Evaluating Policies to Combat False Emergency Calls

1. Center for Competitive Government Dr. Simon Hakim, Director Center for Competitive Government The Fox School of Business & Management Temple University http://www.sbm.temple.edu/ccg/ E-mail: simonhakim@temple.edu

2. POP CONFERENCEOCTOBER 28, 2004 Evaluating Alternative Policies To Combat False Emergency Calls Presented by:Simon Hakim with Erwin A. Blackstone Andrew J. Buck

3. The Balance of Costs & Benefits • The cost variables are: • To owners Installation outlays $420,035 Monthly charges $453,773 • To the Police Department $139,081 Response to false activations Total Cost: $1,012,889

5. Benefit Variables (cont)

6. BenefitsofAlarms • To Alarm Owner- Burglary • Deterrence by yard sign • At break-in alarm sound prevents penetration • Once inside the premises-shorter stay • Similar benefits from preventing spread of fire • To the Community • Police save time for securing alarmed property • Displacement/Umbrella effects?

7. Problems With The Current System • Efficiency • Higher cost to police • Lack of choice to consumers • Alarm activators become criminals • Prices do not reflect actual cost • Price discrimination: • business • residential • schools • religious and chartable facilities • municipal facilities

8. Problems(continued) • Equity • Cross subsidization between false activators and non-alarm owners/non–activating owners.

9. Significance of false alarm problem • Estimated annual national cost is $1.8 billion; 36 million false alarm activations; 10-20% of patrol officer time spent on responding to false alarms. • If we solve the problem it will add the equivalent of 30,000 officers nationwide.

10. Can we increase net benefits to the community? • Efficiency • Reduce number of false activations. • Reduce cost of response. • Equity Cross subsidization between false activators and non alarm owners/non-activators.

11. Is response to Alarmsa public good? • A valid alarm is a public good. • Reduce pool of burglars • Deterrence for other burglars • Apprehension-punishment • A false alarm is a private good. • Customer is identified and response is a private service • No others in the community benefit • Benefits foregone–displacing other worthwhile police activities.

12. Alternative 1: Do Nothing • Police deliver private service, causing cross subsidization. • Pricing of response is not based on cost. • Police treat alarm response at low priority, thus reducing the effectiveness of alarm. • Causes congestion on emergency communication systems. • Response to other events takes longer. • Registration of systems is bureaucratic, costly and unnecessary. • Violators are treated as criminals rather than customers.

13. Alternative 2Managed Competition • Police maintain response • Allow private companies to respond • Price at cost. No escalating fees, no free response. Charge all targets at cost • Commercial • Residential • Public and religious

14. Alternative 2: (Continued) • The business of response. Revenues of false alarms should be credited to the police account. • Registration fees should be eliminated. Fees collected for no service rendered yields unjustified tax on alarm owners. • Comments The solution is likely to occur in rural/small suburban localities where the market is too small for private firms.

15. Alternative 2 (Continued) Benefits • Police act as a business where it is not a public good. • Introduction of competition improves efficiency, enhances consumer welfare, and stimulates introduction of technology.

16. Alternative 3 Verified Response • Police respond only after physical verification • Police respond only to real events. • State licensing or private certification of guards and companies . (license guard companies, certify UL) • Registration of alarms is unnecessary

17. Benefits: • Competition among responders results in choice of price/quality packages. • Faster response by private companies and police • Patrol cars respond faster to other emergencies. • Less congestion on 911 or on other emergency communication system. • Consumers have greater incentives to adopt video/audio technology to save on response. • Police perform public duties for which they are responsible and trained. • Treat alarm activators as customers rather than criminals.

18. Criteria for Success • Private Response • Feasible if in high density area and/or high value establishments/area. • Feasible if bundled with other services: Patrol, vacation services, stationary guard, locking/un-locking buildings. • Police do not offer free response or price response below its own cost. • Police cooperate by raising priority for verified cases.

19. Private Response Evidence • Private response time ranges from 5 to 30 minutes, almost all under 20 minutes. Average police response-40 minutes (our survey; SLC) • The cost of response is less than half that of police. Average cost of police is $50-$60 (our work). • Reduce congestion on 911 and improve police response to other emergencies. • No evidence of misconduct or consumer complaints with respect to private response companies.

20. Conclusions • Alarms are beneficial to the community. • Under the current system it is inefficient and inequitable for police to respond to false alarms. • If, however, police wish to retain some of the false response they must allow others to enter and compete, and they must price at or above their cost. • Verified response comes closest to the economic model of competition. It solves the public vs. private good aspect of alarm response.