Removing cash welfare from children once they turn 18 greatly increases the chance that they will face criminal charges in the following few years, the authors of a new study report. In other words, continuing welfare programs into adulthood can reduce crime -- much more than it reduces work.
Supplemental Security Income (SSI) is a tried and tested welfare program in the US. Launched in 1972, the program provides cash payments to disabled children, disabled adults, and individuals aged 65 and over. Children qualify for the program based on their disability status and their parents' low income and assets. Initially, the program continued to offer cash to children even after they reached 18, provided that their income (or their parents' income) hadn't increased. But in 1996, that was changed and the SSI program started re-evaluating people who turned 18 using different medical criteria.
As a result, some 40% of children receiving benefits were cut from the welfare program once they hit 18. In particular, children with mental and behavioral conditions (such as ADHD) were disproportionately cut off from the program. Manasi Deshpande from the University of Chicago and Michael G. Mueller-Smith from the University of Michigan wanted to see whether this cut-off translates into increased crime.
Using data from the SSI and the Criminal Justice Administrative Records System, the team assessed the effect of losing the payments from the welfare programs over a period of 20 years. They found that being cut off from the program at 18 increased the risk of incarceration by 60%, especially for money-related crime.
"We find that SSI removal increases the number of criminal charges by a statistically significant 20% over the next two decades. The increase in charges is concentrated in offenses for which income generation is a primary motivation (60% increase), especially theft, burglary, fraud/forgery, and prostitution," the researchers write in the study.
"As they progress through adulthood, youth who have been removed from SSI appear to specialize in either illegal activity or formal employment in order to recover the SSI income that they have lost. Illegal income-generating activity leads to higher rates of incarceration, especially for groups with a high baseline incarceration rate, including Black youth and youth from the most disadvantaged families," the study also mentions.
However, the picture is pretty messy. Some people removed from the program engaged in work to compensate for the loss of welfare, but a larger proportion engaged in crime to make up for the lost income. The costs to taxpayers of law enforcement and incarceration related to SSI removal are so high that they almost negate any savings to taxpayers from reduced SSI benefits. In other words, cutting people off from these benefits not only increases crime significantly but also doesn't even save all that much money, the study reports.
“Traditionally, economists talk about the income effects of welfare programs in the context of the formal labor market—that welfare discourages work,” said the paper’s authors, Manasi Deshpande and Michael Mueller-Smith. “What we find is that the income effect of welfare benefits can also manifest as reductions in criminal activity. In fact, in the SSI context, cash welfare has a much larger discouragement effect on criminal activity than it does on formal work.”
This is not the first study to find a negative link between welfare and crime. A 2008 study from 12 American cities where 10% or more of the population was on welfare programs found that the timing of welfare payments affects criminal activity, with more crime occurring when more time has passed since welfare payments were offered. Another 2020 study carried out in 18 countries noted that "the welfare state suppresses crime, particularly through social support via generous unemployment benefits," although some types of welfare programs are more effective than others. Striking at the root of crime, which often is a lack of money, seems to be an efficient and cost-effective approach.
"Further research in this area will be important to determining whether new or expanded general welfare programs would decrease crime by the same magnitudem," the researchers conclude.
The study was published in the National Bureau of Economic Research.