as well as time and state fixed effects, our event-study estimation reveals that total food expenditures show a stable and smooth trend in the months surrounding SNAP entry. This is found to be largely due to SNAP replacing a great share of households’ food budget after program entry. We also demonstrate that there are household shocks that co-occur with SNAP entry, such as new spells of unemployment or marital dissolution, suggesting that these shocks may trigger SNAP entry.

Full Paper: