People Actually Use Food Stamps to Buy More Food

For years, opponents of food stamps -- or the Supplemental Nutrition Assistance Program, as it’s now called -- have claimed that the program is just a cash giveaway. Some worry that people will sell their food stamps for cash, and use that cash to buy alcohol, drugs or other things that the government doesn’t want to subsidize. That’s actually very rare. But there’s an easier way to turn food stamps into cash -- just take the cash you otherwise would have spent on food, and use it for something else. No fraud involved.

Economists refer to this as the fungibility of targeted benefits. In a standard, fully rational economic model, all of a person’s income -- wages, government benefits, etc. -- goes into a single pot, and then they decide what to do with it. Since they can easily shift money from item to item, if you try to get them to buy more food you may end up actually paying for them to buy more alcohol. This is why even some on the left have urged the government to scrap SNAP and just give cash.