How Do Government Transfer Payments Affect Retail Prices and Welfare? : Evidence from SNAP

How Do Government Transfer Payments Affect Retail Prices and Welfare? : Evidence from SNAP

This paper studies the effect of the Supplemental Nutrition Assistance Program (SNAP) on retail prices in the United States. State-level program adjustments motivate the identification strategy. A 1 percent increase in benefits per population raise...

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Bibliographic Details
Main Authors: Leung, Justin H., Hee Kwon (Samuel) Seo
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2022
Subjects:
CONSUMPTION
FOOD STAMPS
INCIDENCE
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)
FOOD PRICE FLUCTUATION
FOOD SECURITY
SOCIAL SAFETY NET
ELECTRONIC FOOD BENEFITS
REAL VALUE OF SNAP
FOOD INFLATION
GOVERNMENT TRANSFER SPENDING POWER
Online Access:http://documents.worldbank.org/curated/en/099456206072258657/IDU0a6985a3f0ac4a04d2809d4801775fc4a42d7
http://hdl.handle.net/10986/37515
Description
Summary:This paper studies the effect of the Supplemental Nutrition Assistance Program (SNAP) on retail prices in the United States. State-level program adjustments motivate the identification strategy. A 1 percent increase in benefits per population raises grocery prices by a persistent 0.08 percent. A calibrated partial-equilibrium model implies a marginal benefit dollar raises a recipient’s consumer surplus from groceries by $0.7, producer surplus by $0.5, and lowers each non-SNAP consumer’s surplus by $0.05, because of a large marginal propensity to consume food out of SNAP, low elasticities of demand, and moderate market power. To guarantee the real intended spending power on food, benefits should be increased by 7 percent.

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