The Effects of Government Transfers on Monthly Cycles in Drug Abuse, Crime and Mortality Carlos Dobkin and Steven Puller

What are the immediate adverse effects of the receipt of government aid? Important to understand the unintended consequences of government programs –Hospitalization –Arrest –Mortality Insight into a population with severe self control problems Cycles in adverse events may

Cycles in Drug Consumption: Literature Monthly pattern in deaths (Phillips, NEJM 1999) –1% deaths in first vs. last week of month –14% more substance abuse deaths in first vs. last week of month Monthly pattern in psychiatric admissions (Halpern & Mechem, Am J Med, 2001) –Psychiatric admissions for substance abuse 14% higher first week (vs. 6% for non-substance abuse) Cocaine use by disabled vets (Shaner, NEJM, 1995) –105 male vets on disability with history of schizophrenia & cocaine use –Highest cocaine concentration in body during first 3 days of month, followed by highest number of hospital admissions 3-5 days later Other effects of govt transfers on consumption –Food stamp recipients do not smooth caloric intake over the month (Shapiro, 2005) –Social Security recipients do not smooth monthly consumption (Stephens, 2003)

Major Cash Aid Programs Welfare (AFDC, TANF, CalWORKs) –Averaged about $550/month for family with no income –Receipt: 1 st of month (few exceptions including LA post-97) Supplemental Security Income (SSI) –Two-thirds of CA’s 1 million recipients are disabled –About $600/month for individual ($1100 for couples) –Receipt: 1 st of month Social Security Disability Insurance (SSDI) –Partial income replacement if sufficient work history –Eligible for Medicare after 2 years –Receipt: 3 rd of month for most recipients in our sample General Relief (GR) –Indigent population not qualifying for welfare –About $200/month for individual –Receipt: Varies

Contributions of This Paper Determine which programs drive the cycle in hospital admissions –SSI & SSDI, but not Welfare Show that for SSI recipients, receipt of check results in very significant increases in mortality Document strong monthly cycle in drug- related crime

Data California Hospital Discharge Data –Census of hospitalizations –Includes patient demographics, cause of hospitalization and treatment provided Medi-Cal Eligibility Data –Linked to hospital data –Includes individuals receiving welfare and Supplemental Security Income for Aged, Blind, or Disabled –Does not include General Relief –Social Security Disability Insurance (SSDI) (proxied by Medicare & under 65) California Mortality Data –Census of deaths in California California Arrest Records –Census of arrests in California

Welfare Check Receipt in LA County June 1997: Los Angeles County changed timing of welfare check disbursement –Pre-June 1997: All checks 1 st of month –Post-June 1997: Staggered over first 10 days of month Test for causal effect of welfare checks –Did peak of LA county welfare cycle shift later in month? Falsification tests –Did welfare cycle in other large counties change? –Did SSI cycle in LA change? Regression Specification:

Summary Strong Cycle in Drug Related Hospital Admissions Cycle largely due to SSI with SSDI contributing also SSI recipients leave the hospital at considerably higher than expected rates in anticipation of the first of the month These are indirect evidence of a strong cycle in drug consumption

Regression Discontinuity Design Second order polynomial in days from the first of the month fully interacted with a dummy for after the first of the month Post = dummy for event after the 1 st of the month Days = days from the first of the month

Summary Strong Cycle in Drug Related Hospital Admissions largely due to SSI Strong cycle in mortality particularly for SSI recipients Cycle in mortality largest among causes likely to be due to drugs

Summary of Results The cycle in hospitalization is largely driven by SSI Mortality for SSI recipients increases by 22% on the first of the month Arrests for drug possession and sale population wide increase by 20% Arrests for some revenue generating crime drop with a 16% drop in arrests for prostitution

Policy Implications Distribute cash aid in smaller, more frequent batches –Reduces prevalence of “full wallets” –May reduce bingeing and number of adverse events –Low cost due to EBT Target small subpopulation with repeat drug admissions & substitute in-kind aid –Among 45 thousand SSI recipients ever admitted from , 1004 recipients (2%) are admitted more than 11 times and represent 16% of SSI admissions

Conclusions Full wallets induce a significant increase in drug use for some subpopulations Increased drug use facilitated by government transfers can result in considerable harm for the individual receiving the check Cash aid to certain individuals may generate substantial externalities