The Economic Benefits of Reducing Violent Crime

7/31/2019 The Economic Benefits of Reducing Violent Crime

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The Economic Beneftso Reducing Violent CrimeA Case Study o 8 American Cities

Robert J. Shapiro and Kevin A. Hassett June 2012

www.americanprogress.o


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The Economic Benefts oReducing Violent CrimeA Case Study o 8 American Cities

Robert J. Shapiro and Kevin A. Hassett June 2012


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iv Ceter or America Progress |The Ecoomic Beeits o Reducig Violet C rime

Reducing current rates o murder, rape, assault, and robbery would

produce a wide range o savings and other benets or Americans as

individuals, property owners, and taxpayers. In 2010 these our main

types o violent crime cost Americans more than $42 billion in direct

costs, including the associated costs o police, courts and correctional

institutions, out-o-pocket-medical expenses borne by victims, and

lost earnings by both victims and perpetrators who are arrested and

convicted. These costs totaled $137 per American in 2010, the last

year or which complete data are available.

Violent crimes also inict other, more intangible costs, including the

pain and suering o victims, a reduced quality o lie or everyone,

and lower investment levels and property values. While these intan-

gible costs are difcult to measure with precision, analysts agree thatthey greatly exceed the direct costs. Here are the ast acts enumerat-

ing the economic benets o reducing violent crime:

Across ve cities with the necessary data or our analysis, we ound

that a 10 percent reduction in homicides should lead to a 0.83

percent increase in housing values the ollowing year, and a 25 per-

cent reduction in homicides should produce a 2.1 percent increase

in housing prices over the next year. Applying these results to all

residential housing in the metropolitan areas o our sample o eight

American cities, we nd that:

A 10 percent reduction in homicides should increase the value o

residential real estate by $4.4 billion in the Boston metropolitan

area, $3.2 billion in Philadelphia, $2.9 billion in Seattle, $2.4 billion

in Dallas, $2.2 billion in the Chicago area, $800 million in Mil-

waukee, and $600 million in Jacksonville. At current property tax

rates, the increase in housing values associated with a 10 percent

reduction in homicides would substantially expand revenues rom

property taxes in all eight cities.

A 25 percent reduction in homicides should be ollowed by in-

creases in metropolitan area housing values totaling $11 billion in

the Boston area, $8 billion in Philadelphia, $7.25 billion in Seattle,

$6 billion in Dallas, $5.5 billion in the Chicago area, $2 billion

Milwaukee, and $1.5 billion in Jacksonville. At their current p

erty tax rates, these increases in housing values would substa

expand the revenues rom property taxes in all eight cities.

The other, direct annual costs o violent crime in the eight cit

tal $3.7 billion per year, ranging rom $89 million per year in

and $198 million in Boston to $752 million per year in Housto

$736 million in Philadelphia, and $1.1 billion in Chicago. Thes

direct costs average $320 per person per year across the eigh

ies, ranging rom $144 in Seattle and $246 in Jacksonville to a

$390 in Milwaukee and Chicago, and $472 in Philadelphia.

The value o the more intangible pain and suering borne bythe victims o these violent crimes totals some $13.9 billion p

year across the eight cities, ranging rom $216 million per ye

Seattle and $734 million in Boston, to nearly $3 billion per ye

Philadelphia and $4.2 billion in Chicago. These annual, intang

costs average more than $1,200 per person across the eight c

ranging rom $350 per person per year in Seattle and nearly

in Jacksonville, to $1,486 per person per year in both Chicago

Milwaukee, and more than $1,900 in Philadelphia.

Successul eorts to reduce violent crime can generate signica

savings or municipal budgets and large benets or residents, rom increases in their housing values. On the next page we list

economic savings the eight cities in our study would reap by re

ing violent crime by 10 percent and by 25 percent.

Fast acts on the economic beneits o reducing violent crime


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Fast acts o the ecoomic beeits o reducig violet crime | www.americaprogress.

Boston

A 10 percent reduction could save $5 million per year, reduce

direct costs to victims by more than $7 million per year, and avert

more than $73 million in annual intangible costs to victimsre-

ducing the total government costs by an average o $145 per

resident per year.

A 25 percent reduction could save more than $12 million per year,

reduce the direct costs borne by victims by some $18 million per

year, and avert more than $180 million in annual intangible costs

reducing total government costs by the equivalent o more than

$360 per resident per year.

This 25 percent savings could enable a mix o boosting city spendingon housing and community development by up to 14.4 percent or

reducing property taxes by up to 0.8 percent.

Chicago


the direct costs to victims by nearly $43 million per year, and

avert more than $420 million in annual, intangible costs to

victimsreducing total government costs by an average o $187

per resident per year.


the direct costs to victims by more than $107 million per year, and

avert more than $1 billion in annual intangible costsreducing to-

tal government costs by the equivalent o nearly $470 per resident

per year.

This 25 percent savings could enable a mix o reducing all local

taxes by up to 2.5 percent or increasing city spending on commu-

nity services by up to 66 percent.

Dallas


direct costs to victims by nearly $15 million per year, and ave

more than $140 million in annual, intangible costs to victims

ducing total government costs by an average o $138 per res

per year.

A 25 percent reduction could save $19 million per year, reduc

the direct costs to victims by more than $36 million per year,

avert more than $360 million in annual intangible costsred

total government costs by the equivalent o more than $450

resident per year.

This 25 percent savings could enable a mix o reducing propetaxes by up to 4.3 percent or increasing the parks and recreat

budget by up to 29 percent.

Houston

A 10 percent reduction could save $17 million per year, reduc

the direct costs to victims by nearly $27 million per year, and

more than $265 million in annual, intangible costs to victims

ducing total government costs by an average o nearly $150

resident per year.

A 25 percent reduction could save more than $43 million per

reduce direct costs to victims by $67 million per year, and ave

more than $660 million in annual intangible costsreducing


resident per year.

This 25 percent savings could und a mix o doubling city sp

ing on health and human services or cutting property taxes

to 5 percent.

Continued on nex


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vi Ceter or America Progress |The Ecoomic Beeits o Reducig Violet C rime

Jack sonvil le

A 10 percent reduction could save $4 million per year, reduce the

direct costs to victims by nearly $8 million per year, and avert more

than $80 million in annual, intangible costs to victimsreducing

total government costs by an average o $122 per resident per year.

A 25 percent reduction could save nearly $12 million per year, re-

duce the direct costs to victims by nearly $20 million per year, and

avert more than $200 million in annual intangible costsreducing

total government costs by the equivalent o more than $305 per

resident per year.

This 25 percent savings could enable a mix o cutting its property

taxes by up to 2 percent or increasing local spending on economic

development by up to 26 percent.

Milwaukee

A 10 percent reduction could save nearly $5 million per year,

reduce the direct costs to victims by more than $9 million per year,

and avert some $90 million in annual, intangible costs to victims

reducing total government costs by an average o nearly $190 per

resident per year.

A 25 percent reduction could save more than $12 million per year,

reduce the direct costs to victims by some $23 million per year,and avert $225 million in annual intangible costsreducing total

government costs in Milwaukee by the equivalent o nearly $470

per resident per year.

This 25 percent savings could enable a mix o cutting property

taxes by up to 4 percent or increasing spending on housing and

community development by up to 71 percent.

Philadelphia


year, reduce the direct costs to victims by nearly $30 million

year, and avert nearly $300 million in annual, intangible cost

victimsreducing total government costs by an average o

$240 per resident per year.


reduce the direct costs to victims by nearly $75 million per ye

and avert some $742 million in annual intangible costsred


resident per year.

This 25 percent savings could enable a mix o cutting local pr

taxes by up to 11 percent or doubling spending on homeless

housing assistance.

Seattle

A 10 percent reduction could save more than $2 million per y

reduce the direct costs to victims by more than $2 million pe

and avert nearly $22 million in annual, intangible costs to vic

reducing total government costs by an average o nearly $50

resident per year.

A 25 percent reduction would save the city budget $6 millioyear, reduce the direct costs to victims by more than $5 mil

per year, and avert some $54 million in annual intangible c

reducing total costs in Seattle by the equivalent o $123 pe

resident per year.

This 25 percent savings could enable a mix o cutting property

by up to 2.4 percent and increasing city spending on neighbor

and development by up to 5.4 percent.


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Contents 1 Introduction and summary

7 The consequences o alling crime rates on real estate va

city budgets, and local residents

13 The impact o lower rates o violent crime on real estate v

19 Estimating other direct savings and intangible beneits

o reducing violent crime

31 The costs o violent crimes or eight U.S. cities and the

beneits and savings rom reducing those crimes

39 Alternative uses o the municipal savings rom reducing

violent crime

48 Reerences

51 Appendix A

55 Appendix B

62 About the authors

63 Acknowledgements

64 Endnotes


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Itroductio ad summary | www.americaprogress.

Introduction and summary

Violen crimes are cosly. Murders, rapes, assauls, and robberies impose concree

economic coss on he vicims who survive as well as he amilies o hose who lose

heir lives, in he loss o earnings and heir physical and emoional olls. Violen

crimes also impose large coss on communiies hrough lower propery values,

higher insurance premiums, and reduced invesmen in high-crime areas. In addi-

ion, violen crimes impose signican coss on axpayers, who bear he nancial

burden o mainaining he

police personnel and opera-ions, cours, jails, and prisons

direced oward hese crimes

and heir perperaors.

Forunaely, he incidence o

violen crimes in he Unied

Saes has allen sharply over

he las 20 years. From 1960 o

1990 he raes o hese crimes

rose sharply as did heir aten-

den coss. Over ha period

murder raes nearly doubled,

raes o rape and robbery

increased ourold, and he rae

o assual quinupled. Since he

early 1990s, however, raes o

mos violen crimes have been

cu nearly in hal. (see Figure 1)

Ye raes o mos violen crimes in he Unied Saes remain high compared o he

1950s and 1960s and o oher advanced socieies oday. Te U.S. murder rae, or

example, has allen o a 50-year low, bu ha rae is sill nearly hree imes he level

in Canada and more han our imes he level in he Unied Kingdom.1 Among all

FIGURE 1

The good news: Falling crime rates

Violent crime in the United States, oenses per 100,000 population, 1960-2010

Use of weapons and guns in violent crimes, 2010

Violent crimePercent committed

with weapons

Percent committed

with handguns

Homicide 94% 67%

Robbery 58% 41%

Aggravated assault 73% 20%

Source: Federal Bureau of Investigation, Uniform Crime Report, Crime in the

United States, 2010 (Department of Justice, 2011).

Source: FBI, Uniorm Crime Reports as prepared by the National Archive o Criminal Justice Data, http://www.ucrdatatool.govSearch/Crime/State/StateCrime.cm
http://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfmhttp://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfmhttp://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfmhttp://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfm


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2 Ceter or America Progress | The Ecoomic Bee its o Reducig Violet Crim e

o he worlds developed counries, he Unied Saes oday, on a per capia basis,

ranks second in murders, ourh in rapes, and sixh in robberies.

Te Bureau o Jusice Saisics repors ha he majoriy o all violen crimes

involve he use o weapons, and in wo-hirds o all homicides and 41 percen o

all robberies, he weapon is a handgun. (see able 1)

TABLE 1

Most violent crimes involve weapons

Use o weapons and guns in violent crimes, 2010

Violent crimePercent committed

with weapons

Percent committed

with handguns

Homicide 94% 67%

Robbery 58% 41%

Aggravated assault 73% 20%

Source: Federal Bureau o Investigation, Uniorm Crime Report, Crime in the United States, 2010 (Department o

Justice, 2011).

Moreover, rom 2005 o 2010 he naionwide incidence o homicides declined

by 12.5 percen, he number o robberies decreased by nearly 9 percen, and he

number o aggravaed assauls declined by 7 percen. Te share o crimes commi-

ed wih guns in all hree caegories, however, remained consan.

By mos measures, violen crime coninues o impose signican coss on

Americans and heir communiies. Te coss borne by he American public or

his level o criminal aciviy are signican. Medical care or assaul vicims, or

example, coss an esimaed $4.3 billion per year.2 We spend $74 billion per year

on incarceraing 2.3 million criminals, including some 930,000 violen criminals.3

Moreover, he coss o he pain and suering borne by he vicims o violen

crimes is several imes greaer han he more direc coss o hose crimes. As a

resul, successul eors o reduce violen crime can produce subsanial economic

benes or individuals, communiies, and axpayers.

Tis repor presens he ndings and conclusions o a yearlong projec o examine

and analyze he coss o violen crimes in a sample o eigh major American ciies

and esimae he savings and oher benes ha would accompany signican


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reducions in hose crimes. Tis analysis draws on daa pinpoining he incidence

and locaion o murders, rapes, assauls, and robberies. Te daa were provided

by he police deparmens o Boson, Chicago, Dallas, Houson, Jacksonville,

Milwaukee, Philadelphia, and Seatle.

We examined a broad range o boh direc and inangible coss associaed wihhose violen crimes based on heir incidence in each o he eigh ciies in 2010.

Te direc coss repored here are hose borne by he residens and ciy govern-

mens o he eigh ciies, alhough addiional coss are also borne by sae and

ederal governmens and he axpayers who nance hem. Finally, we calculaed

he benes o hose residens associaed wih subsanial reducions in violen

crime, including he impac on residenial home values and a variey o savings o

he ciy governmens.

In odays igh scal and economic environmen, he mayors and ciy councils o

every ciyalong wih sae and he ederal governmensare searching or wayso reduce heir spending and expand heir revenues. Te common challenge is o

achieve susainable scal condiions wihou hobbling governmens abiliy o pro-

vide he vial goods and services ha mos Americans expec, all wihou burden-

ing businesses and amilies wih onerous new axes. Tis analysis provides anoher

way available o many American municipaliies: Secure budge savings, higher

revenues, and personal income and wealh gains by reducing violen crime raes.

o calculae he exen o hose savings and benes, we analyze a broad range

o direc coss associaed wih he violen crime in he eigh ciies sampled here.

Tese direc coss sar wih local spending on policing, prosecuing, and incar-

ceraing he perperaors o hose crimes. Tese coss also encompass ou-o-

pocke medical expenses borne by surviving vicims o violen crime as well as

he income hose vicims mus orgo as a resul o he crimes. Tese coss also

include he los incomes ha would oherwise be earned by he perperaors o

violen crimes had hey no been apprehendedas disaseul as i is o calculae

he oregone income o rapiss or armed robbers who are arresed, conviced, and

incarceraed. Tese direc, annual coss range rom $90 million per year in Seatle

o around $200 million per year in Boson, Jacksonville, and Milwaukee, o more

han $700 million in Philadelphia and nearly $1.1 billion or Chicago.

Tis repor also examines cerain inangible coss associaed wih violen crime,

including he pain and suering o he surviving vicims o violen crime and he

coss o he amilies o murder vicims. Across he eigh ciies examined here, he


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oal annual coss o violen crimes, including hese inangible coss as well as he

more direc ones, range rom more han $300 million per year in Seatle o more

han $900 million in Boson, o some $3.7 billion per year in Philadelphia and

$5.3 billion or Chicago.

Based on his analysis we also esimae he budgeary savings ha each o he eighciies should expec o achieve i heir raes o violen crime declined by eiher 10

percen or 25 percen. Tese savings include lower expendiures on law enorce-

men and he jusice sysem, as well as he addiional revenues ha each ciy could

expec o collec rom applying local axes o he income earned by hose who oh-

erwise would have been vicims or perperaors o hose crimes.

All old, he esimaed savings or municipal budges rom a 25 percen reducion

in violen crime range rom $6 million per year in Seatle o $12 million per year

in Boson and Milwaukee, o $42 million per year in Philadelphia and $59 million

or Chicago. We also esimae he value o oher benes associaed wih reducedraes o violen crime, including lower ou-o-pocke medical coss or hose who

oherwise would have been vicims as well as heir avered pain and suering.

Te larges economic benes, however, arise rom he impac o lower raes o

violen crime on he housing values in he ciies sampled here. o esimae his

eec, we use daa covering several years on he incidence o violen crimes by zip

code in each ciy and changes in housing values in he same zip codes over he

same period. Five o he eigh ciies were able o provide daa by zip code covering

a leas six years. Our analysis o hose daa ound ha a reduced incidence o mur-

ders in a paricular zip code is ollowed by a predicable and signican increase in

housing values in he same zip code in he nex year.

On average, a reducion in a given year o one homicide in a zip code causes a 1.5

percen increase in housing values in ha same zip code he ollowing year. We

applied hese ndings o available daa on he value o he housing sock in he

meropolian areas o all eigh ciies. Te esimaed increases in he value o he

housing sock or he eigh ciies and heir immediae meropolian areas, ollow-

ing a 10 percen reducion in homicides, range rom $600 million in Jacksonville

and he surrounding area o $800 million in he Milwaukee area, o $3.2 billionin Philadelphia and he surrounding suburbs, and $4.4 billion in he Boson area.

Unorunaely, inconsisen reporing o oher ypes o violen crimerapes,

assauls, and robberiespreclude a reliable analysis o he impac on housing

values o changes in he incidence o hose crimes.


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A ull analysis o the ways communities reduce crime is beyond the

scope o this report, but it is important to note that many strategies

or reducing violent crime entail budgetary costs as well. We do not

attempt to calculate those costs. Nevertheless, readers should beaware that scholars have conducted extensive research to identiy

which crime control and prevention strategies contributed most to

the reductions in violent crimes in recent decades.

Problem-oriented policing is an evidence-based intervention or

reducing violence.4 An evaluation o the pulling levers strategy

policing that ocuses criminal justice and social service attention on

a small number o chronically oending gang membersound a

43 percent decline in assaultive gun violence events and a 66 percent

reduction in gang-related homicides ater the intervention.5

An economic analysis o underground gun markets in Chicago suggests

that intervening in networks o black-market gun brokers may also oer

promise in reducing illegal access to guns.6 Police stings o gun dealers

engaged in illegal gun sales were associated with a subsequent reduc-

tion in the supply o new guns to criminals in some but not all cities.7

Many empirical studies, or example, have examined which strategies

have been most cost eective.8 A 1997 meta-analysis commissioned

by the U.S. Department o Justice identied a range o practices

that have proved successul with various kinds o oenders. Familytherapy and parent-training eorts have been quite eective or at-

risk pre-adolescents while vocational training has worked well or cer-

tain groups o older, male ex-oenders. Additional police patrols also

reduced the incidence o serious oenses in high-crime hotspots.9

Similarly, a 1998 RAND Corporation study analyzed the cost e

tiveness o several approaches in Caliornia. It ound that $1 mi

expended on graduation incentives reduced the number o yea

serious crimes by 258.10 By contrast, $1 million or parent traininto 157 ewer crimes, $1 million on supervising delinquents led

ewer serious crimes, and $1 million devoted to three-strike law

to just 60 ewer serious oenses.11

As a crime-prevention strategy, longer and more certain prison

sentences seem to reduce property crimes, but not violent crim

Yet incarceration does make it much easier to build up DNA dat

bases and recent research has ound that criminals included in

databases are less likely to commit new crimes as well as more

to be apprehended when they do so.13 According to one analy

percent increase in the size o the average DNA database could

duce a 13.5 percent reduction in murders, a 27.2 percent reduc

rapes, and a 12.2 percent reduction in aggravated results.

Many social and economic policies designed or other purposes

also reduce the incidence o serious crimes. Programs to encoura

young people to remain in school, or example, have proved to b

one o the most cost-eective crime-reduction strategies.14 Simil

community-development eorts to increase business investmen

at-risk neighborhoods have also been shown to reduce crime rat

Finally, demographics play a role. Male youth are the populationmost prone to commit serious crimes so as their share o the pop

tion grew with the initial baby boom and then ell with the subse

baby bust, crime rates also increased and then subsided.16

Methods to reduce violent crime


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The cosequeces o allig crime rates o real estate values, city budgets, ad local residets | www.americaprogress.

The consequences o alling crime

rates on real estate values, city

budgets, and local residents

Housing values

Firs, we will examine and analyze how a reducion in he incidence o violen

crimes in a ciy aecs he value o housing in ha ciy. o underake his analysis we

colleced daa on he incidence o violen crimes by geographic area or eigh ciies:

Boson Chicago Dallas HousonJacksonville Milwaukee Philadelphia Seatle

Tese ciies provided daa covering varying periods o ime rom 2000 on, ranging

rom 6 o 11 years. Police deparmens in ve o he ciies were able o provide

complee daa by zip code covering a sucienly long period or saisical analy-

sisChicago, Houson, Jacksonville, Milwaukee, and Philadelphia.

We also colleced daa on he value o residenial real esae in each ciy by zip code

or he same ime periods covered by he crime daa. We used hose wo daases o

analyze he consequences o he acual changes in violen crime raes on acual hous-

ing values, using so called dynamic panel regression models in conjuncion wih

Granger causaliy esing. (See Appendix A, able A-2, on page 54 or a deailed

descripion o his mehodology.) Tis analysis shows ha, on average, a reducionin homicides o one inciden in a zip code during a given year causes a 1.52 percen

increase in home prices in ha zip code he ollowing year.


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Te impac on real esae values o lower raes o oher violen crimes, however,

is more dicul o esablish. Our analysis did no esablish a saisically signi-

can relaionship. In ac, i ound ha alling raes o violen crimes oher han

homicides were ollowed by alling housing prices, hough no o a saisically

signican degree. We discoun hese resuls, however, because hey likely reec

persisen problems wih hese ypes o crime daa. Unlike murders, oher violencrimes are sharply underrepored. According o he Jusice Deparmen Naional

Crime Vicimizaion Surveys, on average only 45 percen o rapes and 59 percen

o assauls are repored o police.

Moreover, he raes a which hose crimes are repored may shif rom year o year

in no sable relaionship o he raes a which hose crimes acually occur. Since

his analysis depends on changes in crime raes in small geographic areas (zip

codes), hese random variaions preclude reliable resuls.

Te resuls rom homicides are reliable, however, and he economic consequenceso reduced raes o homicides can be very large. Here, we were able o roughly esi-

mae he meropolian saisical area-wide impac or seven o he eigh sample

ciies (all bu Houson). We esimae, or example, ha a 10 percen reducion in

homicides could increase he value o he housing sock o he Boson area by $4.4

billion in he ollowing year. (see able 5 on page 17)

Similarly, a 10 percen drop in homicides could increase he value o he hous-

ing sock by $3.2 billion in he Philadelphia meropolian area, by $2.9 billion in

he Seatle area, by $2.4 billion in he Dallas area, by $2.2 billion in he Chicago

meropolian area, by $800 million in and around Milwaukee, and by $600 million

in he Jacksonville area. A 10 percen reducion in homicides, hereore, should

generae large revenue gains rom he propery axes applied o hose values.

Te housing sock daa, however, cover meropolian areas, which in each case

encompass ciy and suburban jurisdicions wih dieren propery ax raes.

Tereore, we canno esimae he precise dimensions o hese addiional propery

ax revenues or he eigh sampled ciies.


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The cosequeces o allig crime rates o real estate values, city budgets, ad local residets | www.americaprogress.

City budgets and their residents

Nex, we analyzed oher benes and savings or individuals, communiies, and

municipal budges ha come rom reducions in violen crimes, using daa on vio-

len crimes rom all eigh ciies examined in his repor. Tis analysis begins wih

an accouning o he direc coss o violen crime:

Te medical coss borne by surviving vicims o violen crime Municipal spending on police Cours and correcions Te oregone produciviy o murder vicims, vicims o oher violen crimes

while hey recover, and o criminals while hey remain in jail or prison

Across he eigh ciies, hese direc coss arising rom he our ypes o violen crimes

oal nearly $3.7 billion per year. Tese direc coss are equivalen o an average o

$320 per residen per year or he eigh ciies, ranging rom $144 per residen peryear in Seatle o $472 per residen per year in Philadelphia. (see able 2)

TABLE 2The direct costs o violent crimes

Estimated direct costs o violent crimes by city 2010 ($ millions)

City Victims Justice systemProductivity losses

(criminals)Total Cost per resident

Boston $72 $102 $24 $198 $308

Chicago $426 $547 $132 $1,104 $390

Dallas $145 $175 $43 $363 $278

Houston $268 $393 $91 $752 $330

Jacksonville $78 $100 $24 $202 $246

Milwaukee $92 $115 $27 $235 $388

Philadelphia $299 $351 $86 $736 $472

Seattle $21 $56 $12 $89 $144

Source: Authors calculations; Federal Bureau o Investigation Uniorm Crime Reports. Department o Justice National Crime Victimization Survey, 2006-2010, Department oJustice Bureau o Justice Statistics Criminal Justice Expenditure and Employment, and Department o Justice Bureau o Justice Statistics National Judicial Reporting Program.


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Given hese coss reducing he incidence o violen crime should produce

subsanial benes. Te direc savings or ciy governmens associaed wih a

10 percen reducion in hese our violen crimes would include commensurae

reducions in spending on law enorcemen, cours and correcions, and addi-

ional revenues rom axing he earnings o boh would-be vicims and would-be

perperaors o crimes ha would no occur under his scenario.

A 10 percen decline in violen crime should produce direc savings o he govern-

mens o he eigh ciies ranging rom $2 million per year in Seatle o $24 million

per year in Chicago. Similarly, a 25 percen reducion in violen crimehal o he

naionwide decline seen rom 1990 o 2010 or rape, robbery, and assaulwould

mean annual savings or he eigh ciy governmens ranging rom $6 million per

year in Seatle o $59 million per year in Chicago.

Across all eigh ciies a 10 percen reducion in violen crime raes would produce

combined direc savings o $82 million per year or he eigh ciy governmens,while a 25 percen reducion would produce $204 million. (see able 3)

TABLE 3Savings rom reduced violent crime

Estimated budget costs rom violent crime and budget savings rom 10 percent and 25 percent reductions

in those crimes, by city, 2010 ($ millions)

Budgetary costsAnnual budget savings rom

reducing violent crimes

CityPolice, courts and

correctionsTax revenue Total

10 Percent

reduction

25 Percent

reduction

Boston $102 $6.8 $109 $11 $27

Chicago $547 $18.2 $565 $56 $141

Dallas $175 $5.6 $180 $18 $45

Houston $393 $10.8 $404 $40 $101

Jacksonville $100 $4.1 $104 $10 $26

Milwaukee $115 $2.9 $118 $12 $30

Philadelphia $351 $33.3 $384 $38 $96

Seattle $56 $1.1 $57 $6 $14

Source: U.S. Census Bureau (2010), authors calculations. Estimates o revenues losses assume one-to-one relationship between growth in the incomes o city residents and

growth in the citys total tax revenues.


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The cosequeces o allig crime rates o real estate values, city budgets, ad local residets | www.americaprogress.o

Such reducions in violen crime could release or creae new resources or oher

municipal purposes. A 25 percen reducion would save he ciy o Boson, or

example, sucien unds and generae sucien addiional revenues o eiher

und a 1 percen cu in ha ciys propery axes, increase ciy spending on healh

and human services by 6.8 percen, or boos spending on housing and communiy

developmen by 14.4 percen. Similarly, a 25 percen drop in Housons violen-crime raes would generae sucien addiional resources o double ha ciy s

budge or healh and human services or und a 5.1 percen cu in propery axes.

esearchers also have sudied and esimaed he less angible, indirec coss aris-

ing rom violen crime, especially he pain, suering, and diminished qualiy o lie

ha surviving vicims o violen crime experience as well as eecs on he amilies

o murder vicims. Unlike he more angible, direc coss o violen crimes, here

are no objecive measures or hese genuine losses. Bu scholars have developed a

variey o mehods o esimae he value o he pain, suering, and reduced qualiy

o lie o people who are raped, violenly assauled, or robbed.

All o hese approaches nd ha hese inangible coss exceed he direc coss by

an order o hree o our. Naionwide, hese inangible coss come o an esimaed

$156 billion per year. For he eigh ciies examined here, hese inangible coss are

esimaed o oal nearly $14 billion per year, ranging rom $216 million per year

in Seatle o $4.2 billion per year in Chicago

Tereore, a 10 percen or 25 percen reducion in violen crime should propor-

ionaely reduce hose indirec, inangible coss. A 25 percen reducion would save

poenial vicims o violen crimes in Milwaukee, or example, pain, suering, and

diminished qualiy o lie valued a $225 million per year, while a similar decline in

violen crimes in Dallas would be worh $361 million in inangible benes or hose

who oherwise would have been vicims o violen crimes. (see able 4 on nex page)


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We now urn o more deailed analyses o he consequences o alling violen

crime raes on real esae values, ciy budges, and local residens.

TABLE 4Direct and indirect costs o violent crimes

Estimated direct and indirect costs o violent crimes, by city, 2010 ($ millions)

Direct costs Intangible and total costs

City VictimJustice

system

Criminal Total direct IntangibleTotal direct

and intangible

Boston $72 $102 $24 $198 $734 $932

Chicago $426 $547 $132 $1,104 $4,206 $5,310

Dallas $145 $175 $43 $363 $1,444 $1,807

Houston $268 $393 $91 $752 $2,655 $3,407

Jacksonville $78 $100 $24 $202 $802 $1,004

Milwaukee $92 $115 $27 $235 $900 $1,135

Philadelphia $299 $351 $86 $736 $2,970 $3,705

Seattle $21 $56 $12 $89 $216 $305

Source: FBI, Uniorm Crime Reports, as prepared by the National Archive o Criminal Justice Data, available at http://www.ucrdatatool.gov/Search/Crime/State/StateCrime.

cm; Kathryn E. McCollister, Michael T. French, and Hai Fang, The Cost o Crime to Society: New Crime-Specic Estimates or Policy and Program Evaluation, Drug and

Alcohol Dependence 108 (1-2) (2010): 98109.
http://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfmhttp://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfmhttp://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfmhttp://www.ucrdatatool.gov/Search/Crime/State/StateCrime.cfm


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| www.americaprogress.o

The impact o lower rates o

violent crime on real estate values

Te analysis in his secion is based on daa provided by he police deparmens

o ve ciies on he incidence o violen crimes by geographic locaion, and daa

on residenial home sales in hose ciies by zip code rom DaaQuick. As we will

demonsrae, changes in homicide raes in paricular across hose ve ciies had

clear and signican eecs on he value o homes in he same areas. Homicides

obviously exac an incalculable oll on he vicims and signican coss on heir

amilies. Bu coss also are borne by everyone who lives nearby hrough he

impac on propery prices. Moreover, our analysis ound ha successul eorso reduce homicides would generae subsanial benes no only or hose who

oherwise would be vicims bu also or he area as a whole.

Tese ndings have imporan implicaions or policymakers because he

equiy ha people hold in heir homes accouns or much o Americans wealh.

Increases in home values driven by he exogenous acor o a alling homicide rae

ranslae direcly ino increases in he wealh and nancial securiy o he amilies

who own hose homes. Such increases in housing values also can lead o subsan-

ially higher local governmen revenues when propery ax assessmens cach up

wih he underlying increase in home values.

13 Ceter or America Progress |The Ecoomic Beeits o Reducig Violet Crime

This analysis ocused on the ve cities o Chicago, Houston,

Jacksonville, Milwaukee, and Philadelphia, covering at most the 11

years between 2000 and 2011. The police departments in these cities

provided violent crime data by zip code. We obtained median and

mean residential property prices by zip code or the same cities tract

rom DataQuick, a public-records database company. DataQuick com-

piles real estate data rom public sources such as county assessors

ofces and county recorders ofces and provides estimates o prices

or new, existing, attached, and detached home-sale transactions.17

The crime data we collected covered reports o homicides, rapes,

robberies, and aggravated assaults, covering all o these crimes and

attempted crimes regardless o whether arrests or convictions were

ever made. These crime data were not reported in a uniorm o

across police departments. Each department provided a list o e

reported violent crime by some geographic identication over

longest period available rom 2000 to 2011.

Philadelphia, Milwaukee, and Jacksonville all provided the point l

o each reported crime. We also engaged Spatial Insights, Inc., a g

graphic inormation services company, to reverse geocode these

locations to zip codes. Houston and Chicago provided street addr

which we mapped onto zip codes using the Geocode+Maps, so

rom GeoLytics, Inc., with a success rate o 99 percent.

Continued on next page

Data and methodology


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The data rom dierent cities covered varying periods: 11 years

(Jacksonville, 20012011), 10 years (Chicago, 20012010), nine years

(Houston, 20002008), and six years (Milwaukee, 20052010, and

Philadelphia, 20042009). As expected, the relative prevalence o

these crimes is airly uniorm across the cities, with homicides being

east common, ollowed by rapes, and aggravated assaults and rob-

beries occurring much more requently.

Our empirical method applied the standard Granger Causality statisti-

cal regression test to identiy any causal relationship between changes

n these violent crimes and changes in residential property prices.

In addition to the proposition that lower crime rates lead to higher

property values, we also consider the possibility that higher residen

property prices lead to reductions in violent crimes, and that violen

crime rates and property prices are correlated with some other, thir

actor. We also recognize that there may be signicant multicolline

ity between the dierent types o violent crimes, so we group the

crimes into the two variables o homicides and nonhomicides.

A more detailed description o our methodology and the summar

statistics rom the regression analysis is provided in Appendix A,

Tables A-1 and A-2, on pages 52 and 54.

Results

Our main specicaion ocused on he relaionship beween changes in violen-

crime raes and changes in housing prices by zip code across ve ciiesChicago,Houson, Jacksonville, Milwaukee, and Philadelphia. Te Granger causaliy

analysis ound, rs, he wholly unremarkable nding ha, by zip code, housing

prices in any one year aec housing prices in he ollowing year o a saisically

signican degree. (see able A2 in Appendix A on page 54) In echnical erms,

changes in median residenial propery prices in an area in one year have a posi-

ive coecien and are saisically signican in explaining he change in median

residenial propery prices in ha area in he ollowing year.

More imporan, he causaliy es ound ha changes in he incidence o mur-

ders in a zip code in one year aec or explain, o a saisically signican degree,

changes in residenial propery prices in he ollowing year. Fewer murders in one

year, hereore, Granger cause higher residenial propery prices he nex year,

and higher numbers o murders Granger cause lower residenial propery prices

he ollowing year.

More specically, a reducion in homicides o one in a zip code Granger causes a

1.52 percen increase in home prices in ha same zip code he ollowing year. Tis

relaionship is symmerical: Each addiional homicide in a zip code, compared

o he year beore, is associaed wih a 1.52 percen reducion in home properyvalues in he ollowing year. Tis large o an eec rom changes in homicide levels

is no unexpeced, given ha he average number o homicides per zip code, per

year across he ciies sampled is only 5.51 per year.


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The impact o lower rates o violet crime o real estate values | www.americaprogress.o

Tese resuls are no aeced by he underlying acs ha hrough mos o his

period, murders were generally declining and housing prices were generally rising.

Te regression analysis akes accoun o hese underlying acs and isolaes and

analyzes raes o changes in each o he variables across hundreds o observaions

by zip code and year.

Te impac o alling raes o violen crimes oher han homicides, however, is

much more dicul o deermine. Indeed, he regression analysis iniially ound

he opposite eec rom homicides. Falling raes o nonhomicide were associaed

wih small declines in housing prices, or, since he relaionship is symmerical,

rising nonhomicide crime raes were accompanied by sligh increases in housing

prices. Tese resuls, however, were notsaisically signican.

In ac, hese resuls likely reec a recurring, underlying problem wih nonhomi-

cide crime daa. Te murder rae is widely considered he mos reliable measure

o violen crime. Tis is because virually all murders are repored o he police.By conras, a signican share o all rapes, robberies, and assaul are no repored.

Comparing deahs rom assaul (homicides) as repored by he Cener or Disease

Conrol wih FBI repors o murder and non-negligen manslaugher, we nd ha

more han 92 percen o all murders are repored o police.18 Bu Naional Crime

Vicimizaion Surveys repor ha, on average, 45 percen o rapes, 59 percen o

assauls, and 62 percen o robberies are repored o police. In addiion, he raes a

which hese oher violen crimes are repored vary rom year o year, so ha changes

in heir repored raes may no reec changes in heir acual incidence.

Tereore, an observed increase in hese crimes may reec shifs in reporing

paterns raher han acual changes in crime raes. Tis eec may be very large in a

small geographic area such as a zip code. When he police increase heir presence

in an area (such as a zip code), repored crimes may rise even when he acual

incidence o hose crimes is unchanged or even alls. Changes in he numbers o

repored robberies, rapes, and aggravaed assauls in a zip code may also be associ-

aed wih increases in urban densiy when, or example, new businesses arrive and

new residences are buil in an area. Such a developmen could resul, a once, in

higher repored crime raes and higher propery values, boh reecing he hird

variable o acceleraed developmen. Along wih many oher researchers on heimpac o crime, we hereore ocus his analysis on homicides.

Te echnical specicaions and resuls o he Granger causaliy analysis are pro-

vided in Appendix A a page 51.


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In addiion, Appendix B beginning on page 55 provides he resuls o six ess o

he robusness o our main resuls. Te ess demonsrae ha he basic ndings

on he impac o changes in homicide raes are no aeced by alernae specica-

ions. In paricular, we esed he sensiiviy o our resuls o an increased number

o lags, he inclusion o squared erms, he use o average raher han median

propery-price daa, one-sep esimaion raher han wo-sep esimaion, heinclusion o diering dephs o lags, and an uncollapsed insrumen marix. Tese

resuls conrm he impac o changes in homicide raes on changes in housing

prices in zip code-size areas.

Impact o homicides on the value o the housing stock across a

city or metropolitan area

Alhough our analysis was conduced a he zip-code level, we can use he resuls

o esimae he impac o changes in homicide raes on he value o he overallhousing sock o a ciy or meropolian area. Tese esimaes assume ha he eec

o reducions in homicide raes does no vary based on he absolue number o

homicides in an area, and ha people are as likely o move beween ciies or me-

ropolian areas in response o changes in homicide raes in heir neighborhoods as

hey are o move wihin he same ciy or meropolian area.

Using hese assumpions we can esimae how much he value o he housing sock

in he ve ciies examined here would be expeced o rise in response o specied

reducions in he homicide raes in hose ciies. Tese esimaes should be accurae

or he ciies examined in his sudy, since hey are all ciies wih accessible suburbs

or nearby meropolian areas ha can provide poenial new residens, and hereore

increased demand or housing in areas wih alling homicide raes.

As noed earlier, by combining he average number o homicides in hose ci-

ies wih our regression resuls, we nd ha a 10 percen reducion in homicides

corresponds o a 0.83 percen increase in residenial propery values and prices

he ollowing year. A 25 percen reducion in homicides in hese ciies could push

housing prices up by nearly 2.1 percen. Tis calculaion allows us o esimae

he overall gain in residenial propery values ha could accompany a 10 percenreducion in homicides a he ciywide or meropolian areawide level. Moreover,

we can exend his analysis o cover oher ciies considered here, so long as he

relevan daa on housing sock is available.


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The impact o lower rates o violet crime o real estate values | www.americaprogress.o

Tis analysis draws on oal marke value esimaes or meropolian areas rom

he Zillow eal Esae Marke epors o December 2010.19 Since marke value

esimaes or 2011 are no available, we esimae he eec on oal residenial

propery values in 2011 i he ciies or heir meropolian areas had reduced

homicides by 10 percen in 2010. Tese are high-end esimaes ha provide a

rough measure o he wealh gains ha could accompany a 10 percen reducionin homicide raes. Houson is omited rom his analysis because Zillow does no

provide an esimae o oal housing-marke value in ha ciys meropolian area.

Tereore, hese esimaes cover he oher seven ciies.

Tis analysis shows ha a 10 percen reducion in homicides could increase he

value o he residenial housing sock by $4.4 billion in he Boson meropoli-

an area, by $2.4 billion in he Dallas meropolian area, by $2.2 billion in he

Chicago meropolian area, and by $600 million in he Jacksonville meropolian

area. Similarly, a 10 percen reducion in homicides would boos he oal value

o all residenial housing by $3.2 billion across he Philadelphia meropolianarea, by $2.9 billion in he Seatle meropolian area, and by $800 million in he

Milwaukee meropolian area. (see able 5)

TABLE 5Housing values rise as homicides decline

Estimated impact o a 10 percent reduction in homicides in 2010 on total residential

housing values in 2011, by metropolitan area ($ billions)

Metropolitan area Value o all housing, 2010 Increase in value o all housing, 2011Boston $532,000,000,000 $4,400,000,000

Chicago $266,000,000,000 $2,200,000,000

Dallas $294,000,000,000 $2,400,000,000

Jacksonville $75,000,000,000 $600,000,000

Milwaukee $99,000,000,000 $800,000,000

Philadelphia $391,000,000,000 $3,200,000,000

Seattle $349,000,000,000 $2,900,000,000

Source: Zillow Real Estate Market Repor ts o December 2011; authors calculations.


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Te large gains in he value o a ciys housing sock associaed wih a 10 percen

decline in homicides sugges ha a successul eor o reduce violen crime could

generae large revenue gains rom he propery axes applied o hose higher home

values. Unorunaely, daa consrains preclude our esimaing hose revenue

gains wih condence because housing sock daa cover meropolian areas, and

in each case, hese meropolian areas encompass ciy and suburban jurisdicionswih varying propery ax raes.


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Estimatig other direct savigs ad itagible beeits o reducig violet crime | www.americaprogress.o

Estimating other direct savings

and intangible beneits

o reducing violent crime

Economiss, poliical scieniss, and sociologiss have examined he various

coss ha violen criminals impose on heir vicims and communiies. We have

reviewed his research o esablish he bes-available mehodologies or esima-

ing hose various coss and consequenly calculaed he savings and benes ha

should ollow rom reducions in he incidence o hose crimes.

We esimae ha a 10 percen reducion in violen crimes naionwide would gener-

ae direc and indirec saving o $20 billion per year. Similarly, a 25 percen reducionin hose crime raes would generae benes esimaed a $50 billion per year.

The various costs associated with violent cr imes

Mos analyss disinguish beween he direc or angible coss o crimes and heir

indirec or inangible coss. Te direc coss include, rs, he value o propery

desroyed or damaged in he course o violen crimes, surviving vicims medical

expenses and los earnings rom crime-relaed injuries, he produciviy losses or

hose vicims associaed wih he afermah o hese crimes over boh he shor

and long erm, and he produciviy losses or murder vicims based on heir

expeced earnings or he remainder o heir working lives.

Te direc coss also include he expendiures by ciies, counies, and saes o

apprehend, prosecue, and incarcerae he perperaors o hese crimes. Oher

direc coss include various ypes o privae spending underaken o avoid crime,

including expendiures or home securiy sysems, car alarms, securiy guards, and

oher securiy services. Finally, here are he economic losses enailed in moving

accused or conviced people rom a ciy s labor orce o is jails and prisons andsacricing he produciviy and oher benes associaed wih heir working, pay-

ing axes, and buying goods and services. Tese las coss may seem problemaic

o some readers, because criminals are no commonly hough o as poenially


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producive members o a communiy. Ye mos criminals do work when hey are

no incarceraed, and we use he minimum wage o esimae hese earnings.

o calculae hese direc coss o crime, we use wha researchers commonly call

he cos-o-illness approach, which disaggregaes hese direc coss ino he sepa-

rae elemens lised above.

While he direc coss o crime are signican, as are he associaed direc savings

rom reducing such crime, he esimaed value o he indirec and more inangible

coss o violen crimes is much larger. Tese indirec coss ocus on phenomena

ha have no universally acceped measure o heir values, especially he pain,

suering, and reduced qualiy o lie ha resul rom being a surviving vicim or

poenial vicim o violen crime. esearchers have developed various ways o esi-

maing hese inangible coss using a hedonic model, a coningen valuaion

approach, a jury-award mehod, or some combinaion o hese approaches. We

examine each o hese approaches in deail in his secion o he repor.

The cost-o-illness approach to calculating the direct costs o violent crime

Te cos-o-illness approach was rs developed by public healh expers o

measure boh he direc and inangible economic coss o illnesses and diseases.

Is applicaion o crime begins by ideniying all o he disinc losses or coss

associaed wih a crime and hen esimaing he value o each elemen. Mos o

such analyses o crime rely on FBI Uniorm Crime epors and he Deparmen

o Jusice Naional Crime Vicimizaion Surveys. Te FBI Uniorm Crime epor

provides esimaes o he incidences o a wide range o criminal aciviies based

on repors o known oenses and arress rom various American law enorcemen

agencies. Tese crime incidence saisics cover eigh serious or Par 1 oenses,

including our oenses classied as violen crimes (murder, rape, robbery, and

aggravaed assaul) and our ohers classied as propery crimes (burglary,

larceny-hef, moor vehicle hef, and arson).20

Te Deparmen o Jusice Naional Crime Vicimizaion Surveys collec inorma-

ion on he vicims o hose crimes, including heir ou-o-pocke coss or medicalreamen, propery losses, and los earnings. Tese daa are drawn rom a naional

sample o 42,000 U.S. households covering 76,000 individuals. Te Bureau o

Jusice Saisics uses hese daa or an annual publicaion presening a variey o


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saisics on rapes and sexual assauls, robberies, aggravaed assauls, burglaries,

larceny-hefs, and moor vehicle hefs.

Using hese daa he Bureau o Jusice Saisics published one o he rs compre-

hensive sudies o he coss o crime in 1984.21 Ta sudy calculaed ha he direc

vicim-relaed coss o crime in 1981 naionwide oaled $22.9 billion (2010 dol-lars). Te bureaus ollow up sudy 10 years laer ound ha direc vicim-relaed

coss grew o $27.4 billion (2010 dollars) rom 1981 o 1991. Tese repors were

imporan early conribuions o he research on he coss o crime.

o esimae he direc coss o violen crimes in he Unied Saes oday using

his approach, we begin by updaing he calculaion o he direc economic coss

borne by he vicims o violen crime. Based on Naional Crime Vicimizaion

Surveys daa or 20062010, we esimae he average ou-o-pocke medical coss,

propery losses, and los earnings o vicims o rape, robbery, and assaul over ha

ve-year period.22 Tis analysis shows, unsurprisingly, ha vicims o aggravaedassaul incur he larges average medical coss ($1,969) and highes oal average

coss ($2,133), and vicims o compleed robberies incur he larges average prop-

ery losses ($1,263). (see able 6)

TABLE 6The direct costs o violent crime excluding murder

Average out-o-pocket costs or victims o rape, robbery and assault based on estimates rom

the national crime victimization survey, 2006-2010 ($2010)

Crime Medical Property Lost earnings Total

Rape/Sexual Assault $201 $28 $17 $246

Rape $314 $41 $24 $379

Completed Rape $510 $41 $45 $596

Attempted Rape $151 $40 $3 $195

Sexual Assault $50 $8 $5 $63

Robbery $244 $927 $67 $1,238

Completed $122 $1,263 $59 $1,444

Attempted $535 $107 $87 $729

Assault $128 $10 $51 $188 Aggravated Assault $526 $8 $61 $596

Completed $1.969 $14 $150 $2,133

Attempted $0 $6 $18 $24

Simple Assault $25 $10 $48 $82

Source: U.S. Department o Justice, National Crime Victimization Survey, (2006-2010).


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Using a similar approach we also esimae he direc vicim-relaed coss o he

ourh violen crime: murder. Tis calculaion assumes no ou-o-pocke medical

coss or propery losses so he vicims los earnings over a lieime consiue he

only vicim-relaed coss o he crime. o esimae he value o hose earnings, we

use daa on he average age o murder vicims rom he Naional Vial Saisics

Sysem and daa on average income by age repored by he U.S. Census BureausCurren Populaion Survey. We apply a discoun value o 3 percen o derive he

ne presen value o he lieime earnings o murder vicims, which we esimae

o average $925,000. Using his gure, he resuls in able 3, and he incidence o

violen crimes, we esimae ha violen crimes naionwide in 2010 imposed direc

coss on vicims oaling $14.6 billion. (see able 7)

Calculaing he coss o violen crime or he criminal jusice sysem is more com-

plex because he daa on hese coss are no usually disaggregaed by ypes o crime.

o esimae he law enorcemen, judicial, and correcional coss o violen crimes,

we sar wih oal U.S. expendiures or police proecion, judicial and legal services,

and correcions in 2007, repored by he Bureau o Jusice Saisics.23 We hen

adjus he 2007 daa o 2010 dollars.24 Nex, we use FBI Uniorm Crime epor

arres daa o calculae arress or violen crimes as a share o all arress.

In 2010 murders accouned or 0.1 percen o all arress, rapes accouned or 0.15percen, robberies accouned or 0.9 percen, and aggravaed assauls accouned

or 3.1 percen. We apply hese shares o he daa on he aggregae coss o police

and he judicial sysem. By his approach, we can esimae ha he policing o

TABLE 7The total direct cost o violent crimes

Victim-related costs rom violent crimes including murder, nationwide, 2010

Crime Direct costs per-oense Oenses in 2010 Total direct costs

Murder $924,562 14,748 $13,635 million

Rape $379 84,767 $32 million

Robbery $1,238 367,832 $455 million

Aggravated Assault $596 $778,901 $464 million

Total -- $1,246,248 $14,587 million

Source: FBI Uniorm Crime Reports (2010); Department o Justice National Crime Vicitimization Survey, and authors calculations


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violen crimes cos $4.6 billion in 2010, and he adjudicaion o hose accused o

violen crimes cos $2.2 billion.

Tese esimaes, however, are very conservaive. Police deparmens and cours

give much higher prioriy o violen crimes. Tereore i is very likely ha he

share o police and judicial resources devoed o hese crimes subsanially exceedsheir share o all crimes.

Te correcions coss or violen crimes are also dicul o measure. Some sud-

ies esimae correcional coss per oense by muliplying he average cos per

inmae or all U.S. jails and prisons by he number o inmaes incarceraed or each

oense, and dividing ha resul by he number o oal oenses commited each

year. Bu his approach assumes ha he number and disribuion o violen crimi-

nal oenses commited each year remains consan, which is no he case.

For a more accurae esimae, hen, we sar wih daa rom he Bureau o JusiceSaisics on he number o inmaes incarceraed in jails and prisons in 2010,and

oal correcional coss a ederal, sae, and local levels. On his basis we calculae

ha he cos o incarceraion per inmae in 2010 was $33,400.25 Nex we muliply

he number o 2010 convicions or each o he our violen crimes by he average

senence or each crime, he percenage o each senence acually served, and he

esimaed annual cos per inmae.26 Using his approach we esimae ha he correc-

ional coss or he our violen crimes naionwide oaled $15.4 billion in 2010.

Te coss o he criminal jusice sysem or violen crimes in 2010, hereore,

oaled $22.2 billion: $4.6 billion (policing) + $2.2 bil lion (cours) + $15.4 bil-

lion (correcions).

Oher direc coss o hese crimes involve he economic losses rom he oregone

produciviy or economic oupu o hose conviced o violen crimes. o esimae

hese coss we sar wih daa on he pre-arres personal incomes o conviced

elons based on a 2002 naional survey o inmaes.27 Tese daa sugges ha con-

viced criminals earn abou 40 percen o he U.S. average personal income. Using

he approach adoped above o calculae correcional coss, we can esimae he

los income atribuable o criminals or each ype o violen crime based on heaverage income o conviced elons, he average age a senencing or each ype o

violen crime, and he average senence served or each violen crime. We esimae

ha in 2010 violen crimes naionwide cos he U.S. economy some $5.4 billion in

income, which hose conviced would oherwise have produced.


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Based on hese calculaions, he direc coss o violen crimes in 2010 oaled

$42.2 billion naionwide: $14.6 billion (vicim-relaed coss) + $22.2 billion

(police, cours, and correcional coss) + $5.4 billion (los work produc o crimi-

nals). Tis is equivalen o a cos o $137 or every person in he Unied Saes.

Tereore, a 10 percen reducion in violen crimes naionwide would saveAmericans nearly $1.5 billion in vicim-relaed coss and $2.2 billion in law

enorcemen and judicial coss while increasing economic oupu by $540 million.

Similarly, a 25 percen reducion in hese crimes would save Americans $3.6 bil-

lion in vicim-relaed losses and nearly $5.6 billion in law enorcemen and judicial

spending while increasing he economys oupu by nearly $1.4 billion annually.

Estimating the intangible costs o violent crime

The hedonic model approach or estimating these intangible costs

Te academic lieraure on he coss o crimes includes exensive analysis o indi-

rec or inangible coss, noably he pain, suering, and diminished qualiy o lie

experienced by vicims o violen crimes. Tis lieraure includes numerous sud-

ies ha apply so-called hedonic models drawn rom housing markes. Hedonic

models are designed o reveal peoples underlying preerences abou he charac-

erisics or atribues o a good, and hen use hose ndings o esimae is value.

In a housing marke he value o a propery can be esimaed based on he number

o bedrooms and bahrooms, he size o he lo, he locaion and characerisics o

he neighborhood, and so on.

Cos-o-crime sudies ha use hedonic pricing assume ha people reveal heir

preerences abou crime levels when hey purchase heir homes, based on crime

levels in ha area. Tese sudies apply economeric models ha conrol or oher

variables ha inuence housing prices in order o isolae he moneary value ha

homebuyers place on reduced risk o crime.

Te rs sudy o adop a hedonic model approach o esimae he inangible cosso crime used a sample o single-amily home sales in ocheser, New York, in

1971.28 Afer conrolling or he characerisics o he properies and neighbor-

hoods as well as oher variables, he auhor ound ha an increase in per capia


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propery crime o 4.5 percen was associaed wih 3 percen lower home values.

Using hese ndings he auhor esimaed ha he social and personal coss o a

propery crime in ocheser in 1971 averaged abou $2,880 (in 2010 dollars).

A broader sudy rom 1999 analyzed he relaionship beween crime raes and

urban igh or 127 American ciies rom 1970 o 1993.29

Applying a hedonicmodel o FBI daa on rapes, robberies, aggravaed assauls, burglaries, larcenies,

and auo hefs, he auhors concluded ha a 10 percen increase in hose crimes

led o a 1 percen decline in a ciys populaion, and ha hose populaion losses

were associaed wih ideniable reducions in housing prices. Finally, a 2010

sudy ocused on housing prices and crime raes in Miami-Dade Couny, Florida,

rom 1999 o 2007 and ound ha a 1 percen increase in violen crime per acre

reduced housing prices by abou 0.25 percen.30

A key srengh o his approach is ha i relies on marke daa, which generally

provide he mos reliable inormaion on he rue value o goods. Te challengelies in ideniying all he acors oher han crime ha inuence housing prices so

he relaionship beween crime and housing prices can be isolaed. Tis is paricu-

larly dicul or acors such as povery, which may be correlaed wih boh crime

and low real esae values.

Criics also noe ha an observed correlaion beween changes in crime raes and

changes in housing prices may represen a causal relaionship ha runs rom crime

o housing prices and no in he oher direcion. Our own analysis o his rela-

ionship avoids he pialls o hedonic modeling by using he Granger Causaliy

regression, which explicily ess or and esablishes he direcion o he eec. In

addiion, his approach is ofen unable o disinguish he coss o dieren ypes o

crimes, because raes or he various kinds o crimes end o rise and all ogeher.

The contingent-valuation approach to estimating intangible costs

In he absence o marke daa on a public good such as reduced crime or clean air,

some economiss rely insead on surveys ha measure how much people say hey

would be willing o pay or hose public goods. Tis approach is called coningenvaluaion, because he willingness-o-pay values repored in hose surveys are con-

ingen on he condiions presened in he survey. Coningen valuaion analysis was

rs used in environmenal economics, bu i is now commonly applied o crime.


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A 2001 analysis, or example, used a 1998 survey o more han 1,200 people o

esimae how much people would be willing o pay o reduce gun violence by 30

percen.31 Te sudy esimaed a willingness-o-pay value o $24.5 billion, or abou

$1.2 million per gunsho injury. A 2004 analysis similarly surveyed 1,300 aduls

o esimae how much Americans would be willing o pay or a 10 percen reduc-

ion in murders, rapes, robberies, assauls, and burglaries.32

Based on he surveyhe auhors repored ha he oal personal and social coss o hese crimes are

beween 1.5 imes and 10 imes greaer han had been ound previouslya resul

ha hey atribued o heir capuring a range o inangible as well as direc coss.

Here, oo, many economiss quesion he reliabiliy o his approach. Te

responses rom he surveys someimes conradic basic economic axioms, espe-

cially in he environmenal area, when respondens say ha hey would be willing

o pay he same or similar amouns o reduce waer polluion by widely dieren

amouns.33 Anoher criicism is ha coningen valuaion suers rom hypohei-

cal bias because survey respondens have no acual sake in he resul.

Finally, some analyss argue ha he surveys do no measure peoples acual eco-

nomic preerences bu raher heir general approval or disapproval abou a public

good such as reduced gun violence or cleaner air. So respondens may derive a

sense o saisacion rom expressing heir (heoreical) willingness o pay a high

price or less crime or cleaner air, bu in pracice hey migh srongly oppose a new

ax or he same purpose.

Despie hese criicisms he applicaion o coningen valuaion analysis o crime

has cerain advanages. In conras o is use in he environmenal area, respon-

dens generally express a willingness o pay more or greaer reducions in crime.

On balance, a panel o expers recenly concluded ha a coningen valuaion

approach can produce esimaes ha provide a credible saring poin or assess-

ing he value o greaer public saey, even hough i may oversae peoples acual

willingness o pay or i.34

The jury-award approach to estimating intangible costs

Tis approach also applies peoples saed views on he inangibles coss o crime

bu in a less hypoheical way. Tis approach relies on daa rom jury awards in

civil suis ha compensae vicims o violen crimes or pain and suering. A 1988


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sudy used jury awards o esimae hese coss or vicims o 10 ypes o crimes,

including rape, robbery, and assaul.35 Tis sudy also inroduced oher inangible

coss unexamined by previous researchers, including he coss o vicims menal

healh and anxieies relaed o perceived risks o deah.

A subsequen sudy published by he U.S. Deparmen o Jusices Naional Insiueo Jusice also used jury awards o esimae he coss arising rom he pain and su-

ering o rape, robbery, and assaul vicims.36 Tis sudy also esimaed a variey o

coss associaed wih murders, which oher researchers usually had lef unexamined,

including he pain and suering o hird paries, medical coss, and los produciviy. 37

While he jury award approach provided a new way o capuring he inangible

coss o crimes, i also raised cerain concerns. For insance, since liigaion is

ofen cosly he cases ha are pursued civilly may involve unusually violen and

injurious acs, creaing an upward bias in he cos esimaes.38 In addiion, some

analyss argue ha jury awards are inappropriae because hey represen ex-postorwillingness-o-accep esimaes o he cos o crime raher han ex-ante or will-

ingness-o-pay esimaes derived, in principle, rom coningen valuaion surveys.

esearchers have ound ha willingness-o-accep values are ypically wo o hree

imes larger han comparable willingness-o-pay values,39 which criics poin o as

suppor or he view ha jury awards incorporae an upward bias.

In he end we nd ha he mos credible esimaes o he inangible coss were

derived rom a very large and recen sudy ha used a modied jury compensa-

ion approach o calculae per-oense pain and suering esimaes or violen

crime, eniled, Te Cos o Crime o Sociey: New Crime-Specic Esimaes

or Policy and Program Evaluaion.40 Te auhors based heir pain and suering

esimaes on Jury Verdic esearch (2004), which provides daa on jury verdics

or individual injuries such as gunsho wounds, knie wounds, and rape-relaed

injuries, based on heir level o severiy.41 Te auhors hen used 2007 daa gah-

ered by he Bureau o Jusice Saisics on he probabiliy ha each oense leads

o various injuries, o esimae pain and suering coss or individual oenses.

Moreover, as shown in able 9 on page 32, he aggregae esimaes o direc and

inangible coss ound by he Cos o Crime o Sociey, a sudy sponsored by

he Naional Insiue on Drug Abuse and he Naional Insiues o Healh,42

are very close o hose derived in a leading coningen valuaion analysis ha is

also included in able 9.43


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The limitations o al l cr ime-related cost estimates

Te daa used in all o hese analyses o crime and heir coss have cerain limia-

ions. Esimaes o he income losses suered by vicims o violen crimes, or

example, generally assume ha hose vicims are broadly represenaive o he whole

populaion. In ac, daa rom he Naional Crime Vicim Survey sugges ha vicimso rape, robbery, and assaul have lower-han-average annual incomes: 35 percen

o he vicims o violen crimes beween 2006 and 2010 lived in households wih

incomes o less han $20,000, compared o 20 percen o all American households.44

Similarly, daa rom municipal police deparmens sugges ha 70 percen o 80

percen o homicide vicims in large ciies have criminal records.45 Tis suggess ha

he lieime earnings losses atribued o murder vicims may be oversaed.

A he same ime oher acors sugges ha mos esimaes o he coss o crime

are undersaed. Mos noably, crime is nooriously underrepored. Daa rom he

Naional Crime Vicim Survey indicae ha less han 60 percen o all violen crimesare repored o he police: hese respondens repor ha only 45 percen o rapes, 59

percen o assauls, and 62 percen o robberies are repored o he police. I hose

daa are correc, hen he esimaes o he coss o vicims o violen crime in mos o

he curren research including his sudy are subsanially undersaed.

Beween he various daa issues and he approaches or esimaing coss, research-

ers have produced a wide range o esimaes. Te esimaes o he direc or

angible coss o one murder, or example, range rom $1.3 million o $1.5 million,

while he esimaes or he indirec or inangible coss o one murder range rom

$2.9 million o more han $8.5 million. Similarly, he esimaes o he direc coss

o a rape or sexual assaul vary rom $7,642 o $41,774, and he esimaed indi-

rec or inangible coss range rom $94,115 o $200,746. As noed above, we nd

ha he per-oense esimaes derived by he Cos o Crime o Sociey sudy,

on balance, are he mos reliable available. (See able 8 or a breakdown o hese

inangible cos esimaes by our key researchers.)


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TABLE 8Estimates o Costs o Violent Crime

Survey o recent research on the direct and intangible costs o violent crimes, per-oense (in 2010 dollars)

Crime Cohen (1988) Miller et al (1996) Cohen et al (2004) McCollister et al (2010)

Murder N/A $4,425,284 $9,098,564 $9,844,715

Direct Costs N/A $1,543,022 N/A $1,294,771

Intangible Costs N/A $2,882,263 N/A $8,549,945

Rape & Sexual Assault $103,471 $130,477 $222,305 $242,521

Direct Costs $9,357 $7,642 N/A $41,774

Intangible Costs $94,115 $122,836 N/A $200,746

Robbery $25,522 $12,059 $217,615 $26,711

Direct Costs $2,258 $3,457 N/A $21,672


Assault $24,375 $14,114 $65,660 $33,394

Direct Costs $855 $2,344. N/A $19,787


Sources: Mark A. Cohen, Pain, Sufering, and Jury Awards: A Study o the Cost o Crime to Victims, Law & Society Review 22 (3) (1988): 537556. Ted R. Miller, Mark A.Cohen, and Brian Wierseman, Victim Costs and Consequences: A New Look (Washington, : National Institute o Justice Research Report, U.S. Department o Justice, 1996).

Mark A. Cohen and others, Willingness-To-Pay or Crime Control Programs, Criminology 42 (1) (2004): 89109. Kathryn E. McCollister, Michael T. French, and Hai Fang, TheCost o Crime to Society: New Crime-Specic Estimates or Policy and Program Evaluation, Drug and Alcohol Dependence 108 (1-2) (2010): 98109. The estimates romCohen and others (2004) are adjusted by a actor o 1.35 or hypothetical bias. The McCollister and others (2010) estimates do not include intangible costs associated with

a sense o enhanced risk o homicide.


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The cost o violet crimes or eight U.S. cities ad the beeits ad savigs rom reducig those crimes | www.americaprogress.o

The costs o violent crimes or eight

U.S. cities and the benefts and

savings rom reducing those crimes

Earlier in his repor we provided he deails behind our esimae ha violen

crimes across he Unied Saes cos Americans nearly $200 billion per year,

including $46 billion in direc coss and nearly $156 billion in indirec, inangible

coss. (see able 4 on page 12) o esimae hose inangible or indirec coss,

we rely, as noed, on he recen Cos o Crime o Sociey sudy conduced by

Kahleen McColliser, Michael French, and Hai Fang, which draws on jury award

daa o esimae he value o he pain and suering arising rom injuries rom gun-

sho wounds, knie wounds, and physical assauls.46

Based on hese daa he auhors calculaed he average pain and suering coss or

each ype o violen crime. We adjused heir gures o 2010 dollars. While jury

awards may inroduce an upward bias, we suspec ha he subsanial underre-

poring o mos ypes o violen crimes inroduces a larger downward bias. While

we consider hese esimaes o be he mos reliable available, we are conden ha

he acual, oal coss o all violen crimes, direc and inangible, are probably even

higher han hose repored here.

Te direc economic coss o hose violen crimes cover he medical, propery,

and work- or produciviy-relaed coss borne by surviving vicims and by vicims

o homicide; he coss o policing, cours, and correcional aciliies or hose who

commi violen crimes; and he value o he work or produciviy-relaed losses

o hose arresed or violen crimes. For he eigh ciies examined in his repor,

hose direc coss come o nearly $3.7 billion per year, ranging rom an esimaed

$89 million per year in Seatle o more han $1.1 billion per year in Chicago. On

a per-residen basis, hese direc annual coss range rom $144 per residen o

Seatle o $472 per residen o Philadelphia.47 (see able 9 on nex page)


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While able 9 includes he oal law enorcemen and jusice sysem coss or

violen crimes a each level o governmen, we also disaggregae hose coss ino

hree componens: police proecion, he judicial sysem, and correcions. Tese

daa show ha correcional-sysem operaions accoun or nearly 72 percen o he

oal coss, ranging rom $38 million per year or Seatle o $397 million per year

or Chicago. O he remaining jusice-sysem expendiures, police operaions or

he eigh ciies accoun or an average o abou 19 percen, and he judicial sysem

accouns or he remaining 9 percen. (see able 10)

Te annual inangible or indirec coss per residen or he pain and suering o

he vicims o violen crimes, on average, are nearly our imes greaer han he

annual direc coss o hose crimes per residen. Tese inangible coss or he

eigh ciies oal nearly $14 billion per year, ranging rom $216 million per year in

Seatle o $4.2 billion per year in Chicago. On a per-residen basis, hese annual

inangible coss average $1,202 per crime and range rom an esimaed $350 or

Seatle o $1,905 or Philadelphia.

Te large dierences among he eigh ciies in boh inangible and direc coss per

residen reec dierences in boh oal violen crime raes and he raes o dier-

en ypes o violen crime. In paricular, here are signican dierences in murder

TABLE 9The multibillion dollar cost o violent crime

Estimated direct costs o violent crime, by city, 2010 ($ millions)*

CityVictim

costs

Law enorcement and justice system costs Criminal

productivity

costs

Total costsCost per

residentFederal State Local Total

Boston $72 $12 $48 $42 $102 $24 $198 $308

Chicago $426 $64 $265 $218 $547 $132 $1,104 $390

Dallas $145 $20 $86 $69 $175 $43 $363 $278

Houston $268 $47 $187 $159 $393 $91 $752 $330

Jacksonville $78 $12 $47 $40 $100 $24 $202 $246

Milwaukee $92 $14 $55 $46 $115 $27 $235 $388

Philadelphia $299 $41 $171 $139 $351 $86 $736 $472

Seattle $21 $7 $26 $23 $56 $12 $89 $144

Total $1,401 $217 $885 $786 $1,839 $439 $3,679 $320 (ave)

*The criminal justice system cost estimates presented here are distributed among ederal, state, and local governments based on national data on the distribution o those costs, as reported by the

Bureau o Justice Statistics, and the incidence o violent crime in each jurisdiction. The actual costs borne by each o our eight cities may difer rom those presented here based on how those costs aredistributed between state and local governments.

Source: Authors calculations. The estimates o justice system costs by level o government are based on data rom the Bureau o Justice Statistics.


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TABLE 10The costs o protecting against violent crime

Law enorcement and justice system expenditures on violent crimes, by city, 2010 ($ millions)

City Police protection Judicial system Corrections Total

Boston $21 $10 $71 $102

Chicago $101 $49 $397 $547

Dallas $31 $15 $129 $175

Houston $80 $38 $275 $393

Jacksonville $20 $10 $70 $100

Milwaukee $22 $11 $83 $115

Philadelphia $64 $31 $256 $351

Seattle $13 $6 $38 $56

Total $352 $170 $1,319 $1,839

Source: Tracey Kyckelhahn, Justice Expenditures and Employment, 1982-2007 (Washington: Bureau o Justice Statistics, 2011).

TABLE 11The cost o violent crime per resident in eight U.S. cities

Annual intangible costs o violent crimes, by city, total and per resident, direct costs per resident,

and total costs per-resident, 2010

CityIntangible costs

($ millions)Intangible costs

per residentDirect costs,per resident

Total costsper resident

Boston $734 $1,142 $308 $1,447

Chicago $4,206 $1,486 $390 $1,874

Dallas $1,444 $1,106 $278 $1,383

Houston $2,655 $1,165 $330 $1,494

Jacksonville $802 $977 $246 $1,221

Milwaukee $900 $1,486 $388 $1,873

Philadelphia $2,970 $1,905 $472 $2,378

Seattle $216 $350 $144 $492

Total/Average $13,920 $1,202 $320 $1,520

Source: Authors calculations.


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raes across he eigh ciies, and he direc and indirec coss per residen are much

higher or murders han or he oher violen crimes. Te oal annual coss o

violen crimes per residen in he eigh ciies average $1,520, ranging rom $492

per residen per year in Seatle o $2,378 per residen per year in Philadelphia. (see

able 11 on previous page)

Based on hese cos calculaions, a 10 percen reducion in violen crimes would

generae esimaed direc savings or benes oaling $368 million per year or

all eigh ciies, ranging rom $9 million per year or Seatle o $110 million or

Chicago. Te oal annual savings and benes, direc and indirec, rom a 10

percen reducion in violen crime or all eigh ciies come o nearly $1.8 billion,

ranging rom $30 million in Seatle o $531 million in Chicago.

A 25 percen reducion in violen crime in hese eigh ciies would generae direc

savings or benes oaling $921 million per year, ranging rom an esimaed $22

million in annual benes in Seatle o $276 million in annual benes or Chicago.A 25 percen reducion in violen crime would generae oal benes and savings,

direc and indirec, o nearly $4.5 billion per year or all eigh ciies, ranging rom

$76 million in Seatle o more han $1.3 billion in Chicago. (see able 12)

TABLE 12Total costs o violent crime and total savings and beneits

Annual direct and indirect costs o violent crimes and annual direct savings and total beneits rom

reducing those crimes by 10 percent and 25 percent, by city, 2010 ($ millions)

City

Costs 10% Crime Reduction 25% Crime Reduction

Direct Intangible TotalDirect

SavingsAll Beneits

Direct

SavingsAll Beneits

Boston $198 $734 $932 $20 $93 $50 $233

Chicago $1,104 $4,206 $5,310 $110 $531 $276 $1,327

Dallas $363 $1,444 $1,807 $36 $181 $91 $452

Houston $752 $2,655 $3,407 $75 $341 $188 $852

Jacksonville $202 $802 $1,004 $20 $100 $51 $251

Milwaukee $235 $900 $1,135 $24 $114 $59 $284

Philadelphia $736 $2,970 $3,705 $74 $371 $184 $926

Seattle $89 $216 $305 $9 $30 $22 $76

Total $3,679 $13,927 $17,605 $368 $1,761 $921 $4,481

Source: FBI Uniorm Crime Reports (2010); McCollister et al (2010); authors calculations.


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Tese esimaes o he benes o lower violen-crime raes are conservaive

because hey do no include a range o secondary benes associaed wih reduced

crime. Ciies known o be saer places ofen experience increased ourism, which

Documents

The Economic Benefits of Reducing Violent Crime