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Posts Tagged ‘welfare’

Does the Absence of Cash Help Cut Crime?

A new working paper (abstract; ungated PDF not available) by Richard Wright, Erdal Tekin, Volkan Topalli, Chandler McClellan, Timothy Dickinson, and Richard Rosenfeld analyzes the effects of delivering welfare benefits via Electronic Benefit Transfer (EBT) instead of checks (which are easily converted to crime-fueling cash):

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 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 examine 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. EBT implementation had no effect on rape, a crime that is unlikely to be motivated by the acquisition of cash. 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.

The Mixed Blessings of a Welfare Program

A new paper (abstract; PDF) by Gustavo J. Bobonis, Melissa González-Brenes, and Roberto Castro examines the effects the Mexican welfare program Oportunidades on spousal abuse:

Beneficiary women are 40 percent less likely to be victims of physical abuse, but are more likely to receive violent threats with no associated abuse. This evidence is consistent with a model of decision-makers’ interactions with asymmetric information in the male partner’s gains to marriage, who can then use threats of violence to extract rents from their female partners.

“The article may have important implications for policy, since it provide a mixed view of conditional cash transfer programs’ effectiveness in improving women’s empowerment within the household,” the authors wrote in an earlier draft. “The program may increase the likelihood of violent threats, which may in turn compromise women’s emotional health and other aspects of their wellbeing.”

In SuperFreakonomics, Levitt and Dubner wrote about another interesting research finding gleaned from Oportunidades data:

Bad Incentives That Work Quite Well: The Opportunity Cost of Political Partisanship

Nick Kristof, writing in the N.Y. Times:

This is what poverty sometimes looks like in America: parents here in Appalachian hill country pulling their children out of literacy classes. Moms and dads fear that if kids learn to read, they are less likely to qualify for a monthly check for having an intellectual disability.

Many people in hillside mobile homes here are poor and desperate, and a $698 monthly check per child from the Supplemental Security Income program goes a long way — and those checks continue until the child turns 18.


This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.

Jimmy the Lock or Break the Window?

My first full day in Berlin and I’m off for a great run in 60-degree weather.  Only problem:  I take my office key, which looks very much like my apartment key.  I return to discover I’m locked out and stand around for an hour on the street in my running shorts  (since there is no information about a house supervisor or any other contact).  Fortunately, a painting crew arrives.  I ask one fellow to help me break a window (the apartment is on the ground floor). He says OK, but it would probably cost me €300 to have it repaired; instead, he claims he can jimmy the lock and will do so for €80. I am dubious, but after 45 minutes of hard work, he succeeds (without damaging anything).  He was pleased. He may have earned producer surplus of at least €60, as I doubt that he earns as much as €20 (untaxed!) for 45 minutes of work.  I’m delighted, got about €220 of consumer surplus, since I would have had to pay that much extra to break the window. This is what exchange is about — both sides gain.

Insights From the Fall Meeting of the Brookings Panel on Economic Activity

The Brookings Panel on Economic Activity is pretty much my favorite conference each year. (It better be! I took over running the Panel with David Romer in early ’09.) I’ve found that the best way to keep growing as an economist is to embrace any opportunity to be the dopiest guy in a very smart room, and this latest meeting was no disappointment. I’ve been meaning to write about it for a couple of weeks, but time kept getting away from me. So I decided to try something different-I popped into the video studio to chat about some of the new findings presented at the Panel. Here are the highlights.

Congratulations Fran Blau!

Fran Blau is one of my favorite labor economists in the world: She’s smart, savvy, tackles important problems, and also incredibly generous in helping younger scholars and colleagues with their own research. She is now also the winner of this year’s IZA Prize in Labor Economics.

Help Wanted: Babysitters. Salary: Six Figures.

For anyone who read, even casually, about the welfare wars of the 1990’s, it seems strange that there is so little conversation, political or otherwise, about the topic these days. That may soon be changing, of course, as the proposed Obama stimulus plan attempts to direct money toward the poorest segments of our population.

Why Do You Lie? The Perils of Self-Reporting

I am always surprised at how easily, and cheaply, we humans lie. Have you ever been in a conversation about, say, a particular book and been tempted to say you’ve read it even though you haven’t? I am guessing the answer is yes. But why would anyone bother to lie in such a low-stakes situation? The book lie is what . . .