A key question in public opinion research is how voters react to policies that benefit them materially. The challenge of estimating the causal effect of personal benefit on especially incumbent support has inspired a dearth of research over the past decade. Yet, we know little about the psychological underpinnings of this behavior although existing studies commonly attribute it to pocketbook voting. In this paper, I challenge this assumption and argue that existing studies have conflated voters acting on their personal benefit with voters acting on benefits to their in-groups. As a result, the importance of pocketbook motives has been overestimated. To resolve this, I decompose the effect of a targeted policy into a pocketbook and a group-targeting component in a replicated, pre-registered experiment on Danish and American voters. Across all three experiments I consistently find that voters’ responses to material benefits are shaped more by in-group targeting than pocketbook gains. In a supplemental observational analysis, I find that recipients of a targeted policy are likely to infer that their group is targeted, which can explain what looks like a pocketbook effect. Importantly, however, the effects of targeting vary by group and are only positive for groups associated with strong social identities. These findings have implications for the electoral dynamics of targeted policies as well as the understanding of pocketbook behavior more broadly.