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Economical Crime Control

Economical Crime Control. Philip J. Cook Duke University Research for the Real World Seminar National Institute of Justice 12/6/11. Reference: Controlling Crime. Today’s Agenda . The growing role of economists in criminology and criminal justice policy Gary Becker’s normative framework

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Economical Crime Control

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  1. Economical Crime Control Philip J. Cook Duke University Research for the Real World Seminar National Institute of Justice 12/6/11

  2. Reference: Controlling Crime

  3. Today’s Agenda • The growing role of economists in criminology and criminal justice policy • Gary Becker’s normative framework • An economistic framework for thinking about criminal behavior and crime policy • The role of private citizens and the private sector

  4. 1. Criminology and Economics Gary Becker (1968): The (re)entry of economics • Normative: “How many resources and how much punishment should be used to enforce different kinds of legislation?” • “A useful theory of criminal behavior can dispense with special theories of anomie…”

  5. Bentham  Becker

  6. My identity crisis After 40 years of researching crime and crime control, am I a criminologist? Hopeful signs: NBER working group University of Chicago Crime Lab AL CAPONE Vera Institute Cost-Benefit unit Criminology & Public Policy

  7. 2. Economistic framework for crime control -- Normative Crime is costly Crime control is costly Total social cost = crime costs + crime-control costs How much crime control is too much? Can we achieve same level of control at lower cost?

  8. Total property crime rate – NCVS(per 1,000 households)

  9. Local, State, & Fed spending(per capita, $2008)

  10. Police officers and security guards(per capita)

  11. Bottom line? • Crime has dropped • Crime control costs (public and private) have increased • Is the “crime problem” better or worse?

  12. 3. Economistic framework for crime control – behavior Crime rates are determined by complex interplay of: • “Character” and capability (primarily of youths) • Environment of Opportunities (for crime and licit activities) • Availability of criminogenic commodities

  13. Character and capacity Improving character and capacity of youths Reduce exposure to lead Healthy pregnancies, competent parenting Parenting supplements: quality daycare, Head Start Family income support (Chicago vouchers) Mental health and family therapy Raise minimum age of school leaving

  14. Simplistic to focus on character only Good guys and bad guys • Much of the rhetoric makes an implicit claim: “The crime rate is proportional to number of bad guys who are at large” • 1984-1993: The “superpredators” story • Cook-Laub response: It was the environment (crack markets), not the character of the kids

  15. Character is not destiny The character and capabilities of the youths does not determine the crime rate. Crime is a choice, influenced by criminal opportunities Washington DC murder rate increases by 10X during crack epidemic

  16. Curtailing attractiveness of criminal opportunities • Deterrence: threat of swift and sure sanctions, not necessarily severe • A stake in straight society is also a deterrent (opportunity cost) • Intoxication (drugs or alcohol)  bad decisions. • Private actors play a vital role

  17. 4. Private action to prevent& avoid victimization? Conceptually: • Situational crime prevention Private actions to make crime targets less alluring to criminals Displacement vs. “taking profit out of crime” • Private inputs into police investigation Co-production with criminal justice system of deterrence and incapacitation

  18. Case study of private action:Business Improvement Districts • Self-taxing non-profits that focus on neighborhood safety, sanitation, marketing • “Safe and clean” • Local public goods supplement city services • 800 BIDs in US • Crime-related efforts • Private security, improved contact with police

  19. Evaluation results for BIDs in LA • Question: Do BIDs reduce crime? • History: California changes law, LA adopts a process for BID creation • Evaluation of 30 new BIDs in LA, 1997-2003 • Annual panel data, 1995-2005, for 1,072 “reporting districts” (neighborhoods) • 179 become part of a BID

  20. Crime count per neighborhood

  21. Annual Effect of BID on Crimes/RD

  22. Value of crime reduction • Contingent valuation study from national survey • Vote for continuation of a program that reduces [robbery] by 10% if it will cost you $X? • X ranges from $25 to $225, at random • Responses form a demand curve • Area under the demand = total value • Compute implied value per crime

  23. Social value of crime reduction (per $10,000 expended)

  24. Are we ignoring some costs? Displacement to other neighborhoods? NO, panel regression results show nil effect Do BIDs increase the arrest rate? NO, just the opposite - 1.7 arrests per $10,000 @ $2,947 = $4,863 savings to the city Other concerns?

  25. Some questions • BIDs in Los Angeles reduce crime, & pass the cost-benefit test • Are there equity concerns? Or (possibly) equity benefits? • How can the collective action problem be overcome in other states? • Is BID security equivalent to more police? • What can we conclude about private action?

  26. Auto Theft as a case study ofprivate action 2008 vs. 1989: 2X vehicles but fewer thefts! Why? New locking devices: steering column locks; The Club, immobilizers; Too much or too little effort? (Moral hazard?)

  27. Private co-Production with CJS CJS effectiveness depends on willingness of victims and others to provide a public service, largely uncompensated Cooperation begins with reporting to the police

  28. Reporting rates, residential burglary

  29. Reporting rates, motor vehicle theft

  30. Public policy  Private incentives • Insurance requirement • Crime Stoppers • Victim compensation • Restitution/ tort settlement • Regulatory requirement • Satisfaction from doing good/ revenge Too much or too little? Too little!

  31. Best example of victim input LoJack (Ayres & Levitt) Private cost = $700. Externality = $1300 per year Some states give insurance discount VIN is earlier example Mandated

  32. Summary • Why the huge drop in crime since 1980? Private action deserves some credit • Should private action be encouraged by public policy? Yes for cooperation; Yes for some precautions • How? BIDs; insurance regulation; incentives for cooperation; trust in system

  33. Conclusion Crime and crime control are both costly An economic perspective may be helpful I am a criminologist

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