SNAP and Food Consumption among the Elderly: A Collective Household Approach with Homescan Data

Abstract

How should we evaluate transfer programs when the targeted households are composed of individuals with heterogeneous preferences, asymmetric bargaining power, and disparate incentives to share public goods? This paper estimates a collective household model for evaluating the Supplemental Nutrition Assistance Program (SNAP) among older households. I use longitudinal Homescan data to identify SNAP-eligible food. I find that husbands have relatively stronger preferences for food than wives, and that household demand is affected by bargaining power (i.e., control over resources) within households. Failure to account for this difference in preferences and control leads to underestimates of elderly couples' total food demand, and of their implied response (at both intensive and extensive margins) to a counterfactual experiment of replacing SNAP with a cash transfer program. I find that for most eligible older households, their SNAP-eligible spending given the cash transfer is above the program's needs standard. Their spending patterns suggest that low income is the main reason for food insecurity, not that they have different preferences from richer households. Overall these findings imply that grocery vouchers or cash transfers would be more cost-effective than in-kind transfers among older households.