Welfare Change from FSP (1964–1974) in Millions $2015—Transfer and Labor Market Losses vs. Crime Reduction Gains (18–24-Year-Olds)
| Welfare Loss | ΔWelfare | Gain–Loss Ratio | |||||
|---|---|---|---|---|---|---|---|
| Social Discount Rate | Welfare Gain | (Min.) | (Max.) | (Min.) | (Max.) | (Min.) | (Max.) |
| McCollister, French, and Fang (2010) crime cost estimates | |||||||
| 0% | 510,216 | 34,591 | 114,437 | 475,625 | 395,779 | 14.8 | 4.5 |
| 3% | 291,990 | 34,591 | 114,437 | 257,399 | 177,553 | 8.4 | 2.6 |
| 5% | 203,650 | 34,591 | 114,437 | 169,059 | 89,213 | 5.9 | 1.8 |
| 7% | 143,311 | 34,591 | 114,437 | 108,721 | 28,874 | 4.1 | 1.3 |
| Low crime cost estimates | |||||||
| 0% | 229,285 | 34,591 | 114,437 | 194,695 | 114,848 | 6.6 | 2.0 |
| 3% | 131,217 | 34,591 | 114,437 | 96,626 | 16,780 | 3.8 | 1.1 |
| 5% | 91,518 | 34,591 | 114,437 | 56,927 | −22,919 | 2.6 | 0.8 |
| 7% | 64,402 | 34,591 | 114,437 | 29,812 | −50,034 | 1.9 | 0.6 |
Notes: The table presents the estimates of welfare gains from crime reduction due to FSP implementation from Table 6 and the range of estimates of the welfare losses due to the program from Online Appendix Table A22. Welfare losses are the sum of the FSP’s contemporary work disincentives, program administrative costs, and distortionary taxes needed to raise government revenue. “Min.” and “Max.” column titles correspond to the minimum and maximum estimates of welfare loss. “Min.” (“Max.”) welfare loss uses the low (high) end of the range of marginal deadweight loss from government revenue reported by Ballard, Shoven, and Whalley (1985), the smaller (larger) estimates of hours and wage changes from Hoynes and Schanzenbach (2012), and the low (high) end of the range of elasticity of labor supply estimates reported by McClelland and Mok (2012). The change in welfare is the difference between the welfare gain and the welfare loss and the gain–loss ratio is the welfare gain divided by the welfare loss. See Online Appendix C for details.