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Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program

50 Pages Posted: 6 Sep 2014  

Richard Wright

University of Missouri at Saint Louis

Erdal Tekin

Georgia State University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Volkan Topalli

Georgia State University

Chandler B McCellan

Government of the United States of America - Substance Abuse & Mental Health Services Administration (SAMHSA)

Timothy Dickinson

Paul, Hastings, Janofsky & Walker, LLP

Richard Rosenfeld

University of Missouri - St. Louis

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Abstract

It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare program benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we investigate whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime. To address this question, we exploit the variation in the timing of the EBT implementation across Missouri counties. Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny. According to our point estimates, the overall crime rate decreased by 9.8 percent in response to the EBT program. We also find a negative effect on arrests, especially those associated with non-drug offenses. Interestingly, the significant drop in crime in the United States over several decades has coincided with a period of steady decline in the proportion of financial transactions involving cash. In that sense, our findings serve as a fresh contribution to the important debate surrounding the factors underpinning the great American crime decline.

Keywords: crime, cash, EBT, welfare, economy

JEL Classification: H53, I38, J22, K42

Suggested Citation

Wright, Richard and Tekin, Erdal and Topalli, Volkan and McCellan, Chandler B and Dickinson, Timothy and Rosenfeld, Richard, Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program. IZA Discussion Paper No. 8402. Available at SSRN: https://ssrn.com/abstract=2492429

Richard Wright (Contact Author)

University of Missouri at Saint Louis ( email )

1 University Blvd.
St Louis, MO 63121
United States

Erdal Tekin

Georgia State University - Department of Economics ( email )

University Plaza
Andrew Young School of Policy Studies
Atlanta, GA 30303
United States
404-651-3968 (Phone)
404-651-4985 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Volkan Topalli

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Chandler McClellan

Government of the United States of America - Substance Abuse & Mental Health Services Administration (SAMHSA) ( email )

1 Choke Cherry Rd
Rockville, MD 20857
United States

Timothy Dickinson

Paul, Hastings, Janofsky & Walker, LLP ( email )

875 15th Street, N.W.
Washington, DC 20005
United States

Richard Rosenfeld

University of Missouri - St. Louis ( email )

One University Blvd.
St. Louis, MO MO 63121
United States
3146230854 (Phone)
3145165045 (Fax)

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