The Cost Of Crime Tops $1 Trillion A Year
April 11, 2000
The net burden of crime in the U.S. exceeds more than $1 trillion per year, according to David Anderson's research published in the Journal of Law and Economics. In addition to direct losses, Anderson's analysis includes opportunity costs for criminals and victims, fear of victimization and cost of private deterrence to provide a more complete assessment of the financial costs of crime.
The effects of crime (and their resulting costs) can be grouped into the following categories:
- Crime-Induced Production -- the allocation of resources to the drug trade or operation of correctional facilities -- accounts for $400 billion annually.
- Opportunity Costs -- which reflect the loss of active criminals' and inmates' potential productivity and the cost of crime prevention -- are about $130.3 billion annually.
- Risks to Life and Health because of violent crime represents a burden of $574 billion annually.
- Transfers due to fraud and unpaid taxes account for another $603 billion of losses to the economy due to criminal activity.
Anderson estimates that the per capita cost of crime is $4,118 for each U.S. citizen. This estimate includes factors ranging from the value of the life of a murder victim to the more mundane chore of locking doors and locating keys. He says that a fuller understanding of the true costs of crime -- beyond victims' losses and the cost of law enforcement -- can guide public policy debates on the marginal costs of crime prevention programs.
Source: David A. Anderson, "The Aggregate Burden of Crime," Journal of Law and Economics, October 1999.
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