The Hindu Business Line : The economics of crime

The causes and determinants of crime have a significant bearing on the economy and society. Demographics could also contribute to an increase in crime rates. Rapid economic growth will mean more opportunities for crime. Unabated and unaddressed visible inequalities too contribute to the rising crime rates, says Bhanoji Rao.

ENCYCLOPAEDIA Britannica (www.britannica.com) defines crime as the "intentional commission of an act usually deemed socially harmful or dangerous and specifically defined, prohibited, and punishable under the criminal law".

Social science researchers generally distinguish two types of crime — property crime (burglary and theft) and violent crime (rape and murder). The search for identifying the causes and determinants of crime is as old as crime itself. More recent innovations, however, have to do, with the search for the economic and social parameters impacting on crime.

Dr Gary Becker of the University of Chicago won the 1992 Economics Nobel for "having extended the domain of economic theory to aspects of human behaviour which had previously been dealt with — if at all — by other social science disciplines such as sociology, demography and criminology." From an economics angle, his analytical work probes into many socially important phenomena such as marriage and divorce, and crime and punishment.

In his celebrated 1968 article in the Journal of Political Economy on crime and punishment, Dr Becker proposed the economic rationale for criminal activity. Simply put, the decision to commit crime is a function of the costs and benefits of crime. From this assumption Dr Becker concluded that the way to reduce crime is to raise the probability of punishment or to make the punishment more severe.

Ever since the Becker paper appeared, several hundred followed replicating, extending and deepening the probe into the determinants of crime.

Following are a few examples, along with some of the key findings, to illustrate the role of economic, demographic and deterrence factors in crime reduction.

In a paper published in 2002 in Economic Affairs, Derek Deadman and Ziggy MacDonald of the University of Leicester looked into the causes of the reduction in recorded property crimes in England and Wales between 1992-2002.

The reduction was substantial and in 2000-01, the level of crime was 20 per cent below the level in 1992. After an in-depth study of the time series and survey data, the authors found that the fall was due to the combination of all three types of factors: economic, demographic and deterrence related.

Sustained economic growth, low inflation and low unemployment have resulted in a fall in property crime, though economic growth by it self, being synonymous with larger volume and wider variety of goods, is expected to provide greater opportunities for property crimes.

Along with lower inflation and lower unemployment, increased security measures (alarm systems, etc.,) have acted to counter increased opportunities and helped in crime reduction. As for demography and deterrence, the fall in youth population relative to total population and increased number and duration of imprisonments have helped.

In a more recent paper (August 2004), appearing in the International Economic Review, a group of four researchers looked into the proximate causes of the decline in property crime rates during 1980 and 1996 in the United States. The most important factors that account for the decline are found to be higher apprehension probability, stronger economy, and aging population.

Several studies point to other important economic causes of criminal activity. High levels of income and wealth inequality, for instance, have been found to raise crime in general and property crimes in particular. In addition to the fact that property crime is likely to be stimulated by a general increase in income and wealth, the impact of income and wealth inequality is less direct, but quite known.

A relatively high level of income and wealth inequality presents a fertile ground for property crimes, since the very poor have little to loose even if imprisoned, and the very rich serve to provide the canvass for crime.

Practically every study — national and international — has shown a positive relationship between income inequality and property crime, while some have shown a strong link between inequality and violent crime.

As an example, or a very simple and down to earth explanation, of the strongest link between highly visible absence of inequality and little or no property crime, here is what a chief executive of a state research institute in Beijing and his wife working in a government department had to say in the late 1980s.

Their apartment, like many others in the city in those days, had just one room, a bath and a kitchen. The couple was categorical that there were no thefts in the city simply because there was nothing much to steal.

If every family has nearly similar clothing and housing, etc, there is hardly any incentive to steal. But one need not resort to such extreme measures to curb crime. Yet, the case for lower rather than higher inequality gains relevance if one is serious about crime prevention.

The causes and determinants of crime found in literature relating to the subject have significant bearing on the Indian economy and society. Demographics, most notably the relatively high proportion of young people, which is expected to have a positive impact on the rate of economic growth, could also contribute to an increase in crime rates. Rapid economic growth will mean more opportunities for crime.

Unabated and unaddressed visible inequalities (in education, health and housing) too will have their share in raising crime rates. There is strong public opinion and sound research demonstrating the importance of quick and deserving punishment as an effective deterrent to criminal activity.

However, ensuring such punishment would require the necessary wherewithal in terms of the required quality and quantity of law enforcement officials. (see table)Following are a few noteworthy observations.

First, a lot more female participation is needed in our police force.

Second, taking into account the size and complexity of the country, Central and State governments need to consider carefully whether we have the right quantity of police resources and whether they are well paid and well treated.

Third, the number of recorded crimes seems low and the rate of acquittals high. The right quantity and quality of the police force would doubtless address both issues.

(The author, formerly with the National University of Singapore and the World Bank, is Professor Emeritus, GITAM Institute of Foreign Trade, Visakhapatnam. He can be reached at bhanoji@gmail.com)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Australia: Emerging hub for financial analytics off-shoring

To export or not?

How Indian Airlines can soar

The economics of crime

Easing yuan's peg to dollar — Gauging the China factor

The `peak oil' controversy

Ruling the mind-space

Veto power

World populations

Energy deal