Agriculture

Demography

Ecology

Biology

Microeconomics

Panel data

Computer graphics (images)

Cash

Food security

Economics

Computer science

Market liquidity

Snap

Monetary economics

Econometrics

Sociology

Supplemental Nutrition Assistance Program

Finance

Marginal propensity to consume

Mental accounting

Food insecurity

Fungibility

Demographics

American Economic Review

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. (JEL D12, H75, I12, I18, I38)

How Are SNAP Benefits Spent? Evidence from a Retail Panel