Thrifty Food Plan Panel Price Index and the Real Value of SNAP Benefits

Abstract

This paper uses retail scanner data to construct panel price indices for the Thrifty Food Plan (TFP) basket and uses the indices to estimate the real value of SNAP benefits. We find that the inflation rates and the price levels of TFP basket vary substantially across the 48 contiguous states and the District of Columbia. Using the TFP price indices, we show that from 2006 to 2016, the range of the difference in the real SNAP benefits for a household of four among states is between 7 to 16 percentage points, which converts to about 39 to 90 pounds of food per month. The result of our price convergence test suggests that this inequality would persist for a long time in the absence of regional adjustments of the SNAP benefits. Using the variation in the real value of SNAP benefits, we find that a one-percent increase in the real value of SNAP benefits is associated with a 0.5 percentage point increase in the SNAP participation rate among low- income population.