Department of Economics
February 12, 2017

SNAP benefits are actually used for food, thanks to mental accounting


New research by Brown economists Justine Hastings and Jesse Shapiro indicates that government benefits in the SNAP (formerly food stamps) program find their way into actual food purchases far more often than predicted by the rational fungibility of money.

SNAP BenefitsThe work, disseminated in a January 2017 working paper of the National Bureau of Economics Research (NBER), was discussed in an article in Bloomberg View and in testimony to the U.S House of Representatives Agricultural Committee by the director of the Cornell University Food and Brand Lab. While conventional economic theory predicts that no more of every dollar from SNAP than other sources would go to food purchases, the authors find that between 50 and 60 cents of the SNAP dollar are spent on groceries, consistent with "mental accounting" theory. The research illustrates the changes that "big data" is bringing to economics, and also exemplifies the focus of the recently established Rhod Island Innovative Policy Action Lab (RIIPL) directed by Hastings.