PPA786: Urban Policy
Class 21:
Key Issues in Studying
Urban Crime
PPA786, Class 21: Urban Crime
• Class Outline
▫ Introduction
 Crime Statistics
 The Economics of Crime
▫ Links to Earlier Topics
 The Impact of Housing on Crime
 The Impact of Crime on Housing
 The Impact of Jobs on Crime
 The Impact of Crime on Jobs
PPA786, Class 21: Urban Crime
• Crime Statistics
▫ The FBI website (www.fbi.gov) provides easy
access to crime and victimization statistics.
▫ The main lesson: Crime rates have been falling
steadily for the last 30 years or so (after increasing
in the 1980s).
▫ Another lesson: Some of the most profound
racial/ethnic disparities in the nation appear in
the criminal justice system and in victimization
rates.
PPA786, Class 21: Urban Crime
Property Crime Rates in the U.S., 1991-2010
Crime Rate per 100,000 People
6,000
5,000
4,000
3,000
2,000
1,000
0
1990
1992
1994
1996
Property
crime
1998
Burglary
2000
2002
Larcenytheft
2004
Motor
vehicle
theft
2006
2008
2010
PPA786, Class 21: Urban Crime
Violent Crime Rates in the U.S., 1991-2010
800
Crime Rate per 100,000 People
700
600
500
400
300
200
100
0
1990
1992
Violent
crime
1994
1996
Murder and
manslaughter
1998
2000
Forcible
rape
2002
2004
Robbery
2006
2008
Aggravated
assault
2010
PPA786, Class 21: Urban Crime
Lifetime Likelihood of Serving a Prison
Sentence, Males Born in 1974 and 2001
(Raphael)
35
30
25
20
15
10
5
0
Non-Hispanic White
Non-Hispanic Black
1974
2001
Hispanic
PPA786, Class 21: Urban Crime
Victimizations per 1,000 Households
Property Crime Victimizations by Household Income,
2010
180
160
140
120
100
80
60
40
20
0
Total
Burglary
Motor vehicle theft
Theft
PPA786, Class 21: Urban Crime
Violent Crime Victimization Rates by Race/Ethnicity,
2010
Victimization Rate per 1,000 People
60
50
40
30
20
10
0
White
Total
Black
Rape/sexual assault
Hispanic
Robbery
American Indian or
Alaskan Native
Total assault
Asian or Pacific
Islander
Aggravated assault
Two or more races
Simple assault
PPA786, Class 21: Urban Crime
• The Economics of Crime
▫ Some crime, especially violent crime, obviously
has an irrational element.
▫ But scholars have found that much of the variation
in crime can be found by thinking about the costs
and benefits of crime for potential criminals (=
everyone!)
▫ For more, see the reading from O’Sullivan and the
articles it cites.
PPA786, Class 21: Urban Crime
• Examples of the Costs of Crime
▫ There is some probability that a criminal will get
caught—and costs, such as fines, incarceration,
injury, or limited future job possibilities—if one
does get caught.
▫ Time spent in criminal activities has an
opportunity cost, namely, lost wages; this cost is
low with high unemployment and low skills.
▫ Criminal activity may cause anxiety or alienate
friends or relatives.
PPA786, Class 21: Urban Crime
• Examples of the Benefits of Crime
▫ Criminal activity may be lucrative (with some
probability).
▫ Criminal activity may yield social status in some
neighborhoods—at least with some people.
PPA786, Class 21: Urban Crime
• Supply = Demand
▫ The amount of crime in a community depends on
the distribution of rewards from various crimes
(the benefits or demand curve)
▫ And the distribution of costs (the supply curve).
▫ Equilibrium crime is where the marginal benefit
from one more crime equals the costs.
▫ Policy makers attempt to shift these curves (e.g. by
reducing unemployment) to reduce crime.
PPA786, Class 21: Urban Crime
• The Impact of Housing on Crime: Lead
▫ Earlier in the class we saw that old housing, which
is concentrated in central cities, sometimes has
lead paint, now banned; when children ingest it,
they literally lose intelligence and become more
aggressive.
 Lower IQ lowers the opportunity cost of crime.
 Aggressive behavior is associated with violent crime.
PPA786, Class 21: Urban Crime
• The Impact of Housing on Crime: Lead, 2
▫ Lead also used to be in gasoline and was emitted
in exhaust; so high congestion places, again big
cities, had the highest concentrations of lead in
the air—leading to the same types of problems.
▫ The housing market is involved here because high
congestion is a neighborhood disamenity and lowincome people sort into low-quality
neighborhoods.
PPA786, Class 21: Urban Crime
• The Impact of Housing on Crime: Lead, 3
▫ A study by Reyes (2007) looked at the impact of
removing lead from gasoline on violent crime.
▫ Her paper contains a lot of information about the
impact of exposure to lead on behavior.
▫ Her methodology is very good. Even though lead was
removed from gasoline at the same time in every state
due to the Clean Air Act, the change in lead exposure
was different in different states because each state has
a different mix of gasoline grades. So she uses state
fixed effects and state level changes in lead in gasoline.
PPA786, Class 21: Urban Crime
• The Impact of Housing on Crime: Lead, 4
▫ Reyes finds “a significant and robust relationship
between lead exposure in childhood and violent crime
rates later in life.
 The estimates indicate that the reduction in lead
exposure in the 1970s is responsible for a 56% drop in
violent crime in the 1990s and will likely produce further
declines in the future, up to a 70% drop in violent crime
by the year 2020.”
▫ “Moreover, the social value of the reductions in violent
crime far exceeds the cost of the removal of lead from
gasoline.”
PPA786, Class 21: Urban Crime
• The Impact of Crime on Housing
▫ Several recent studies show that people are willing
to pay a lot more for housing in low-crime
neighborhoods than in high-crime neighborhoods.
 Ihlanfeldt and Mayock find that in the Miami area,
“the elasticities of house value with respect to
aggravated assault crime and robbery crime are
−.152 and −.111, respectively.”
 I find that in Cleveland, people pay 20% more to be
at least ½ mile from one of the city’s 3 crime “hot
spots,” which have high violent and property crime.
PPA786, Class 21: Urban Crime
• The Impact of Crime on Housing, 2
▫ Crime also affects sorting, of course. High-crime
neighborhoods are not desirable.
 An economics graduate student, Alex Bogin, uses data
from Mecklenberg, NC to estimate the impact on house
values of a nearby homicide; he finds that “homes sold
within 500 feet of a homicide fall by roughly 14.4% in the
year following the crime.” This difference then fades.
 He also finds that this impact is larger in low-crime than
in high-crime neighborhoods. This is consistent with
sorting, because people willing to pay the most to avoid
crime sort into low-crime neighborhoods.
PPA786, Class 21: Urban Crime
• The Impact of Jobs on Crime
▫ As pointed out earlier, some people are driven to
crime because the expected returns to criminal
activity are higher than the expected returns to
work in the regular labor market.
▫ Hence, a lack of job opportunities (high
unemployment, low wages) leads more people to
choose crime.
PPA786, Class 21: Urban Crime
• The Impact of Jobs on Crime, 2
▫ A study by Gould, Weinberg, and Mustard (ReStat
2001) looks at this link.
▫ “From 1979 to 1997, the wages of unskilled men
fell by 20%, and, despite declines after 1993, the
property and violent crime rates(adjusted for
changes in demographic characteristics) increased
by 21% and 35%, respectively.”
▫ They find that “the wage trends explain more than
50% of the increase in both the property and
violent crime indices over the sample period.”
PPA786, Class 21: Urban Crime
• The Impact of Crime on Jobs
▫ Another important effect is that people with a
criminal record have a much more difficult time
finding a job.
▫ The posted reading by Pager, Western, and Sugie
shows this with employment audits (which were
discussed in an earlier class).
▫ The posted Raphael reading reviews many more
studies on this topic.
PPA786, Class 21: Urban Crime
• The Impact of Crime on Jobs, 2 (Pager et al.)
PPA786, Class 21: Urban Crime
• The Impact of Crime on Jobs, 3
▫ A related effect concerns the location of business (see
the posted article by Rosenthal and Ross).
▫ R&R find that crime affects firm sorting.
 The firms they look at (in retail, wholesale, and
restaurants) tend to be in census tracts with higher rates
of violent crime and motor vehicle theft.
 An increase in violent crime and motor vehicle theft leads
to less retail activity.
 More violent crime during prime dinner hours lowers the
concentration of high-end restaurants.
PPA786, Class 21: Urban Crime
• The Impact of Crime on Jobs, 4--Policy
▫ The Center for Employment Opportunities (CEO)
Transitional Jobs Program was designed to help former
prisoners.
▫ CEO provides temporary, paid jobs and other services in
an effort to improve participants’ labor market
prospects and reduce the odds that they will return to
prison.
▫ It was evaluated by MDRC using a random-assignment
design. See
http://www.mdrc.org/publications/616/overview.html
PPA786, Class 21: Urban Crime
• The Impact of Crime on Jobs, 5—Policy (MDRC)
▫ CEO substantially increased employment early in the follow-up
period but he effects faded over time.
 The initial increase in employment was due to the temporary jobs
provided by the program.
▫ CEO significantly reduced recidivism, with the most promising
impacts occurring among a subgroup of former prisoners who
enrolled shortly after release from prison.
 These program group members were less likely than their control
group counterparts to be arrested, convicted of a new crime, and
reincarcerated.
 CEO’s impacts were stronger for those who were more
disadvantaged or at higher risk of recidivism when they enrolled in
the study.
▫ CEO’s financial benefits outweighed its costs, largely due to
reduced criminal justice system expenditures.