Does a “Baby Bonus” Mean More Crime?

That’s the question asked by an Australian reader named Peter Gartlan:

In 2004, the Australian government introduced a $4,000 lump sum payment for having a baby, known as the Baby Bonus. [Note: it was judged to be somewhat effective.]

The anecdotal evidence is that this instantly created a huge wave of young unmarried teenage mothers from lower socioeconomic communities who saw the BB as a great big “free money” sign.  At the time it was also referred to as the “Plasma TV” bonus. Anyway, many teenage mothers had many babies, and received many payments. But obviously the motivation was money, not family. And $4,000 does not go very far when bringing up kids, as you know.

So after I read your “Abortion Reduces Crime” study, I wondered whether the BB would demonstrate the inverse scenario.

As you will note in this article from my local newspaper, it appears there is now evidence of the beginnings of a new juvenile crime wave.

It is easy to see how a baby bonus, like a variety of bounties we’ve explored, can have unintended consequences. It is a good research question, to be sure. (Australia is hardly the only country to have tried this.)

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  1. Jose says:

    In many European countries there are a lot of child benefits…, specifically, in Belgium, you have Brussels, where families with 4 or more children can get 1000€ or more per month (> 1200$)…

    It is funny that you can see a lot of families with >3 children with no big incomes (in some cases no other income than social benefits, children + unemployment)…., and it seems that in general they do not spend that money in child’s education.

    Of course what you get, after 20 years, is huge number of unemployed, unskilled (not finishing secondary school) youngsters who cannot find a job.., so unemployment rate in Brussels is 20% whereas in other regions (Flanders and Wallonie), is 6 and 12%.

    But you get thousands of Belgian and foreign skilled people going to work to Brussels because, actually, there is a big demand of skilled workforce in the city.

    http://www.cerexhe.irisnet.be/actualites/03-04-2012-mars-2012-stabilisation-du-taux-de-chomage-a-bruxelles

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  2. Natscan says:

    Is the questioner suggesting that there’s a wave of crimes being committed by 9 year olds in Australia?

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  3. Ozimandias says:

    Really? Unless these ‘juvenile offenders’ are nine years old or younger there is no relationship to the 2004 law. The local newspaper article mentions this trend started 20 years ago.

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  4. Nic says:

    I was in the Tax Office Call Centre the day the Baby Bonus landed and as you would expect it was a busy day. The more startling thing was when I got home and spoke to my house mate who was working at a bottle shop at the time. He complained to me that the day had been ridiculously busy and completely out of character for that time of the week or year. So many people wanted to buy booze.

    I am not sure if there is a correlation to increased crime because of larger numbers of low socioeconomic children being born but I firmly believe it lead to a lot of short term binge drinking. Nothing like spending the Baby Bonus on cases of Rum and Coke.

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    • Enter your name... says:

      I suspect that the run on alcohol had more to do with “liquor is quicker”: if you want the bonus, you need to get (her) pregnant. So you plan a special night, and for many people, that means buying alcohol.

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      • Luka says:

        Hardly. The money goes to the mother so the fathers wouldnt see much of the cash.

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  5. Joshua Gans says:

    The data doesn’t conform with the idea that there was a jump in teenage births.

    There was a little increase in birth rates but very uncertain

    http://link.springer.com/article/10.1007/s11113-010-9193-y#page-1

    More on the marginal baby than teenagers.

    https://www.mja.com.au/journal/2009/190/5/impact-baby-bonus-payment-new-south-wales-who-having-one-country

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    • Rosario says:

      But… but.. there’s *anecdotal* evidence of all these irresponsible, unscrupulous teenage girls having more kids! Surely that can’t be wrong!

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  6. Iljitsch van Beijnum says:

    Are you saying that they didn’t bother to have a minimum age for this bonus?

    Also, this seems like a very stupid policy. If there’s a lack of people in a certain locale, I’m sure it’s much cheaper and more effective to pay people to immigrate.

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    • Enter your name... says:

      Immigration solves the economic problem associated with unsustainable birth rates, but it does not solve the social problem of too few of “us”. For better or worse, people want to believe that the next generation has the same values as themselves, and we (stupidly, but commonly) believe that anyone who looks different or sounds different is going to hold different values. High rates of immigration result in an “us versus them” situation. You see this on a small scale in everyday life, by the way. This phenomenon appears in small schools and parishes that merge, a sudden influx of new employees to a workplace that previously had a stable workforce, a new group of would-be regulars at the pub…

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  7. Enter your name... says:

    It should be possible to eliminate the effect on “young teenage mothers” by limiting the payments to women over the age of 20 or 21 at the time of birth.

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  8. Joe says:

    Perhaps a silly question, but how is the ‘baby bonus’ different from the child tax credit and tax deductions in the US? Between the two you get $1000 + $3800 per child, after all (of which up to $1000 is refundable).

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    • Enter your name... says:

      At least three ways:

      * Getting a discount off your income tax bill does not feel emotionally the same as finding a check in your mailbox for $4,000.

      * A tax deduction does not result in that full amount going into your wallet. A $3800 *credit* puts $3800 in your wallet (or, more precisely, does not take $3800 out of your wallet in the first place). A $3800 *deduction* puts ~$1000 in your wallet (less if you’re lower income, more if you’re higher income).

      * Also, a check reaches lower income and unemployed people, whose income isn’t high enough to take advantage of the full deduction.

      Specifically in the US, another difference is Social Security treatment: The $3800 deduction for children is not exempt from the $300 FICA bill, so that ~$1000 savings on your tax bill really only puts ~$700 in your wallet.

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