Supplemental Security Income for Youth — Incorporating Impacts on Crime
Introduction
Deshpande and Mueller-Smith (2022) compute the MVPF of Supplemental Security Income (SSI) to youth at age 18 considering the program’s effect on criminal justice and labor market outcomes. The US Supplemental Security Income (SSI) program is a federal social program that provides cash payments and Medicaid eligibility to low-income children, adults with disabilities, and the elderly. The paper studies a policy change implemented under the Personal Responsibility and Work Opportunity Act (PRWORA) in 1996. PRWORA established stricter criteria for remaining in the program when recipient youth reach age 18. The stricter requirements only applied to children with an 18th birthday after the date PRWORA was enacted (August 22, 1996), and the number of youths who remain in the program after turning 18 years old dropped sharply after the reform. The authors use this reform to implement a regression discontinuity design (RD) and evaluate SSI’s effects on crime. They find that SSI removal increases the number of criminal charges by 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 paper includes these cost impacts from criminal justice enforcement, administrative costs, and incarceration costs, and illustrates how they affect the program’s MVPF.
MVPF = 5.6
Net Cost
The paper divides program costs into those related to crime and those not related to crime.
First, the costs not related to crime are given by the sum of SSI transfers, Medicaid transfers and changes on tax revenue due to changes in labor supply after removal from SSI. They estimate that each SSI removal saves taxpayers an average of $37,700 in federal SSI benefits and of $8,400 in Medicaid. Deshpande (2016) also estimate that SSI removal causes an increase in labor supply that generates an extra $2,984 in tax revenue over the 21 years following removal. So an SSI removal would save the government a total of $37,737 + $8,400 + $2,984 = $49,121. So the costs of SSI not related to crime are $49,121 per beneficiary on average.
Second, the costs related to crime are given by the sum of administrative and incarceration costs. Each removal creates $10,774 in police and court costs and another $30,160 in incarceration costs, so the costs of SSI related to crime are – $10,774 – $30,160 = -$40,934.
Net costs are then $8,187 (=$49,121-$40,934) when including effects on crime-related costs and $49,121 when not including crime-related costs.
Willingness to Pay
The paper also discuss the impact of including crime effects on willingness to pay for SSI. The baseline specification is conservative and does not include any benefits from reduced victimization. The willingness to pay is given by the SSI transfers ($37,737) plus Medicaid value ($8,400) = $46,137. Additionally, authors estimate that the extra crimes caused by SSI removal impose a monetized cost on victims of crime of $85,628 per removal on average. Including victims’ willingness to pay to avoid these crimes yields a total willingness to pay of $46,137 + $85,628 = $131,765.
MVPF Summary
The paper also discuss the impact of including crime effects on willingness to pay for SSI. The baseline specification is conservative and does not include any benefits from reduced victimization. The willingness to pay is given by the SSI transfers ($37,737) plus Medicaid value ($8,400) = $46,137. Additionally, authors estimate that the extra crimes caused by SSI removal impose a monetized cost on victims of crime of $85,628 per removal on average. Including victims’ willingness to pay to avoid these crimes yields a total willingness to pay of $46,137 + $85,628 = $131,765.
References
Deshpande, Manasi, and Michael Mueller-Smith. “Does Welfare Prevent Crime? The Criminal Justice Outcomes of Youth Removed from SSI.” Working Paper (2022). The Quarterly Journal of Economics, 137(4): 2263-2307. https://doi.org/10.1093/qje/qjac017
Deshpande, Manasi. “Does Welfare Inhibit Success? The Long-Term Effects of Removing Low-Income Youth from the Disability Rolls.” American Economic Review 106.11 (2016): 3300-3330. https://www.aeaweb.org/articles?id=10.1257/aer.20151129
Policy Features
- Category
- Social Insurance
- Sub-Category
- DI/SSI
- Beneficiary Type(s)
- Adults, Children and Youth
- Average Age
- 18
- Country of Implementation
- United States
- Year of Implementation
- 1996
- Empirical Method
- Regression Discontinuity
- Research Type
- Primary
- Peer Reviewed
- No
- MVPF Publication Link
- doi.org/10.1093/qje/qjac017