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Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program
Hoynes, Hilary. Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program (with Diane Whitmore Schanzenbach), American Economic Journal: Applied Economics Vol. 1, No. 4, October 2009, pp. 109-139.
Abstract
Economists have strong theoretical predictions about how in-kind transfers, such as providing vouchers for food, impact consumption. Despite the prominence of the theory, there is little empirical work on responses to in-kind transfers, and most existing work fails to support the canonical theoretical model. We employ difference-indifference methods to estimate the impact of program introduction on food spending. Consistent with predictions, we find that food stamps reduce out-of-pocket food spending and increase overall food expenditures. We also find that households are inframarginal and respond similarly to one dollar in cash income and one dollar in food stamps.