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Economic theories

Economic theories. Early studies – 19 th . Century. 1800’s France – Guerry Wealthiest regions have more property crime, less violent crime Opportunities – more things to steal Lack of education not related to crime 1800’s France – Quetelet Men more likely to commit crime

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Economic theories

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  1. Economic theories

  2. Early studies –19th. Century • 1800’s France – Guerry • Wealthiest regions have more propertycrime, less violent crime • Opportunities – more things to steal • Lack of education not related to crime • 1800’s France – Quetelet • Men more likely to commit crime • Especially poor, unemployed, undereducated • Opportunities important • Poor areas had less crime • Crime more likely to occur in better off areas, committed by poor • Inequality within richer areas might breed resentment • Crime consequence of moral character; virtues break down if poor • Problem – reporting • Was crime in poor areas under-reported? Undercounted?

  3. More or less crime witheconomic slumps? • More crime during economic slumps • Pratt and Lowenkamp: Homicides 1976-94negatively associated with economic activity(as one rises, the other falls) • Less crime during economic slumps, or no relationship • Great Depression (1928-1940) – Henry and Short • General crime rate did not increase; crimes of violence declined • Cho 1970: % below poverty level in 49 largest cities not associated with index crimes • During the 1960’s, as the economy expanded, crime and delinquency increased • During the 1990’s, as the economy expanded, crime and delinquency decreased

  4. The Great Recession • 2011 Census Bureau Report • 2010 median income was $49,445, 2.3percent less than 2009 • Poverty rate (less than $22,314 for family of 4)15.1 percent, up from 14.3 percent in 2009 • 46.2 million in poverty, up from 43.6 million in 2009, a rise of 5.9 percent • Highest rate since 1993, 7.3 percent lower than in 1959, first year rate was computed • 11.7 percent of families in poverty, up from 11.1 percent in 2009 • 22 percent of children under 18 live in poverty, up from 20.7 percent in 2009 • Number without health insurance coverage in 2010 about the same • 26.9 percent of households with incomes less than $25,000 have no coverage • 8 percent of households with incomes of $75,000 or more have no coverage http://cnn.com/video/data/2.0/video/us/2011/09/13/tsr-sylvester-poverty-in-america.cnn.html

  5. Basic questions and issues • Do economic conditions affect crime? • Study times of economic depression • Look at crime over time, during periods of prosperity and downturns • Does unemployment affect crime? • Does economic inequality affect crime? • Compare crime rates in wealthy and poor areas • Is inequality more important than income? Are poor areas that exist in or near wealthy areas particularly affected? • Issue: economic factors supposedly don’t address individual characteristics • But they influence environmental variables such as nutrition and educational opportunities, which affect human development

  6. Crime and poverty today • Strong positive association between povertyand crime – the more of one, the more of theother • Ehrlich - 1940, 50, 60 – association betweenproperty crime and poor households • 1974 - Loftin and Hill’s index of structuralpoverty • Infant mortality, education, income, singleparent families • Strongly correlated with State homicide rates • Lee – 1990 - concentration of poverty is important • Stretsky – The more concentrated the poverty, the more robbery and homicide • Brookings map – Areas where 40% or more of residents are under poverty line • 1990 – 14.1 percent of all poor people lived in these areas; 2000 – 9.1 percent; 2009 – 10.5 percent http://www.brookings.edu/research/papers/2011/11/03-poverty-kneebone-nadeau-berube

  7. North St. Louis: An example ofconcentrated poverty • In St. Louis, homicides fell from 267 in 1993to 113 in 2012, a 60 percent drop • But in North St. Louis, in the abysmally poor27th Ward, murders increased from five in2009 to 17 in 2012 • Residents are gripped by fear. Even armedgang members are afraid. • Like problems pervade areas of Chicago and entire other cities, including Detroit, Newark and Camden • Economic problems – the effect of declining property values – have battered city revenues, reducing public services and slashing the numbers of police • NY Times article: http://www.nytimes.com/2013/11/20/us/in-neighborhoods-like-north-st-louis-gunfire-still-rules-the-night.html

  8. Poverty in Southern Californiakeeps going up • 2014 report by the Southern California Associationof Governments (SCAG) • Poverty in Southern California increased between1990 and 2012 • Six counties measured: L.A., Orange, San Diego, Riverside, Imperial, Ventura • Number of persons living in poverty increased from 1.9 million in 1990 to 3.2 million in 2012 • Poverty increase – 69 percent – was nearly three times higher than the population increase – 26 percent • Eighteen percent of residents and 25 percent of children live in poverty • Of those without a high school diploma, one in four lives in poverty • Poverty statistics are based on income, not cost of living. So the situation is likely worse. • Poverty less of a problem in Northern California, with a more educated workforce • Link at http://www.scag.ca.gov/Documents/PovertyGrowth_EconSummit120413.pdf

  9. Adult/youth unemploymentand youth crime Hypothesis: Unemployment  poverty  crime • Adult unemployment effect on delinquency • Glaser and Rice: adult unemployment reduces delinquency, maybe because parents are home • Weatherburn and Lind: delinquency high when adult unemployment high • Youth unemployment effect on delinquency • Several studies report strong positive correlation between delinquency and youth unemployment (go up and down together) • Ihlanfeldt -- More than 20 percent of difference in property crime between black and white neighborhoods caused by lack of job opportunities for black youth

  10. Unemployment andadult crime • By early 1980’s studies had shown a weakpositive relationship between unemploymentand crime • In a 1987 review of 63 studies, Chiricos found asignificant positive relationship between unemployment and crime, especially after 1970 • More unemployment, more crime • Easier to discover in small units (e.g., cities) because they are more homogeneous than larger units (e.g., States and regions) • Disagreeing, Land, McCall and Cohen found the opposite for homicides • As unemployment increased, homicides decreased • Land, Cantor and Russell found a weak negative relationship between unemployment and crime between 1960-1980 • As unemployment increased, crime decreased • Said that the positive relationship found by Chiricos is more likely to be found in smaller units of analysis and for property crime http://www.cbsnews.com/video/watch/?id=6987699n&tag=segementExtraScroller;housing

  11. Trends in unemployment and crime Unemployment Rate (percent) 1970-2010ages 16 years and over - Bureau of Labor Statistics 1982 – 9.7 pct. 2010 – 9.6 pct. 1992 – 7.5 pct. Crime rates 1970-2009 - UCR • Compare 1982 – 1992 – 2009/10 • Is there a relationship between unemployment and crime? Is it perfect? • Does the data generally support the theory? • Could the recent uptick in inner-city violence represent a lagged effect of unemployment on crime? 1980 – 5353.3 Property 1991 – 5140.2 1991 – 758.2 1980 – 596.6 Violent

  12. Kinds of employment and crime • Are things especially bad in the Northeast because of the decline in manufacturing? • White – 1970 -1990: Decline of manufacturing jobs  increased poverty and unemployment  increased robberies, burglaries, drug offenses • Police Issues : “A Tale of Three Cities” • Shihadeh – 1970 -1990: decline of low-skilled jobs  increased poverty  increased violence

  13. Is The Great Crime Drop bottoming out? • But – property crime rates may have bottomed out in 2011 • Is this the sign of a “lagged” effect of The Great Recession? • Recent rising violence in major cities • National Youth Gang Survey: Gang violence in large cities on the upswing in the 2000’s. In Chicago and Los Angeles, more than half of killings in 2010 were gang-related. • As of the end of June 2012, New York City property crime down 7%. BUT: violent crime is up, with murders jumping 11%, rapes 13% and shootings 7%

  14. Major differences • Start from drastically different levels • Oakland and Newark higher in 2010 than in 2005 • New York City remains low but increased 2009-10 • Might the flattening out of the downtrend or the recent increases be a “lagged” effect from the Great Recession?

  15. Interpreting research on economic conditions

  16. Problem #1: Poverty issubjective • Relative to locale • Relative to who’s measuring • Relative to how it’s measured • Unemployment is an inexact concept • People not actively seeking work are not counted • Count the under-employed, poorly paid dead-end jobs, bad working conditions • How people feel about their jobs isn’t measured

  17. Problem #2: Two contradictory theories, with support for each Poverty  Crime OR Opportunities  Crime • Traditional view: Poverty causes crime • Good economy, low crime; bad economy, high crime • Oppositional view: Crime is driven by opportunities • Good economy  greater criminal opportunities  more crime • Ploscowe - 1931: support for positive relationship betw. economy & crime • Crime increased during 150-year period when the economy improved • Gurr – 1977: support for positive and negative relationships • Crime “increases” may be due to better police reporting • Different causal processes may be at work in each time frame • 19th. Century - economic activity positively related to crime • 20th. Century – economic distress had no effect, but as total productivity increased, so did crime

  18. Problem #3: Economic change may have a delayed (lagged) effect on crime • It takes time for unemployment to cause crime to increase • Unemployed don’t feel the full brunt of being out of work until other sources of support are exhausted • Perhaps there is no corresponding “lag time” for increased opportunities to commit crime • Economic improvements immediately increase criminal opportunities • Cantor and Lang - 1946-1982 - US unemployment rates and crime index • Immediate “opportunity” effect and lagged “motivation” effect. As unemployment increased… • Robbery, burglary and theft immediately decreased but then increased the next year • Homicide and auto theft decreased, did not increase the next year • No effect on rape and assault

  19. Problem #4: Determining the size of the unit that economic factors affect • Local conditions are very important • In economically stagnant inner cities, there may be declining amount of legal work and increasing amount of illegal work (e.g., dealing drugs) • Involvement in crime and incarceration may limit opportunities • Alienation and diminished expectations • Low-paying work is stigmatized • Violence substitutes for normal social controls • Once people are socialized into illegal activities, they may continue them

  20. Problem #5: What are themost important variables? • High crime areas have many variables thatmight cause crime • Poverty • Unemployment • Single-parent households • High density • Poor schools • Many are intercorrelated – related to each other – so their unique individual contributions are hard to measure • Land - the most important determinants of homicide were clustered in one factor (group of intercorrelated variables): “resource deprivation/affluence” • This factor includes measures for... • Poverty & income inequality • Percent African-American • Percent children not living with both parents http://www.cbsnews.com/video/watch/?id=7371392n&tag=segementExtraScroller;housing

  21. Problem #6: Distinguishing between poverty and economic inequality • Poverty: fixed concept – below a fixed level of incomeor material goods • Inequality: relative deprivation • Consistent findings • Economic inequality associated with homicide • Economic inequality associated with violent crime • Firearms violence strongly correlated with inequality after controlling for poverty and access to firearms • Is it a specific kind of inequality (e.g., white/black)? • Messner and Golden (1992): increased inequality between blacks and whites associated with homicide • Other studies report mixed results http://www.nytimes.com/2013/11/10/nyregion/de-blasio-could-help-the-rich-see-the-poor-living-next-door.html

  22. Problem #6 cont’d Comparisons between lowest 20%, middle 20% and top 20% of earners • 1979 adjusted after-tax income (as % of total income) • Lowest 20 percent: 15,300 (6.8) • Middle 20 percent : 44,100 (16.5) • Top 20 percent: 101,700 (42.4) • 2007 adjusted after-tax income (as % of total income) • Lowest 20 percent: 17,700 (4.9) • Middle 20 percent : 55,300 (14.1) • Top 20 percent: 198,300 (52.5) 1979-2007 change in adjusted after-tax income Lowest 20 percent of earners up 16% Middle 20 percent of earners up 25% Top 20 percent of earners up 95% (source: Congressional Budget Office and Inequality.org)

  23. Conclusions • Economics may have most direct affect on crime within the urban “underclass” – pockets of extreme poverty • Strong association between poverty and violence • Economic inequality is associated with violent crime • Key factor may not be how many poor, but how many wealthy • When only poor people are around, crime may be lower • Direct effect of poverty on crime is mediated by many other variables • High-crime communities have a host of factors – poverty, unemployment, single-parent households, poor schools • These factors may be a more proximate cause of crime than poverty • For example: Poverty  poor schools  unemployment  broken homes  crime

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