The Effects of Benefit Timing and Income Fungibility on Food Purchasing Decisions Among Supplemental Nutrition Assistance Program Households
17 Pages Posted: 15 Apr 2020
Date Written: March 2016
The Supplemental Nutrition Assistance Program (SNAP) is the largest nutritional safety net in the United States. Prior research has found that participants have higher consumption shortly after receiving their benefits, followed by lower consumption towards the end of the benefit month. Known as the “SNAP benefit cycle,” this consumption pattern has been found to have negative effects on beneficiaries. We hypothesize two behavioral responses of SNAP participants may work in tandem to drive much of the cycle: (1) short‐run impatience—a higher preference to consume today, and (2) fungibility of income—the degree of substitutability between a SNAP dollar and a cash dollar. Using data from the National Food Acquisition and Purchase Survey (FoodAPS), a newly developed nationally representative survey of daily food acquisitions by SNAP households, we find evidence of both behavioral responses. However, the degree of short‐run impatience and fungibility of income is found to differ significantly across poverty levels and use of grocery lists to plan food purchases. SNAP households could gain from food purchase planning education.
Keywords: Fungibility of income, SNAP benefit cycle, time‐inconsistent preferences
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