Food Stamps, Income Shocks, and Crime: Evidence from California

Abstract

Abstract An extensive literature shows that reduced labor earnings lead to an increase in criminality, while another literature suggests that diminished economic conditions via changes in public assistance programs may alter criminal behavior. This study considers electronic benefit transfer (EBT) reforms that may have altered households’ real income, black market activity, and criminality. A natural experiment that relies on plausibly exogenous variation in the timing of EBT reforms across California counties is exploited within an event study design to identify the effect of EBT adoption on arrests. A significant, though transitory, increase in criminal arrests is revealed. Following conversion to EBT delivery, the average county experiences an additional 108 arrests per month, or equivalently an increase of 5 . This increase in arrests lasts up to 6 months before fading out. The increase is most pronounced for crimes motivated by income shortfalls, such as burglary, larceny, prostitution, and robbery. In the average county, income-motivated criminal arrests rise by about 25 arrests, or 10 . Estimates are practically and statistically significant, as well as robust to changes in controls and specification. Findings suggest that income shocks can substantially change criminal behavior and that declining economic conditions can alter criminal behavior through channels other than labor earnings.