Assessing the Effectiveness of SNAP by Examining Extramarginal Participants
A primary objective of in-kind transfer programs is to promote the consumption of specific goods. Standard economic theory implies that the program's ability to achieve this objective depends critically on the proportion of recipients whose spending on the good is limited to the amount of the in-kind transfer, i.e., they are extramarginal. For these families, an increase in benefits will translate into an equal sized increase in consumption of the good. We find that roughly 30% of participants in SNAP are extramarginal, which is larger than previous estimates and implies in-kind benefits provided through SNAP promote food consumption. Furthermore, very low income SNAP families are much more likely to be extramarginal, and extramarginal families have extremely low income and are nearly five times more likely to be food insecure than families not on SNAP, implying that families are extramarginal not because their food needs are fully met by SNAP, but because their income is so low.