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

Author

Listed:
  • Wright, Richard

    (Georgia State University)

  • Tekin, Erdal

    (American University)

  • Topalli, Volkan

    (Georgia State University)

  • McClellan, Chandler

    (National Bureau of Economic Research)

  • Dickinson, Timothy

    (University of Missouri-St. Louis)

  • Rosenfeld, Richard

    (University of Missouri-St. Louis)

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.

Suggested Citation

  • Wright, Richard & Tekin, Erdal & Topalli, Volkan & McClellan, Chandler & Dickinson, Timothy & Rosenfeld, Richard, 2014. "Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program," IZA Discussion Papers 8402, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8402
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    welfare; EBT; cash; crime; economy;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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