SNAP Benefits and the Volatility of Food Spending
In March 2020, Congress passed the Families First Coronavirus Response Act, which included many provisions to improve access to and increase benefits for families enrolled in the Supplemental Nutrition Assistance Program (SNAP), also known as the food stamp program. SNAP benefits are designed to stabilize food consumption for low-income families, and the temporary benefit increases and procedural modifications from the initial COVID-19 relief bill helped families and individuals struggling in the pandemic.
While the expanded benefits have ended in some states and are expiring soon in others, the Biden administration recently approved the largest increase in food assistance benefits in the program’s history. Given the large program changes that went into effect this month, we look at past data to understand how SNAP benefits impact family food expenditures.
Volatility in Income and Food Expenditure
Specifically, we examine the relationship between income volatility and food expenditure volatility for families with children that are receiving SNAP benefits and families with children and similar incomes that are not receiving SNAP benefits. The figure below displays a binned scatterplot of the relationship between the transitory variance of income and the transitory variance of food expenditures for these families.
Transitory variance is the average deviation from the mean of each variable computed from 2011-19; this is meant to capture how much a variable changes from one period to the next. For example, a transitory variance in income of 20% means that income fluctuates an average of 20% over the sample (data are collected every two years).
Income is measured as total household income, and food is measured as the amount of money spent on food, delivery food, groceries, and food from restaurants; the amount of money spent also includes any food stamp purchases. We limit the families to those with total family income within 130% of the poverty line, which is the gross income limit for SNAP in 2020, in order to compare families with similar incomes.
To create the scatterplot, we divided the income volatility data into equal-sized groups, or bins. Then, the average of income volatility and the average of food volatility in each bin were both calculated and placed on the plot. Finally, a line of best fit through the points shows the relationship between the two types of volatility for families receiving food stamps and families not receiving food stamps from 2011-19.
Income and Food Spending Volatility for Families with Children at or below 130% of the Poverty Level
SOURCES: Panel Study of Income Dynamics and authors’ calculations.
NOTES: The transitory variance are the squared deviation from the mean value of either log income or log food spending. The dashed blue line represents the relationship of the two variables for families enrolled in SNAP, the federal food assistance program, and the dotted red line represents the relationship for families not enrolled in SNAP.
Greater Volatility for Families Receiving SNAP
What we can see is that, for a given level of income volatility, families receiving food stamps have a much higher level of food volatility than families not receiving food stamps, despite both sets of families having similar incomes. This suggests that the SNAP program is sorting people into the program accurately—those without food stamps don’t need them and those with food stamps do. If food stamps were making up the difference in food expenditures, the two lines would be much closer together or even the same.
Furthermore, we can see that the relationship between food and income volatility is steeper for families on food stamps; this means that as income volatility rises, food volatility increases faster for those enrolled in SNAP. Again, this seems counterintuitive as we would expect SNAP to decrease food volatility. Instead, the data suggests that families more vulnerable to income shocks are more likely to enroll in SNAP, and the benefits are not effectively stabilizing their food consumption in response to income shocks. There are a number of reasons these families may be more vulnerable to income shocks, including lower savings, less access to family support, and higher costs of living.
In summary, despite the goal of SNAP to stabilize food consumption, the data suggests that families enrolled in SNAP still experience more food volatility than families with similar incomes who are not enrolled in SNAP. The recent expansion of SNAP benefits may help increase food security for families enrolled in the program.