How Did Consumers Change Their Grocery Spending in Response to Changes in SNAP Benefit Generosity?

• In Event: Strengthening Public Benefits to Support Family Financial Resilience

Abstract

Federally funded nutrition assistance programs are often the first line of defense against hunger for families. These programs (such as SNAP) have been shown to reduce food insecurity and increase consumption. In recent years, a deep body of scholarship has documented that expanded state and federal nutrition programs between 2020 and 2021 reduced food insufficiency and poverty below pre-pandemic levels, largely using self-reported survey data. 

Using 21 waves of product-level food transaction data from 8,299 unique households between March 2020 to December 2022 (provided by Circana Consumer Network), we explore (1) to what extent SNAP households’ food spending (including the mix of foods they purchased, aggregate purchase amounts, and payment types used) shifted following the removal of SNAP emergency allotments (EAs), (2) if there were differences in household responses by race or family composition, and (3) if households’ spending responses were dynamic in the six months following policy removal. We use imputation difference-in-difference static and dynamic (event study) models using Borusyak et al. (2024)’s methodology to estimate policy impact. We test model assumptions using the Goodman-Bacon decomposition and test the robustness of impact estimates using Calloway and Sant’Anna, TWFE, and stacked difference-in-difference models.

We find that households participating in SNAP reduced their aggregate food purchasing after SNAP EAs were removed. On average, total aggregate monthly grocery spending fell by nearly $13, or 4.8 percent, although Black-headed households and households with children experienced relative reductions twice as large. Dynamic models suggest that these declines in spending are sustained in the six months following policy removal. Despite reductions in aggregate purchases, consumers are inframarginal and don’t decrease spending to fully compensate for the loss of SNAP benefits. Instead, SNAP households partially compensate by shifting to paying for groceries with cash (+15.1 percent) and/or credit cards (+24.1 percent). Shifting food spending to credit cards could be costly, if consumers do not repay these bills on time and incur interest and fees—which could result in elevated levels of financial distress. We also find evidence that SNAP households may not have substantially changed their overall consumption (in dollar terms) across key food categories, suggesting that they may be less sensitive to policy changes in terms of what they buy.

This analysis draws on novel, high-frequency administrative data to directly observe household consumption, providing policymakers with crucial information on how households respond to fluctuations in SNAP benefit generosity—and reveals potential ways that reductions in benefits could shape consumer decision-making.

Author

• Kassandra Martinchek, George Washington University
  Presenting Author