A cashless economy leads to a safer society [View all]

[Nye Bevan]

“Cash", wrote Marcus Felson, an eminent American criminologist, “is the mother’s milk of crime.” Its appeal to criminals is clear. Unlike cars or paintings, it can be concealed immediately after being pinched. It has no security features to prevent its being easily and anonymously spent on legal or illegal goods. Unlike nearly any other object that can be stolen, it needs no fence.

Criminals’ need for cash motivates much predatory street crime. A new paper from the National Bureau of Economic Research asks whether this might work in reverse: if cash motivates crime, could the absence of cash reduce crime? The answer seems to be yes.

The paper looks at county-level crime data in Missouri from 1990 to 2011, a period when crime dropped markedly all over the rich world. During this time Missouri, like the rest of America, changed the way it delivered its welfare and food-stamp benefits. Instead of paper cheques states now use a debit-card system known as Electronic Benefit Transfer (EBT). Missouri introduced EBT cards in eight phases over 12 months. This gradual shift allowed the authors to analyse not just differences in crime rates before and after the introduction of EBT, but also how those differences compared with changes during the same period in counties that had not implemented it.

They found that electronic payments led to a drop of 9.8% in the overall crime rate and caused the rates of burglary, assault and larceny to fall by 7.9%, 12.5% and 9.6%, respectively. The introduction of EBT was also associated with a lower number of arrests, an indication that the crime rate’s decline did not stem from more aggressive policing. EBT’s effects on non-property-related crimes such as drug offences, rape and prostitution were statistically insignificant. The findings suggest, according to Volkan Topalli, one of the authors, that “for people in densely populated urban neighbourhoods, the less cash they have and the more their transactions are digitised, the less attractive criminal targets they make.”

http://www.economist.com/news/finance-and-economics/21600149-cashless-economy-leads-safer-society-less-coin-purloin?zid=317&ah=8a47fc455a44945580198768fad0fa41