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

The Great Depression of the 1930s led contemporaries to worry that people hit by hard times would turn to crime in their efforts to survive. Franklin Roosevelt argued that the unprecedented and massive expansion in 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 through 1940, we estimate the impact of relief spending by all levels of government on crime rates. The analysis suggests that a ten percent increase in relief spending during the 1930s lowered property crime by roughly 1.5 percent. By limiting the amount of free time for relief recipients, work relief was 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.