The SNAP Disbursement Schedule and its Effects

By Katherine Harris-Lagoudakis and Hannah Wich

The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program (FSP), is the largest food assistance program administered by the US Department of Agriculture (USDA). In 2017, SNAP provided aid to 12.9% of the United States population—the average household received $254 in benefits per month (USDA). The stated objectives of the SNAP program are to reduce hunger, malnutrition, and poverty through the provision of in-kind transfers to households who are eligible for benefits. Nevertheless, in a sample of SNAP households, approximately 61% indicated being food insecure in 2011 and 2012 (Mabli et al. 2013). Although SNAP is a federal program, each state is responsible for distributing benefits to its residents. Distribution dates for each household are determined at the state level and all 50 states currently deliver benefits according to a monthly distribution cycle.

This report utilizes household level supermarket panel data, generated from roughly 850 SNAP households, to evaluate the effect of SNAP issuance on intramonthly grocery spending patterns. In its most granular form, the data set is provided at the universal product code (UPC), date, store, household level and contains purchases made between April 2014 and September 2017. Like many supermarket retailers, the retailer providing the data has developed algorithms that utilize loyalty card numbers and other matchable forms of payment (e.g., credit card numbers) in order to identify all purchases made by a household in the retailer’s stores. Additionally, the retailer sends promotional material to its customer base; and, as a result, the retailer can link the name and address of a specific household to purchases made at the retailer. The data we utilize includes an observation for each purchased item, along with its price and quantity for every household. In addition, we are able to observe the form of payment (e.g., credit card, cash, EBT-SNAP, EBT-WIC etc.), at the transaction level, which can also be linked to the items purchased by the household in that transaction.

SNAP benefits in the state of residence for these households are distributed monthly according to the first letter of the household’s last name. Benefit distribution days in this state begin on the fifth of each month and end on the twenty-third of each month. The exceptional detail of the retail data combined with the state’s benefit disbursement schedule allows us to determine the day and week of the calendar month that each household receives their SNAP benefits. Table 1 illustrates the frequency and percentage of households receiving SNAP benefits on a certain calendar day in the state of residence of the SNAP households.
 

To shed light on the effect of SNAP benefit disbursement on intramonthly expenditure patterns with the retailer, we evaluate changes in daily overall expenditure levels over the course of the benefit cycle. Figure 1 plots the coefficient estimates from a fixed effects regression equation that estimates the effect on household expenditure i days away from benefit receipt, where i ϵ {0,1,…,30}. We use day 28 after disbursement as a reference point for daily spending over the benefit cycle. A unique advantage of our data is that the benefit distribution dates span the four calendar weeks of the month, which alleviates concerns that the day of SNAP distribution might be correlated with other monthly income shocks (e.g., cash welfare payments, paycheck receipt, rent payments, utility bills etc.) that occur on the first of the month.

Visual inspection of figure 1 indicates that the effect of SNAP disbursement on intramonthly spending patterns has a statistically significant and positive impact for 10 to 12 days after benefit receipt. Notably, on the day that SNAP benefits are disbursed, spending is $13 higher relative to 28 days after benefit receipt. The effect of disbursement on spending is roughly $2 to $4 one to three days after benefit receipt and $1 to $2 four to twelve days after benefit receipt.

The extreme peak in expenditures around the day of SNAP disbursement has motivated researchers to identify whether the SNAP disbursement cycle has other effects on participants. Research finds that a correlation between expenditure and consumption cycles exist for SNAP households (Kuhn 2018), which explains the reduced caloric intake of SNAP recipients at the end of the benefit month compared to the beginning (i.e., calorie crunch) (Shapiro 2005; Todd 2015). Other research shows that criminal activity increases over the benefit month (Foley 2011); and, Carr and Packham (2019) show that the expenditure cycle is directly connected to grocery store theft rates. Further findings suggest that children bear a smaller burden than adults of the calorie crunch (Kuhn 2018). Cotti et al. (2018) and Bond et al. (2021) find that standardized test scores are lower for children of SNAP households at the end of the benefit month.

Policymakers should consider the influence of the SNAP disbursement cycle on the health and economic outcomes of SNAP households. Our findings highlight how monthly welfare payments influence spending patterns of recipients. Having multiple, smaller disbursement days within a single month may help recipients smooth their consumption over the course of the benefit cycle.

References

Bond, T.N., J.B. Carr, A. Packham, and J. Smith. 2021. “Hungry for Success? SNAP Timing, High-Stakes Exam Performance, and College Attendance.” Forthcoming, American Economic Journal: Economic Policy.

Carr, J., and Analisa Packham. 2019. “SNAP Benefits and Crime: Evidence from Changing Disbursement Schedules,” The Review of Economics and Statistics 101(2):310-325.

Cotti, C., J. Gordanier, and O. Ozturk. 2018. “When does it Count? The Timing of Food Stamp Receipt and Educational Performance.” Economics of Education Review 66:40–50.

Foley, F. 2011. “Welfare Payments and Crime.” The Review of Economics and Statistics 93(1):97–112.

Kuhn, M. 2018. “Who Feels the Calorie Crunch and When? The Impact of School Meals on Cyclical Food Insecurity.” Journal of Public Economics 166(C):27–38.

Mabli, J., J. Ohls, L. Dragoset, L. Castner, B. Santos. 2013. “Measuring the Effect of Supplemental Nutrition Assistance Program (SNAP) Participation on Food Security.” USDA Food and Nutrition Service Office of Policy Support Report.

Shapiro, J. 2005. “Is There a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle.” Journal of Public Economics 89(2-3):303–325.

Suggested citation:

Harris-Lagoudakis, K. and H. Wich. 2021. "The SNAP Disbursement Schedule and its Effects." Agricultural Policy Review, Fall 2021. Center for Agricultural and Rural Development, Iowa State University. Available at www.card.iastate.edu/ag_policy_review/article/?a=129.