The average recipient of Supplemental Nutrition Assistance Program (SNAP) benefits, formerly known as food stamps, runs out of a month’s worth of assistance within a week or two.
Given that there are more than 45.8 million people on SNAP, we thought it was important to find out why. To do this, Common Cents, a financial decision-making research lab supported by MetLife Foundation, partnered with Propel, a software company that aims to make America’s safety net more user friendly.
We studied the aggregated spending patterns of people who use Fresh EBT, Propel’s free mobile app that helps SNAP recipients track their money, transactions and more (electronic benefit transfer or EBT cards are what SNAP programs use to distribute benefits). We conducted qualitative interviews with SNAP recipients in California and New York. We even tried to apply for SNAP ourselves.
Here is what we learned:
There is an accelerated spending curve: For the average SNAP recipient, more than 80 percent of their SNAP benefits are spent within the first nine days. Within the first 21 days, the average SNAP recipient has nothing left. This spending curve is even worse than what the U.S. Department of Agriculture saw a few years ago.
People are not making it to the end of the month: This accelerated spending curve would not be an issue if SNAP recipients were buying in bulk at the beginning of the month and accurately planning their meals for the month. A Harvard study of SNAP recipients, however, showed caloric intake declines 10 to 15 percent over the month, meaning people are running out of both food and benefits early.
This has real downstream consequences: Talking to SNAP recipients, we often hear stories of recipients who go hungry during the end of the month because they do not have any food or SNAP benefits left. This can affect their children’s academic performance. In North Carolina, researchers found that toward the end of the month, children of SNAP households have lower test scores and more disciplinary events.
Why don’t SNAP benefits last?
There are a number of reasons why SNAP benefits do not last through the month. One of the easiest explanations is that the amount provided is just not enough to cover a household’s food costs. In addition to a lack of sufficient funds, we propose that the way SNAP benefits are disbursed only makes things worse.
Most SNAP benefits are distributed in a lump sum once a month. From social science, we know that receiving monthly lump sums can create a “windfall” mindset. This windfall effect creates a false sense of security, hindering our ability to budget. As a result, we are more likely to misallocate our funds.
The windfall effect is not just something that affects low-income communities. We are all susceptible to it. Think about how you spend your money on payday compared with the last day of the month.
What are we doing about it?
We turned to the Fresh EBT app to design a simple experiment to combat the windfall effect and help SNAP recipients budget more effectively.
In a randomized controlled trial, we provided half of all new users a recommended weekly budget. This served as a reminder to spread consumption over the month and anchored users to an appropriate weekly spend. The remaining half served as a control group with a monthly balance only. We also surveyed all users on a weekly basis, asking them about their food purchases.
Over three months, we found that the weekly budget extended users’ monthly food stamp balance by roughly two more days. Families in the control group spent 80 percent of their monthly balance after nine days, while families who received a weekly budget spent 80 percent of their balance after 11 days. This is a 21 percent increase! A family depending on SNAP to put food on the table could have about six extra meals that month, just from this simple change to how we display a person’s SNAP balance.
In addition, results from our weekly health surveys showed no difference in the healthiness of consumption patterns between the control and experimental groups, contradicting concerns that families would trade off food quality as a result of better budgeting.
What does this mean?
The implications of this research are significant. Budgeting is difficult, especially for people who live in scarcity. Our experiment proves that simple interventions, like giving SNAP recipients useful guidelines, can go a long way.
Based on the success of this pilot, Propel is in the process of rolling out weekly budgets to its entire consumer base. Our hope is that policy makers will use these results as evidence in favor of changing how they manage the SNAP program. Program administrators could print a suggested weekly budget on each EBT card, or they could significantly help families by distributing SNAP benefits weekly or biweekly.
Special thanks to MetLife Foundation for supporting Common Cents. MetLife Foundation believes that everyone should have access to the right financial tools and services to build a better tomorrow.