Banning Soda Purchases Using Food Stamps - Good idea or bad?

According to Politico:

The House Agriculture Committee this morning is delving into one of the most controversial topics surrounding the Supplemental Nutrition Assistance Program: whether to limit what the more than 40 million SNAP recipients can buy with their benefits. Banning SNAP recipients from being able to buy, say, sugary drinks has gotten some traction in certain public health and far-right circles, but it looks like the committee’s hearing will be decidedly open-minded on the debate.

I've written about this policy proposal several times in the past.  It's an example of good intentions getting ahead of good evidence.  Do SNAP (aka "food stamp") participants generally drink more soda than non-SNAP participants?  Yes.  Is excess soda consumption likely to lead to health problems?  Yes.  But, will banning soda purchases using SNAP funds reduce soda consumption.  Probably not much.  

In fact, I just received word that the journal Food Policy will publish a paper I wrote with my former Ph.D. student, Amanda Weaver, on this very topic.  First is the logical (or theoretical) argument:

In public health discussions, however, the conceptual arguments related to the Southworth hypothesis have received scant attention (see Alston et al., 2009, for an exception). A soda consuming SNAP recipient who spends more money on food and drink than they receive in SNAP benefits can achieve the same consumption bundle regardless of whether SNAP dollars are prohibited from being used on soda by rearranging which items are bought with SNAP dollars and which are bought with other income. Thus, an extension of the Southworth hypothesis to this case would predict little or no effect of a soda restriction as long as the difference in total food spending and SNAP benefits does not exceed spending on sugar-sweetened beverages.

If that wasn't transparent, consider the example I gave in this paper I wrote for the International Journal of Obesity:

To illustrate, consider a SNAP recipient who receives $130 in benefits each month and spends another $200 of their own income on food for total spending of $320. Suppose the individual takes one big shopping trip for the month and piles the cart with food, including a case of Coke costing $10. Suppose the cost of all the items in cart comes to $320. SNAP benefits cannot cover the entire amount, but the individual can place a plastic divider on the grocery conveyer belt, put $130 on one side (to be paid for with the SNAP benefits), and put $200 on the other side (to be paid for with cash). Now, suppose there is a ban on buying soda with SNAP. What happens? The individual can simply move the $10 case of Coke from the SNAP side of the barrier to the cash side and replace it with other items worth $10. The end result is the same regardless of whether the SNAP restriction is in place or not: spend $320 and Coke is purchased.

So, in theory, people can "get around" these sorts of SNAP restrictions very easily making the restriction ineffectual.  

Now, back to my Food Policy paper.  Our experiment results show the following: 

As conjectured by H3, for the 65% of participants (78/120) who did not consume soda in T3, soda expenditures were unaffected soda restriction. H4 posited that consumers who had expenditures of more than $2 (including a soda purchase) in T3 would likewise be unaffected by the soda restriction as they moved to T4. However, this hypothesis was rejected (p<0.001). Soda expenditures fell from an average of $1.000 to $0.588, contrary to the theoretical prediction. We find that 58.8% (20/34) of the respondents to which the hypothesis applied behaved as the theory predicted (they did not change soda expenditures); however, the remaining 41.1% (14/34) reduced soda expenditures when moving from T3 to T4.

So, maybe restrictions on soda purchases by SNAP recipients will affect their soda consumption after all.  Here are our thoughts on that:

Previous research has identified heterogeneity in cognitive abilities and in consistency with economic theories (Choi et al., 2014; Frederick, 2005), and future research might seek to explore the extent to which cogntive ability plays a role in the ability of extramarginal consumers to recognze that they can achieve the same consumption bundle despite the soda restriction. In addition, our experiment was a one-shot game. In a field environment, respondents can talk to friends, gain experience, and alter behavior over time as they learn that the same consumption bundle can be achieved despite the restriction. This learing conjecture could be tested in an experimental setting by conducting repeated trials with feedback. It could also be tested using field data (after a policy was passed) by investigating the change in soda purchases for inframarginal buyers over time. Another hypothesis that could explain the anomolous result is that the soda restriction could have non- pecuinary effects, providing information about realtive healthfulness of items or signaling what people “should” be doing. For example, Kaplan, Taylor, and Villas-Boas (2016) found that, following a widely publisized vote to tax sodas, Berkeley California residents reduced soda consumption before the tax was even put into place, illustrating significant information effects surrounding soda consumption policies. Future research could further explore this signaling effect by including a treatment that restricts purchases of food items not generally percieved as unhealthy or by including survey questions about percieved healhfulnes of an item before and after a restriction.

Another thing to keep in mind is that such restrictions may limit people's willingness to participate in SNAP in the first place.  Even in our experimental context, we find that soda restrictions do indeed affect participation as measured by use of the "coupon" or "stamp" (both whether it is used at all and the amount of the coupon used).  

All in all, I think the above discussion shows that despite the intuitive appeal of a simple policy restricting SNAP purchases, the actual consequences are likely to be much more complicated.