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American Economic Journal: Applied Economics: Vol. 1 No. 4 (October 2009)

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Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program

Article Citation

Hoynes, Hilary W., and Diane Whitmore Schanzenbach. 2009. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program." American Economic Journal: Applied Economics, 1(4): 109-39.

DOI: 10.1257/app.1.4.109

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. (JEL D12, H23, I38)

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Authors

Hoynes, Hilary W. (U CA, Davis)
Schanzenbach, Diane Whitmore (U Chicago)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
I38: Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs

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