Development that Works
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    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • Cash and Crime



    cash crime eng

    I find it very hard to work or write on airplanes so in my last trip, I watched Rounders. Matt Damon –whose smile lights up any smoke-filled room – is a reformed gambler and current law student whose girlfriend (a translucent Gretchen Moll) wants him to kick the habit. He picks up his best friend (Edward Norton, appropriately called the “worm”) from prison, and the worm goes straight back to shady deals in damp and dark Poker rooms in NYC. Norton persuades Damon back into gambling so that he can beat a nasty Russian mobster (a very. very nasty John Malkovich) in a game of Texas hold ‘em and pay back a debt. It’s all downhill from there.

    One wonders what would have happened if Damon had just given Norton a wad of cash the minute he stepped out of prison, and walk away.

    A new paper by Ignacio Munyo and Martin Rossi makes the criminal case for unconditional cash transfers.

    We find that on any given day the number of inmates released from incarceration significantly affects the number of offenses committed that day. Our estimates are robust to a variety of alternative specifications. We run a series of placebo experiments that further support our causal interpretation of the results. We also find evidence that an increase in the amount of money received by prisoners at the time of their release significantly decreases first-day recidivism, and that first-day recidivism is restricted to crimes with a direct financial motivation. These findings suggest that our results are driven by liquidity constraints.

    And the movie would have probably been very boring.

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