The Impact of Food Stamps on Food Expenditures: Rejection of the Traditional Model

Abstract For food stamp recipients whose normal food purchases exceed their coupon allotment, the traditional economic model predicts that the impact of food stamps on food spending will be the same as for an equal cash transfer. The Tobit analysis in this study indicates that, for these recipients, food stamps have a substantially greater impact on at‐home food expenditures than an equal amount of cash income. These results reject the traditional model. Several possible explanations of this behavior are discussed.