What was the crime rate during the Great Depression?
The Great Depression of the 1930s led to dire
circumstances for a large share of American households.
Contemporaries worried that a number of these households would
commit property crimes in their efforts to survive the hard times.
The Roosevelt administration suggested that their unprecedented and
massive relief efforts struck at the roots of crime by providing
subsistence income to needy families. After constructing a panel
data set for 83 large American cities for the years 1930 through
1940, we estimated the impact of relief spending by all levels of
government on crime rates. The analysis suggests that relief
spending during the 1930s lowered property crime in a statistically
and economically significant way. A lower bound ordinary least
squares estimate suggests that a 10 percent increase in per capital
relief spending during the Great Depression lowered property crime
rates by close to 1 percent. After controlling for potential
endogeneity using an instrumental variables approach, the estimates
suggest that a 10 percent increase in per capital relief spending
lowered crime rates by roughly 5.6 to 10 percent at the margin.
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.