NCPA - National Center for Policy Analysis

CRIME AND ECONOMY DON'T TELL WHOLE STORY

January 9, 2009

Everyone knows that there is more crime in economically depressed inner-city neighborhoods than in affluent suburbs.  That fact leads naturally to the assumption that if a community becomes more prosperous, crime rates will go down, and if income levels decline, crime rates go up, says James Q. Wilson who teaches at Pepperdine University and is the author of "Thinking About Crime," the coauthor of "Crime and Human Nature" and the co-editor of "Crime: Public Policies for Crime Control."

Economists who have checked this view have discovered that it is often true, but not always:

  • They have found, for example, that the burglary rate goes up by 2 percentage points for every 1-percentage-point increase in the unemployment rate.
  • That sounds like a big change until you realize that if the unemployment rate rises from 6 percent to 8 percent (which is about what it is in California now), the burglary rate will increase by 4 percent.
  • Because burglaries aren't measured all that accurately (some are never reported, and police vary in how they report the statistics), it's not certain that we would even notice so small an increase.

A lot of other factors affect the crime rate as well:

  • It often goes up when the population gets younger, and when drug abuse becomes more common.
  • Murder rates are profoundly influenced, at least in big cities, by gang activity.
  • We don't have good ways of understanding why gang activity changes, though we suspect that changes in behavior are influenced by what the police do, whether gang truces have worked and whether gangs are fighting over drug and other illegal transactions.

All these imponderables make it difficult to fully understand why crime rates rise and fall:

  • In the 1960s, the national homicide rate rose by 43 percent, even though the country was in a period of great prosperity and low unemployment.
  • The homicide rate fell in the 1980s, even as the economy was wobbling, with high interest rates and a steep rise in business bankruptcies.
  • In the 1990s, the murder rate fell by 39 percent at a time when unemployment also was declining.

So can the economy help explain fluctuations in crime?  Sometimes yes, sometimes no, says Wilson.  It would be difficult to link rising crime during the prosperous 1960s to economics.  On the other hand, a declining economy provides a plausible theory to explain increases in crime during the 1990s.  Matters become even more complicated if one goes back to the Depression of the 1930s.  We had no FBI data on crime rates at that time, but several studies of individual cities suggest that crime rates fell even though one-quarter of all Americans were unemployed.  Why?  One reasonable hypothesis is that the Depression pulled families together, and this cohesion inhibited crime.

Source: James Q. Wilson, "Crime and the Economy Don't Tell the Whole Story," Los Angeles Times, January 9, 2008.

For text:

http://www.latimes.com/news/opinion/commentary/la-oe-wilson8-2009jan08,0,1034978.story

 

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