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 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.
| Main Authors: | , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022-06
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| 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 |
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| 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. |
|---|