SNAP and Food Consumption: A Collective Household Approach With Homescan Data

Xirong Lin , Boston College

How should we evaluate transfer programs when the targeted households are composed of individuals with heterogeneous preferences, asymmetric bargaining power, and disparate incentives to share public goods? This paper estimates a collective household model for evaluating the Supplemental Nutrition Assistance Program (SNAP) among the elderly population with longitudinal Homescan data which allows me to identify SNAP-eligible food. Using a counterfactual SNAP cash transfer experiment, I find that the husband has relatively stronger preferences for food than the wife. If one ignores that, the elderly couples' overall demand for food will be underestimated and it will further bias downwards, both intensively and extensively, the number of elderly couples whose demand for food is affected by cash transfers. Strong evidence of preference heterogeneity also highlights the important role of bargaining power within households. Findings imply that grocery vouchers or cash transfers would be more cost-effective than in-kind transfers among the elderly.

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 Presented in Session 2. Flash Session: Population Aging, Consequences, and Public Policies