Friedman Forum: Does Welfare Prevent Crime? The Criminal Justice Outcomes of Youth Removed from SSI
On March 4, as part of the Friedman Forum speaker series, University of Chicago’s Manasi Deshpande presented her research evaluating the criminal justice outcomes of youth removed from Supplemental Security Income (SSI). The Friedman Forum series offers students an opportunity for informal discussions with prominent economists.
In new research, Deshpande and her co-author estimate the effect of losing SSI benefits at age 18 on criminal justice and employment outcomes over the next two decades. To estimate this effect, they use a regression discontinuity design in the likelihood of being reviewed for SSI eligibility at age 18 created by the 1996 welfare reform law. They evaluate this natural experiment with Social Security Administration data linked to records from the Criminal Justice Administrative Records System. The authors 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. In response to SSI removal, youth are twice as likely to be charged with an illicit income-generating offense than they are to maintain steady employment at $15,000/year in the labor market. As a result of these charges, the annual likelihood of incarceration increases by a statistically significant 60% in the two decades following SSI removal. The costs of enforcement and incarceration from SSI removal are so high that they nearly eliminate the savings from reduced SSI benefits.