The Economics of Food Stamps: Why Cutting SNAP is a Costly Mistake

Recent cuts to SNAP threaten more than food security for low-income Americans. What are the long-term consequences for individuals and the economy?

Photo by Nellie Adamyan on Unsplash

Since 1939, the Supplemental Nutrition Assistance Program (SNAP) has functioned as one of America’s most effective tools for reducing poverty and expanding economic opportunity. Like many poverty-alleviating programs, food stamps cost taxpayers billions of dollars each year, and politicians often see it as a liability. But in reality, SNAP has numerous positive effects on the economy, and the program's costs are an investment in productivity. At a time when policymakers are searching for ways to strengthen economic growth, cutting one of the nation's most effective investments in human capital is a dangerous decision. Through improving the long-term health and productivity of low-income families, SNAP demonstrates that reducing poverty and promoting economic growth are not competing goals, but mutually reinforcing ones.

The Consequences of Recent Cuts

Because SNAP is such a valuable investment, recent efforts to reduce access to the program raise serious concerns. According to the Center on Budget and Policy Priorities, over 1.6 million people, including 700,000 children, have lost their SNAP food assistance since July 2025 due to the reconciliation law, H.R. 1. Under this law, states will be expected to pay a share of SNAP benefits starting in October 2027. This shift would compel state governments to further restrict eligibility and reduce participation if they can’t absorb the added fiscal burden. Unsurprisingly, participation has already reduced dramatically in some areas. The state with the most significant decline in SNAP benefits is Arizona, where participation fell by 52%, or over 470,000 people. Simultaneously, Arizona’s unemployment rate has increased since the bill's enactment. Supporters of these welfare cuts frame these decisions as fiscally responsible, but don’t see the broader economic costs.

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How Food Assistance Pays for Itself

These SNAP cuts are particularly difficult to justify after evaluating research about the extraordinary returns. Studies consistently find that SNAP generates significant benefits for individuals and the broader economy over time. The highest return value can be found among the youngest Americans: children. Data collected from the Population Reference Bureau shows that every $1 spent produces a return value of $62.25 over a child’s lifetime, with life expectancy simultaneously increasing by 1.2 years. If any private investment generated this much of a return, politicians would rush to expand it, yet programs like SNAP are routinely targeted for cuts. Regardless, it’s clear that SNAP is not just a government expense. Each dollar generates an exponential return in lifetime benefits through better health, stronger educational outcomes, and higher earnings.

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And beyond the economic gains, the increased life expectancy underscores how something as simple as a reliable meal can shape a person's future. In that sense, food assistance is not just about reducing hunger today; it’s about building a healthier, more productive workforce for decades to come. Furthermore, this program increases government income in the long run through higher tax revenue during children’s lifetimes and savings on incarceration costs. Improved birth outcomes, better health outcomes, and lifelong food security are all additional benefits of underserved families partaking in SNAP. Far from creating dependency, food assistance helps individuals become healthier, more productive contributors to the economy.

Economic Growth Through SNAP

SNAP's benefits extend far beyond the households receiving assistance. Food stamps distributed through the program quickly circulate throughout the economy, effectively creating a spending multiplier. In an economic downturn, this spending is paramount. During recessions, “every $1 in additional spending on SNAP benefits generates $1.54 in economic activity as households use their benefits to shop at over 250,000 local grocery stores and supermarkets, spurring new spending throughout local economies across the country”. This makes it one of the most effective forms of economic stimulus available.

A common misconception about SNAP is that because it’s not counted in the GDP, it can’t further economic growth and instead creates dependency. However, with increased consumer spending from these food assistance programs, gross domestic product grows significantly. Beyond increasing consumer spending, SNAP aids economic productivity by expanding human capital. One study found that students in SNAP households can be associated with less likelihood of repeating a grade. This program yields better health and education outcomes, which extend into adulthood and the workplace. This not only reduces dependency but also advances productivity and fosters growth in the economy.

Thinking Ahead

While food assistance programs such as SNAP may seem costly at first, they offer a long-term economic return, not only for underserved communities but for the entire domestic economy. As states prepare to take on a greater share of the costs, they must realize it’s not just about balancing budgets. It is about deciding what kind of economy the United States wants to build in the years ahead.

SNAP doesn’t just alleviate hunger. It strengthens the workforce, improves public health, and generates economic activity that extends well beyond the households receiving assistance. When policymakers weigh the benefits and consequences of cuts to the program, they shouldn’t just consider the immediate savings. Factoring in the long-term costs of reduced productivity, lower educational attainment, and weaker economic growth is far more important. If access to food assistance continues to shrink, the consequences may not be fully visible for years, appearing in poorer health outcomes, lower earnings, and diminished opportunities for future generations. At a time when the U.S. is forced to make difficult budget decisions, the answer is clear: investments in food security are investments in economic prosperity.