Cash to Cards: How a Change in Welfare Payments Helped to Reduce Street Crime

• In Event: Preventing Crime by Design

Abstract

The goal of most predatory street crime is to obtain cash to sustain illicit action, especially illegal drug use. Cash is crucial to this pursuit owing to its liquidity and transactional anonymity; drug dealers and purveyors of other outlawed goods are unwilling to accept checks or credit cards. In poor neighbourhoods, a significant source of circulating cash stems from so-called “welfare” payments. In the 1990s the Federal government mandated that states stop issuing such payments via paper checks and instead adopt the Electronic Benefits Transfer system, whereby recipients received their funds using a debit card. We hypothesized that this shift in policy would reduce the amount of cash circulating on the streets and thereby reduce crime. To test this hypothesis, we assemble monthly data on various types of crimes from all counties in the state of Missouri over a 20-year period. We then exploited the variation in the timing of EBT program implementation across counties to examine the impact on various crimes of removal of cash from the streets caused by the EBT program. Our findings indicate that the reduction in cash produced by the shift from paper checks to EBT led to significant reductions in a variety of crimes.

Authors

• Richard Wright, University of Missouri - St. Louis

• Erdal Tekin, American University

• Volkan Topalli, Georgia State University

• Chandler McClellan, National Bureau of Economic Research

• Timothy E. Dickinson, University of Missouri - St. Louis

• Richard Rosenfeld, University of Missouri - St. Louis