Do Food Prices Affect Food Security for SNAP Households? Evidence from the CPS Matched to the Quarterly Food-At-Home Price Database

In this paper, we estimate the effect of food prices on food insecurity for SNAP recipients using data from the Current Population Survey (CPS) and the recently published Quarterly Food-At-Home Price Database (QFAHPD). By constructing this sample we can directly measure the relationship between food prices and food insecurity for U.S. households. We form a local food price index based on amounts of food for a household of four as established by the Thrifty Food Plan. We use an econometric model that accounts for the endogeneity of SNAP receipt to food insecurity and for household-level unobservables. We find that, on average, the effect of food prices on the probability of food insecurity is positive and significant: an increase of one standard deviation in the price of our food basket results in increases of 2.4 percentage points in adult food insecurity and 3.7 percentage points in child food insecurity. These marginal effects amount to 8.4 and 15.9 percent increases in prevalence of food insecurity for adults and children, respectively. These findings have important implications for policy in that SNAP benefits might be beneficially indexed to local food prices.