Abstract
We study the effect of the Supplemental Nutrition Assistance Program (SNAP) on retail prices nationwide. State-level program adjustments motivate our identification strategy. A 1% increase in benefits per population raises grocery prices by a persistent 0.08%. 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%.
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