A Contribution to the Empirics of Crime

Abstract

We consider two questions. First, we examine the extent to which economic versus sociological theories explain the variation in property and violent crime rates separately. Second, we consider how the relative economic position of a community among neighboring areas may be associated with crime. Both economic and sociological theories suggest that higher inequality may be associated with crime. Economic theories imply that inequality may be positively correlated with crime through its effect on the differential returns from criminal activity versus legitimate pursuits. This suggests that there would be no relationship between crime and inequality, if the benefits and costs of crime participation are controlled. However, sociological theories of crime imply that inequality may have effects on crime through other channels such as lack of social capital, lack of upward mobility, or social disorganization. The empirical evidence on the crime-inequality relationship generally shows a positive relationship. However, there are several limitations in this literature. First, the unit of analysis for which crime is examined is relatively large (e.g. country, states and large metropolitan areas). Various studies suggest that the appropriate geographical unit to study crime might well be much smaller, such as neighborhood. Some recent studies have examine crime at the commune, city block, police precinct level, respectively, but none of these studies address the issue of local inequality and crime. Second, comparability of definitions of crime categories and well-being indicators poses serious problems for most cross-country studies. Finally, most studies treat crime markets as closed, meaning that only the characteristics of own area, and not those of neighboring areas, are allowed to influence the crime rates. This assumption quickly loses appeal when geographical units are such that travel for legitimate or illegitimate activities between them is plausible. Using data for the eight categories of crime during 1998-2002 in the three cities of the US (Nashville, TN; Portland, OR; and Tucson, AZ), we address the limitations summarized above. The geographical unit used in the analysis is block group. The results show that, controlling for economic and structural characteristics, there is statistically significant correlation between local inequality and levels of almost all categories of crime. The unemployment rate and racial heterogeneity are powerful predictors of the level of crime in an area. However, results do not support the hypothesis that criminals travel to wealthier areas in order to commit crime. Finally, we find strong evidence in support of both the Social Control and the Routine Activities theories.