Urban Crime. Economics 312 Martin Farnham

Transcription

1 Urban Crime Economics 312 Martin Farnham

2 Introduction Why do we care about urban crime? Crime tends to be concentrated in center city Characteristic of impoverished areas; likely both a cause and consequence of poverty Low wages lower the opportunity cost of crime (more later) High crime may deter business which can lower local job opportunities May have significant impact on people s location decisions and thus is likely to be a determinant of land prices Cullen and Levitt find evidence in US that inner-city crime leads to middle class flight to suburbs

3 Introduction Crime in Canada has been declining since early 1990s, now at same level as in 1979 (Statistics Canada) Young people are disproportionate offenders Crime rates among year olds are much higher than among the rest of the population Further dropoff in criminality after age 40 Since urban populations tend to be younger, part of the cause of urban crime is simple demographics

4 Introduction CMAs with the highest crime rates in 2002 were Regina and Saskatoon Both have youth populations significantly above the national average Note that crime statistics can be problematic, in that some crimes tend to go unreported at higher rates than others Reporting rate for homicide is very high Reporting rate for assault, sexual assault significantly lower Petty crimes often go unreported

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6 Classifications of Crime Violent Crime e.g. homicide, attempted murder, assault, sexual assault and other sexual offences, abduction and robbery Property Crime e.g. theft, breaking and entering, fraud and possession of stolen goods Other criminal code incidents e.g. arson, mischief, bail violations

7 A Theory of Crime We can think of crime as a rational act by someone weighing up costs and benefits (probably not applicable to crimes of passion ) Assume rational criminal Crime committed if expected benefits exceed expected costs Benefits include proceeds from selling stolen goods Costs include planning costs and (if caught) foregone wages while incarcerated, psychic cost of incarceration (or monetary cost of fines), legal fees, etc.

8 A Theory of Crime Person will commit crime if benefits (weighted by the probability of success) exceed costs (weighted by the probability of capture) Things that shift expected costs and expected benefits will affect the decision whether or not to commit a crime

9 Rational Criminality Can use a simple MB/MC model to describe criminal behavior MB (to criminal) has to do with the money they can make from the crime MC (to criminal) measures costs associated with potential capture and punishment Equilibrium Crime MB, MC ($) Q eq MC MB # crimes

10 Examples of Cost Shifters (all these shift MC curve up) More policing Raises the probability of getting caught Higher wages Those who could earn a lot in the market have a lot to lose if they are incarcerated Higher penalties Higher levels of personal guilt associated with committing crimes Many people feel bad if they break the law or cause harm to others.

11 Examples of Benefit Shifters (shift MB curve) Alarm systems Lower the probability of success Shift MB curve down Skill level People who are skilled at pulling off crimes are more likely to succeed (higher MB curve) Young people likely to be stronger, faster than 50 year-olds; may partly explain higher criminal propensity of young people

12 The Socially Optimal Level of Crime Social costs of crime Victims experience costs of crime directly Lose property, may be injured Prevention costs Clearly some crime prevention is warranted, but do we want to aim for complete prevention? Reducing crime to zero would be very expensive Prevention costs are decreasing in the number of crimes (because it s less expensive to allow 100 burglaries than to allow 0 burglaries)

13 Optimal Crime Prevention It doesn t make sense to entirely eliminate crime Best to minimize total costs of crime Total cost=victim cost + prevention cost Similar to argument that says pollution shouldn t be completely eliminated it s simply too expensive $ Optimal Number of Burglaries Total Cost Total Victim Cost Total Prevention Cost B* # Burglaries

14 Means of Prevention Harden the target Install locks and alarm systems, hire guards, dogs, etc. Increase probability of arrest Hire more police Increase probability of incarceration Hire more investigators, better prosecutors to build stronger cases Increase penalties Higher fines, longer prison sentences Improve outside options Greater wages in legal labour market might tip some away from crime

15 Optimal Crime Prevention Another way to think about optimal crime prevention is to equate the marginal victim cost with the marginal prevention cost If MC v >MC p, could lower social cost by increasing prevention a bit (would lower victim costs more than it would raise prevention costs) If MC v <MC p, could lower social cost by decreasing prevention a bit Therefore where MC v =MC p must be at social optimum If total victim cost curve is linear, MC v is constant

16 Socially Optimal Crime Prevention Different types of crimes may have different victim costs Optimal number of armed robberies will be less than optimal number of burglaries if MC v is higher for armed robbery Note that it s possible the MC p curve will differ across crime types Marginal Victim and Prevention Costs $ MC p MC v,a MC v,b # Crimes

17 Social Optimum May Vary Across Neighborhood This suggests that differences across place in victim costs and prevention costs may lead to different optimal crime levels Can higher crime rate in poor center city neighborhoods be justified as optimal? One could argue poor suffer less per crime because they have less to lose (lower MC v ) Could also argue that prevention costs are higher in poor areas because there are more potential criminals (due to low wages etc.) This all seems a bit problematic, ethically though Kind of like saying the fire truck should drive past a burning shack to put out the fire in the mansion

18 Crime Prevention Crime prevention can occur at both the individual (victim) level and at the government (policy, police, legal) level Individual-level prevention People can protect themselves against crime by making their property less accessible to criminals (hardening the target) Can also insure against crime Government Policing/criminal justice system Social policy (boosting economic opportunities for poor, etc.) Urban planning

19 Why Is Crime Higher in Cities? Cities have valuable targets (fancy cars, etc.) so benefits of crime are higher Arrest rates are lower in cities Anonymity makes people less likely to rat out criminals, help out neighbors by reporting suspicious activity Policy have more potential suspects to sift through More young people, including youth in singleparent households (less supervision of youth) Large populations of poor.

20 Why did Crime Rates Fall in 1990s? Both US and Canada experience major drops in crime rates during 1990s. Why? Improved economy over early 1990s Less youth (aging of baby boom into mellower years) Levitt study on abortion Shift in drug use from crack to less violence-inducing drugs