Working Paper: NBER ID: w11210
Authors: H. Naci Mocan; Turan G. Bali
Abstract: Recent theoretical models based on dynamic human capital formation, or social influence, suggest an inverse relationship between criminal activity and economic opportunity and between criminal activity and deterrence, but predict an asymmetric response of crime. In this paper we use three different data sets and three different empirical methodologies to document this previously-unnoticed regularity. Using nonparametric methods we show that the behavior of property crime is asymmetric over time, where increases are sharper but decreases are gradual. Using aggregate time-series U.S. data as well as data from New York City we demonstrate that property crime reacts more (less) strongly to increases (decreases) in the unemployment rate, to decreases (increases) in per capita real GDP and to decreases (increases) in the police force. The same result is obtained between unemployment and property crime in annual state-level panel data. These results suggest that it may be cost effective to implement mechanisms to prevent crime commission rates from rising in the first place.
Keywords: crime; economic opportunity; deterrence; asymmetric behavior; unemployment
JEL Codes: K4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increasing unemployment (J64) | property crime rates (K42) |
| decreasing unemployment (J68) | property crime rates (K42) |
| economic downturns (rising unemployment) (E32) | property crime rates (K42) |
| economic recoveries (declining unemployment) (J64) | property crime rates (K42) |
| police force decrease (J45) | property crime rates (K42) |
| police force increase (J45) | property crime rates (K42) |
| asymmetric behavior of property crime (K42) | crime rates (K42) |
| asymmetric response of crime to economic conditions (K42) | crime rates (K42) |
| hysteresis in property crime behavior (K42) | crime rates (K42) |