The Effects of Government Transfers on Monthly Cycles in Drug Abuse, Crime and Mortality Carlos Dobkin (UC Santa Cruz) and Steve Puller (Texas A&M)

Cycles in Drug Consumption: Literature Monthly pattern in deaths (Phillips et al., NEJM 1999) –1% more 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 Economic literature on consumption smoothing –Food stamp recipients do not smooth caloric intake over the month (Shapiro, 2005) –Social Security recipients do not smooth consumption over the month (Stephens, 2003)

Contributions of This Paper Determine which programs drive the cycle in hospital admissions Understand the unintended consequences of government transfer programs on: –Health (Hospitalization & Death) –Crime Discuss implications for alternative means of disbursing aid –Cycles vs. Levels

Major Cash Aid Programs Welfare (AFDC, TANF, CalWORKs) –Averaged about $550/month for family with no income –Received: 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) –Received: 1 st of month Social Security Disability Insurance (DI) –Partial income replacement if sufficient work history –Eligible for Medicare after 2 years –Received: 3 rd of month for most recipients in our sample General Relief (GR) –Indigent population not qualifying for welfare –About $200/month for individual –Received: Varies

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 (SSI) for Aged, Blind, or Disabled –Does not include General Relief –Social Security Disability Insurance (DI) (proxied by Medicare & under 65) California Mortality Data –Census of deaths in California (CA Dept of Health Services) California Arrest Records –Census of arrests in California (CA Dept of Justice)

SSI Pre and Post Welfare Reform Act

Possible Causes Other Than Cash Aid Programs Weekends, Certain Holidays? –Weekends evenly distributed over 7 yrs –Figure 1 similar if “regression adjust” Supply-side factor? Paycheck effect? –Negligible cycle for patients w/ private insurance (employed?) –Paychecks commonly received around 1 st and 15 th Other personal income at beginning of month?

Source: payday loan data from Skiba and Tobacman

Surge in Admissions on the 15 th ?

Possible Causes Other Than Cash Aid Programs Weekends, Certain Holidays? –Weekends evenly distributed over 7 yrs –Figure 1 similar if “regression adjust” Supply-side factor? Paycheck effect? –Negligible cycle for patients w/ private insurance (employed?) –Paychecks commonly received around 1 st and 15 th Other personal income at beginning of month?

Alcohol Admissions

Monthly Cycles in Exit Rates

Corroborating Evidence: 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 to later in month? –Likely a low power test –Diff-in-diff to allow for other trend Comparison group: 10 other largest counties Regression Specification:

Choosing “Early” and “Middle” Days

Results – LA “Experiment”

Caseloads Over Time

Mortality Increased drug use can increase risk of dying –Drug/alcohol overdoses –Motor Vehicle Accidents –Violence Look at deaths in hospital –Know program coverage –Know timing of onset of fatal injury Look at overall deaths –Larger sample makes it possible to examine particular causes

Within Hospital Mortality

Regression-Based Estimate of Change in Outcome at 1 st of Month 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 We interpret β 1 <>0 as a “change”

22% increase

Total Mortality

4% increase

15-16% increase 8-11% increase

Crime Arrival of checks may change probability of committing crimes directly or indirectly Drug possession and drug sale –Likely to increase as there are more transactions to interdict Revenue generating crime –May decrease or increase

Drug Crimes

Revenue Generating Crimes

Summary of Results on Crime Arrests for drug possession and sale population wide increase by 11-28% 16% drop in arrests for prostitution Modest drop in burglary arrests

Policies to Consider 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 –Expensive

Conclusions Cash aid to certain individuals results in an immediate increase in drug use Increased drug use facilitated by government transfers can result in considerable harm to the individual receiving the check SSI and SSDI cause the cycle in hospitalizations documented in public health literature

The End

Regression Set up 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