Labor-Public Economics Workshop/Job Market Practice: Hannah Wich (Iowa State University)

Event
Thursday, October 27, 2022 - 3:40 pm to 5:00 pm
Event Type: 

Hannah WichLocation: 368A Heady Hall

Description: Hannah Wich (Iowa State University) Labor-Public Economics Workshop/Job Market Practice

Contact Person: John Winters

Title: SNAP Adoption and Big Box Purchases 

Abstract: The Supplemental Nutrition Assistance Program (SNAP) issues monthly lump-sum payments. In theory, these payments help households overcome liquidity constraints and allow households to purchase bulk items. Purchasing products in bulk sizes decreases unit price and can increase consumption while holding expenditures constant. Using novel retailer panel data, this study investigates the effect of participating in SNAP on bulk purchasing behavior. First, I show that SNAP households can save a considerable amount of money by purchasing bulk relative to non-bulk items. To estimate a causal relationship between SNAP participation and bulk purchases, I use the timing of program recertification as a source of exogenous variation in the decision to participate in SNAP. I find that adopting SNAP increases the expenditure share of bulk purchases for all groceries by five percentage points. This finding suggests that relaxing budget constraints enables households to exploit savings from shopping efforts that require lump-sum liquidity. Investigating Ready To Eat (RTE) cereal and yogurt purchases shows that households shift their expenditures toward food categories that encourage bulk purchases. However, the inter-purchase time for RTE cereal does not change upon SNAP adoption, providing evidence that SNAP households are not stockpiling bulk purchases for future needs.

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