Aug 29, 2012

Electronic financial transactions and crime reduction

We find a negative and surprisingly strong statistical relationship between EFT [Electronic Financial Transactions] penetration and economic crime such as robbery and burglary. Such results lend credence to claims by Warwick and others that expansion of EFT systems may be a valuable tool in combating crime. We believe that this is the first paper to report such results.
That is from a new working paper "The Impact of Electronic Financial Payments on Crime" by Armey, Lipow, and Webb (July 2012).  
The idea is fascinating. The authors should have considered including a variable to measure rule of law or governance. They include police per capita, but it might not be a good proxy, because of corruption in the police. Besides, some argue that what matters for crime is not income but poverty. A measure of inequality would help as well. 

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