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Consumption Responses To In-Kind Transfers: Evidence From The Introduction Of The Food Stamp Program, Hilary Hoynes, Diane Schanzenbach
Consumption Responses To In-Kind Transfers: Evidence From The Introduction Of The Food Stamp Program, Hilary Hoynes, Diane Schanzenbach
Diane Whitmore Schanzenbach
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.