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Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program

Georgia State UniversityAmerican UniversityGeorgia State UniversityAmerican UniversityUniversity of Texas at El PasoUniversity of Missouri–St. Louis

It has been long recognized that cash plays a critical role in fueling street crime because of its liquidity and transactional anonymity. In this paper, we investigate whether the reduction in the circulation of cash on the streets associated with electronic benefit transfer (EBT) program implementation had an effect on crime. To address this question, we exploit the variation in the timing of EBT implementation across Missouri counties and counties in the states bordering Missouri. According to our results, the EBT program had a negative and significant effect on the overall crime rate and specifically for burglary, assault, and larceny. The point estimates indicate that the overall crime rate decreased by 9.2 percent in response to the EBT program. Interestingly, the significant drop in crime in the United States over several decades coincided with a period of steady decline in the proportion of financial transactions involving cash.