Striking at the Roots of Crime: The Impact of Welfare Spending on Crime during the Great Depression

Abstract

During the Great Depression contemporaries worried that people hit by hard times would resort to crime. President Franklin Roosevelt argued that the massive government relief efforts “struck at the roots of crime” by providing subsistence income to needy families. After constructing a panel data set for 81 large American cities for the years 1930–40, we estimate the effect of relief spending by all levels of government on crime rates. The analysis suggests that a 10 percent increase in relief spending during the 1930s reduced property crime by roughly 1.5 percent. By limiting the amount of relief recipients’ free time, work relief may have been more effective than direct relief in reducing crime. More generally, our results indicate that social insurance, which tends to be understudied in economic analyses of crime, should be more explicitly and more carefully incorporated into the analysis of temporal and spatial variations in criminal activity.