PROVIDENCE, R.I. [Brown University] – Approximately 15-20 percent of households in the U.S. are served by the Supplemental Nutrition Assistance Program (SNAP) each year, and a new study by PSTC economists Justine Hastings and Jesse Shapiro finds that those who receive SNAP benefits end up spending more on food than they would without benefits, and more than if they were given a cash benefit instead of SNAP.

Using a novel retail panel with detailed records for more than 500 million supermarket transactions, they find that every $100 a household receives in SNAP benefits results in an additional $50-60 spent on food each month. They argue that an equivalent cash benefit would only increase spending on food by around $10 per $100 of benefit.

Hastings and Shapiro also examine exactly how the benefits are spent and find that those using SNAP are less likely to use discount coupons or purchase store brand foods. “Our findings are consistent with what has been called ‘mental accounting.’ Households may see SNAP benefits as ‘food money’ and spend it accordingly,” Shapiro said.

In a related study, Hastings and Shapiro, along with coauthor Ryan Kessler, a PhD student in Brown’s economics department, find that an increase in spending on food doesn’t result in a significant increase in nutritional value, which is a stated goal of SNAP.

Read more about the first study here. It is forthcoming in the American Economic Review.