The Stimulus Act of 2009 and Its Effect on Food-At-Home Spending by SNAP Participants

Abstract

The American Recovery and Reinvestment Act of 2009, commonly known as the Stimulus Act, increased maximum benefits for households that participate in the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program). In this analysis, SNAP households increased the food share of total expenditures by 1.44 percentage points after the increase in benefits and spent 53 cents of each additional dollar of SNAP benefits on food; this means that SNAP and cash income are not perfectly fungible. Neoclassical economic theory would predict a figure closer to 5-10 cents for each additional SNAP dollar. Thus, SNAP benefits provided a larger boost to food-expenditure share than an equal amount of cash. This report provides estimates of the marginal propensity to spend out of SNAP for vulnerable populations, including households at the lowest income level (under $15,000 annually), single-parent households, households with a member over age 65, and households with an unemployed member. In each subgroup but the elderly, households exhibited higher marginal propensities to spend on food out of SNAP than economic theory predicts, with the lowest income households demonstrating the highest marginal propensity to spend out of SNAP (0.62, or 62 cents for each additional dollar).