Association for Public Policy Analysis & Management

The amount of federal funds allocated toward SNAP is an ongoing policy debate. While advocates for an increase in monthly benefits assert higher benefits enable participants access to more nutritious foods, opponents of higher benefits are concerned with whether participants allocate benefits toward unhealthy food or unnecessary expenditure. Exploiting recent policies that cause exogenous changes to benefit levels received by participants allows us to ask how changes in benefits affect household spending choices. The American Recovery and Reinvestment Act of 2009 (ARRA) increased Supplemental Nutrition Assistance Program (SNAP) benefits by nearly 14% in order to address the consequences of the economic downturn. On November 1, 2013, ARRA expired and benefits returned to their original value causing a $36 drop in monthly benefits for a family of four. This paper examines how the ARRA sunset affected food and non-food expenditure of SNAP participants to determine if lower benefits cause households to not only decrease food expenditure but adjust other household expenditure due to fewer resources.

Recent research has consistently shown that the Marginal Propensity to Spend (MPS) on food is greater out of SNAP than out of cash. This implies higher SNAP benefits disproportionately increases food spending compared to non-food spending. However, the results also indicate that the MPS out of SNAP is less than one, meaning changes in SNAP benefits will undoubtedly affect food and non-food spending. Using the Consumer Expenditure Survey during the years 2012 through 2014, we use a difference-in-difference approach to compare expenditure choices of SNAP households with those of similar non-participant households before and after the ARRA sunset.

The result of this project would be highly relevant to ongoing debate about SNAP generosity. As an in-kind transfer, SNAP is not meant to be a general assistance program; any effects it has on overall consumption through impacts on non-food expenditures are unintended. If the changes in benefit size lead to changes in not only food spending, but also households’ other necessary non-food spending, the broader impact of SNAP on households’ overall spending pattern may be reevaluated. This, ultimately, could be translated into further consequences on various lifetime outcomes such as crime, health, long-term poverty, or education of low-income households.