Study links crime drop to cut in welfare cash

A new study has found that paying welfare benefits via debit card, rather than cash, caused a 10 percent drop in crime.

Researchers have long noted that cash plays a critical role in street crime, because of its liquidity (it is easy to obtain, and everyone accepts it) and anonymity (it leaves no paper trail). In poorer neighborhoods, public assistance payments used to be a significant source of circulating cash: Recipients would cash their assistance checks at the bank, pocketing the money and becoming attractive targets for criminals.

But that changed, starting in the 1990s, as the federal government gradually phased out paper welfare checks in favor of electronic debit cards – the Electronic Benefit Transfer (EBT) program. Along with a team of researchers, Richard Wright of the University of Missouri studied the effects of this change in his home state and found that it was directly responsible for a 10 percent drop in the overall crime rate there.

The authors found that “burglary, assault, and larceny decreased by 7.9 percent, 12.5 percent, and 9.6 percent, respectively.” They also found corresponding drops in arrest rates that supported their findings.

They also looked at the incidence of rape, which showed little change between the pre- and post-EBT eras. Because rape is “typically unrelated to the immediate acquisition of cash,” this didn’t come as a surprise.

To put these results in perspective, the overall 10 percent decrease in crime corresponded to 47 fewer crimes per 100,000 people per county per month as a direct result of switching welfare benefits from cash to debit cards.

The finding raises a few questions.

First, did the drop in crime occur simply because criminals decided to pack up and move elsewhere? The authors tested for this and found no evidence that criminals switched counties, noting that this finding was “consistent with criminological literature indicating that offenders tend to operate within their own geographical awareness space.”

Second, what if we expand the definition of “elsewhere” to include virtual as well as physical space? It stands to reason that a shift from paper to electronic currency would cause a concomitant shift from physical to virtual crime – if criminals can’t pick your pocket, maybe they’ll figure out how to pick your bank account.

Wright’s study did not dig into these questions, but as society gradually shifts from physical to virtual currency in bitcoin and beyond, such issues will become increasingly important.

Finally, to what extent can we extrapolate nationally from these findings? Wright and his co-authors note that the widespread drop in crime in the United States over the past several decades corresponds to a decline in the proportion of transactions involving cash. While there are many possible explanations for this, the paper notes that “a significant fraction of the decline has yet to be identified empirically.”

While a lot more research is needed on these questions, Wright’s paper strongly suggests that less cash equals less crime.

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