Issuance and Incidence: SNAP Benefit Cycles and Grocery Prices

Abstract

Many safety net programs issue benefits as monthly lump-sum payments. We investigate how the timing of Supplemental Nutrition Assistance Program (SNAP) benefit issuance affects food purchases and the incidence of the transfer. Using scanner data from a large sample of grocery stores and state and time variation in SNAP issuance schedules, we document large, SNAP-induced intramonth cycles in food expenditures. However, we find that retailers do not adjust prices based on these predictable patterns of demand. Our results therefore suggest that reforming issuance schedules may reduce costs from SNAP-induced demand surges but are unlikely to affect the incidence of SNAP benefits. (JEL D12, H75, I18, I38, L81)

How do government transfer payments affect retail prices and welfare? Evidence from SNAP

“…We estimate that the MPCs for ineligible products and ineligible households are statistically insignificant and different from the MPCF out of SNAP for eligible households. Using cross-state variation in issuance schedules, we find that the MPCF out of SNAP is larger in weeks of benefit disbursement, complementing previous literature on impacts of issuance schedules (Goldin et al 2022). We also investigate the effect of SNAP on shopping behavior, and report small and mixed effects.…”

“…The supply-side responses of retailers have received less attention. A number of recent papers have investigated cross-state variation in within-month issuance schedules to investigate how quickly consumers exhaust their benefits upon receipt, and whether retail stores take advantage of these predictable expenditure phases (Hastings and Washington 2010;Goldin et al 2022). Jaravel (2018) studies relationships between SNAP take-up rates, prices, and product variety using consumer scanner data.…”

The Liquidity Sensitivity of Healthcare Consumption: Evidence from Social Security Payments

“…Evans and Moore (2011) demonstrate that the distribution of Social Security checks increases short-run mortality. Other studies explore how the arrival of paychecks and government benefits affect food consumption (Shapiro, 2005;Beatty et al, 2019), retailers' responses (Hastings andWashington, 2010;Cheng and Beatty, 2016;Goldin et al, 2019), hospitalizations (Dobkin and Puller, 2007), crime (Foley, 2011), financial decision-making (Carvalho et al, 2016), and aggregate economic activity (Berniell, 2019). Still other studies focus on income shocks that are less anticipated, such as tax rebates and fiscal-stimulus payments.…”

Essays on Household Spending and the Social Safety Net

“…24 Another potential confound is if grocery prices fall in weeks with access to the SFSP. However, Goldin, Homonoff, and Meckel (2022) find that retailers do not change prices across weeks within a month in response to SNAP benefit cycles, which cause predictable changes to customer composition and food spending. It is unlikely that retailers change prices in response to the SFSP when they do not respond to SNAP benefit cycles, as the SFSP is a much smaller program and does not follow a predictable schedule.…”