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

Richard Wright (), Erdal Tekin, Volkan Topalli (), Chandler McClellan, Timothy Dickinson () and Richard Rosenfeld ()
Additional contact information
Richard Wright: Georgia State University
Volkan Topalli: Georgia State University
Timothy Dickinson: University of Missouri-St. Louis
Richard Rosenfeld: University of Missouri-St. Louis

No 8402, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: welfare; EBT; cash; crime; economy (search for similar items in EconPapers)
JEL-codes: H53 I38 J22 K42 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2014-08
New Economics Papers: this item is included in nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published - published in: Journal of Law & Economics, 2017, 60 (2), 361 - 383

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Related works:
Journal Article: Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program (2017)
Working Paper: Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program (2014)
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