Education, Crime, and Neighborhood

Neighborhood Effects Early work sought to measure education and crime as neighborhood effects. IDEA. We could measure the impacts (and possibly the benefits) of improved education or safer neighborhoods. P = a +  b i S i +  c j Educ j +  d k Crime k where S i refers to structural characteristics; EDUC j to Educational characteristics; CRIME k to Crime characteristics.

Shorthand P = a +  b i S i +  c j Educ j +  d k Crime k P = a + b 1 s 1 + b 2 s c 1 Educ 1 + c 1 Educ 1 + … + d 1 Crime 1 + d 2 Crime 2 + … Presumably, the c j and d k tell us something about impacts of good schools and safe neighborhoods.

Neighborhood Effects P = a +  b i S i +  c j Educ j +  d k Crime k Dubin and Goodman (1982) had 21 educational characteristics, and 12 crime characteristics. They were able to “reduce” these into:

Neighborhood Effects 5 educational components –Test scores (Stud. Perf.) –Change in test score –Teacher quality –Change in Stud. Achieve. Test –Staff Experience 3 crime components –Violent crime –Property crime –“Shopping center” crime All of them mattered.

Neighborhood Effects Dubin/Goodman Coefficients, for Baltimore City (mean value = $34,650). –1 unit  in test scores  $2253  in house price, about 7%. –For crime: 1 unit  in property crime  $795 . 1 unit  in violent crime  $3143 . 1 unit  in shopping center crime  $3721 

Victimization Crime rate per 100,000

Victimization Violence  low income victims Property crime  higher income victims Central city residents are more likely to be victims. Blacks are more likely to be victimized.

Costs of Crime Direct Real Costs –Death, injuries –Must calculate dollar values for injuries –Must impute costs for death Direct Transfer Costs –Theft, fraud –These are transfers because wealth is being transfered rather than destroyed.

Costs of Crime Indirect Real Costs –Prevention costs. If we didn’t have robberies, we wouldn’t need to put locks on our homes. –Criminal justice costs. If we didn’t have crimes, our criminal justice/public safety system (police, courts, firefighters) would be much smaller.

Source: Freeman 1996

Crime as a Rational Activity Premise: Expected benefits exceed expected costs. Return to crime exceeds return to other plausible occupations. First, expected benefits. Expected Loot: E (L) = prob of success * Value of Loot So, if prob. of success is 0.6, and loot is $1200, expected loot is: E (L) = 0.6 * 1200 = 720

Crime as a Rational Activity Next, expected costs. Assume one year sentence if caught. Simplest model looks at costs as the probability of going to prison for one year, and the costs of being in prison. Expected prob. of going to prison is –Prob of getting caught * –Prob of getting sentenced. –EXCEL Expected Cost: E (L) = Prob c * Prob s * Cost So, if Prob c is 0.3, and Prob s is 0.2, and foregone wages are $3,000, then expected costs are: 0.3 * 0.2 * 3000 = 0.06* 3000 = $180

Who Commits Crimes? Some people are skillful. They have low probabilities of getting caught and convicted. Expected loot may be high; expected costs are low. Some have low opportunity costs. Some don’t like society much so they’re not too averse to doing crimes.

Supply Curve for Burglary How many burglaries are committed? Depends on return. Depends on aversion to crime. # of burglaries Net Return S (no aversion) S (some aversion) S (more aversion)

Why Did Crime Drop in the 1990s? % Reduction

Why Did Crime Fall in 1990s? Strong Economy. There were more jobs and higher wages, causing a 2% reduction in property crime. Demographics. A decrease in the share of population in the crime-prone years of Police Techniques. Including community policing and more aggressive control of public nuisances. Increase in Police. Increase of about 14%, at a cost of $8.5 billion per year. Decrease in Crack. Legalized Abortion (1974). It appears that crime rates are higher among children born to reluctant parents.