How bad is crime?, Ben Southwood asks:
In the paper, whose calculations were done in 2006, Americans were willing to pay $25,000 to avert a burglary across their society, $70,000 to avoid a serious assault, and nearly $10m to avoid a murder.
A more practical situation comes when juries award money to ‘make people whole’ for physical injury, pain, suffering, mental anguish, shock, and discomfort that they have experienced due to some illegal action. For example, one 68-year old lady was shot through the spine in a drive-by shooting, and left paraplegic — a jury gave her $2.7m in addition to her medical costs.
If you combine these awards, in a large sample, with separate ‘physician impairment ratings’ — basically how bad doctors think the injury is compared to death — then this is another method of estimating the statistical value of a life, something we have hundreds of estimates for, which typically comes out somewhere above $5m, depending on the wealth of the country and the methodology.
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Their central estimate is that crime costs America $2.6 trillion annually, mostly coming from violent crime. This is about 12 percent of US GDP. By this metric, it would be, in GDP terms, one of the US’s biggest problems, on par with housing. For a country like the UK with a murder rate about five times lower, the problem is probably about five times smaller.
I actually think the American problem is considerably bigger than this estimate, because this study only includes the costs of crimes that actually get committed. However, people try their damnedest to avoid being the victims of crime. This leads to many extremely socially costly behaviours.
What are some of these extremely socially costly behaviors?
For example, one study by Julie Cullen and Steven Levitt finds that when crime rates across the city rise ten percent, city centre populations fall one percent — with people generally moving to the suburbs. One crime tends to push one person out of the city centre, on average.
Quantifying this in terms of a real world city, the roughly 400 percent increase in New York City’s murders from 1955 to 1975 (from around 300 to over 1,500 per year) would have been expected to empty the densest parts of the city out by about 40 percent, assuming that other crimes rose in line with murder. And indeed, the population of the centre city — Manhattan — fell about 35 percent over that period, while the population and physical extent of the suburbs grew rapidly.
Murders in New York City peaked in 1990 at over 2,000 per year, roughly as population reached its nadir in the city centre. They have cratered by over three quarters, to about 300. This would have likely driven city centre population up massively, much moreso than it actually did recover, but building restrictions have prevented this happening anywhere near as much as it might, meaning that it has driven up prices instead.
So this story implies that crime in city cores drives people to the suburbs, creating urban sprawl. If so, then crime’s costs are even higher than we thought.