Food benefits from the Supplemental Nutrition Assistance Program (SNAP) expand household grocery spending for low-income families. This seems obvious, because the nation's largest food assistance program, formerly known as the Food Stamp Program, provides targeted food benefits that legally may only be spent at authorized retailers such as grocery stores.
But, what is the effect of SNAP benefits on food spending at restaurants? This is less obvious, because the food benefits may not be spent in restaurants. Benefits could increase restaurant spending by increasing total resources, or the benefits could suppress restaurant spending by substituting grocery food for restaurant food.
In a recent study in the American Journal of Agricultural Economics (AJAE), my colleagues Bea Rogers, Lisa Troy, and I estimated "Engel functions," which show how food spending responds to increased total household resources for food stamp participants and non-participants.
The most interesting finding is that food stamps appear to raise food spending on groceries ("at home" food spending), while perhaps suppressing food spending in restaurants ("away from home" food spending).
This graph shows "at home" food spending (on the vertical axis) as a function of total income including food stamps plus cash income (on the horizontal axis), for single-parent households. Food stamp participants (the shorter line) have greater at home food spending than non-participants (the longer line), even holding constant total income. The upward slope of each line shows how food spending increases as total income rises.
The next graph, by contrast, shows that away from home (restaurant) food spending is lower for participants than for seemingly similar non-participants.
This pattern may have nutritional implications, because past research has shown that restaurant foods contain on average comparatively more of the nutrients (such as salt and saturated fat) that Americans are advised to consume less frequently or in smaller quantities.
Related research, including similar results for household food security outcomes, is available in a report from USDA's Economic Research Service.