COST OF CRIME

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May 25, 2016
Determining the cost of crime to the society is a vital task that many have tried to decipher. A quick research unveils many crime costing literature that employ different approaches to approximate the losses due to crimes committed and the cost of crime prevention. Statistics from the U.S. department of Justice show that billions of dollars are used in crime prevention and related legal activities in addition to the billions of dollars that are incurred in economic losses. Studies have shown the cost of crime in developing countries to be approximately ten percent (10%) of their GDP, a figure which agrees with findings that the US spends $1 to $2 trillion annually on crime prevention.
McCollister and colleagues categorizes the cost of crime to the society into four groups: victim cost, costs incurred in the criminal justice system, crime career costs and intangible costs. Victim costs are the losses that the victim faces such as loss or damage of property, hospital bills and loss of money. The criminal justice system costs include the money the government spends on crime prevention such as police protection and correctional programs while crime career cost is the opportunity cost that results from the choice to engage in crime rather than sticking to the straight and narrow. Intangible costs, unlike the other three crime cost categories, don’t have a particular cost. They include physical pain and suffering, psychological trauma due to a crime or the loss of life of a loved one and their estimation is usually left to jury awards. They are usually dollar amounts required to make the victim whole again, what Ludwig calls “willingness to accept”.
The Cost of Crime
The cost of crime can be evaluated by viewing its effects on various disciplines.
Take the economic implications of crime for instance. The minute a crime is committed, there are several economic implications. First, there may be the loss of personal belongings or the destruction of national property, which reflects a loss to the community. There is also an associated charge of police involvement. A recent study indicated that police spend in the upward of fifty million dollars annually in response to alcohol and drug related crimes. Miller and colleagues estimated the cost of six types of crimes to the state of Washington. These crimes included murder, sex offenses, robbery, drug offences, felony property crimes and aggravated assault. In their report, murder had the highest cost to the state at $4.4 million per murder crime, followed by a distant$369,739 for sexual offenses. $219,286 per for robbery, $105,545 per aggravated assault and $22,739 and $28,121 per property offence and drug offense respectively was reported. These are resources which could have been used more effectively in other pressing issues.
A crime doesn’t need to be as big as the above to cause an effect on the economy. A petty theft at a convenient store by a single person will mean that the owner will have to increase the price so as to cover for the lost sales and profits. This will put pressure on the customers hence putting a strain on their incomes. This may go on and on causing a chain reaction because of a simple petty crime by an individual. This is but a thesis as there are other factors that will need to be considered.
Psychological costs of crime are more difficult to repair and more difficult to value. How do you value the loss on one’s life, or the pain and trauma of sexual assault or even the loss of one’s walking ability due to an aggravated assault? All these are intangible costs of crime which can be very difficult to place a dollar value on unlike the economic costs. Cohen introduced a “jury compensation approach” which he used to approximate the value of these intangible attributes like pain, fear and suffering. He accomplished this by taking victim injury data in personal injury cases and combining it with jury awards. The statistical life value was placed at $2 million and then the dollar value for the risk of death in each crime category was obtained by multiplying the said statistical value of life with the crime related death rate as reported by the FBI. The respective costs from the jury compensation approach were $97,962 for a single rape incident, $24,168 for a robbery incident $23,025 per aggravated assault, $6,006, $2,575 and $344 per vehicle theft, house burglary and theft respectively. Miller and colleagues later combined the jury compensation approach with direct victim cost data so as to determine the intangible victim costs more broadly.
The social cost of crime is well documented. Lynch and Rasmussen show the effect of crime on the prices of houses. Normally, one wouldn’t want to live in a neighborhood that is crime prone. The level of trust among the residents of said region would be low as they look at each other with suspicion. This would lead to a poor social set up as well as deterioration of the economy.
Someone told me that crime is not all bad; that the society needs crime to be as it is. So I set out to find the advantages of crime if any. From this perspective, one can point out that the existence of crime brings about employment. Were it not for crime, imagine how many people would be jobless. Police officers are being recruited daily so as to secure the streets; prison wardens to keep prisoners in check are always being recruited. Drake and Miller found out in their study that the state of Washington would need two new prisons by 2020 and an additional one by 2030. These new prisons will not only reduce the losses due to crime but also create massive employment. Another view that may be considered a benefit to crime is the free labor that prisoners give to the state. They are not only reducing crime in the country but also they are running a business that can be profitable and at the same time they are training the prisoners’ skills to earn a living. Granted, money is used to run the prisons, but the amount of labor provided by the prisoners provides for a viable business. Also, some people are homeless and being incarcerated is an advantage to them. They give the state labor and in return they are provided with food, shelter and clothing. Without crime in the society, people would lack anyone to claim moral superiority over. The existence of a society completely free of crime is impossibility. So in a society where everyone is good and courteous, the definition of crime would be relegated to the pettiest of misdeeds. One can also argue that crime has contributed to the advancement in technology. Many inventions are aimed at increasing the probability of catching the next offender or even identifying an offender before he or she commits the act. Many of these inventions have gone on to find application in other fields and hence crime has indirectly aided in the advancement in technology.
Estimating Cost of Crime
The number of scientific methods that have been developed over the years to estimate the cost of crime are too many to preview on this article. Some of them are the numerical crime-ranking method, the property-value method, the life satisfaction method, the quality of life method, the willingness to pay method, a life course method among others. They have been employed by various scientists as they try to improve on their predecessors. McCollister et al. use a two-pronged approach which includes cost of illness and jury compensation techniques. The former approximates the tangible cost of crime such as loss or/and damage of property, medical expenses and loss of earnings. Lost productivity is also included in this category. The jury compensation technique has already been discussed. It is used to estimate the intangible cost of crime. The intangible cost is the difference between the total award by the jury and the victim’s economic loss.
As pointed out earlier, costs of crime also involve the cost incurred in preventing crime. Programs that are aimed at preventing crime (either set by the government or a by community) have the potential bring about economic benefit. An example of such an example is a substance abuse program which is aimed at reducing addiction related crimes (McCollister 2010). Cohen et al. (2010) point out that the costs and benefits of a crime prevention program might vary depending on the offending trajectories. This implies that we have to compare benefits of a given crime prevention program with the accompanying resource allocation, what Ludwig calls ratio of benefits to cost.
To estimate the benefits of crime prevention, two cost of crime estimation approaches (the bottom-up and top-down) are contrasted. The top-down approach is what most researchers see as being conceptually correct. It relates to resource allocation to crime prevention relative to other pressing issues. The benefit of allocating extra resources to crime prevention is the reduction in risk that a person will be a victim to a crime. To convert the benefits into dollar terms is required to determine the benefits to cost ratio, and this is accomplished by determining what the people are willing to pay (WTP) for the extra resources devoted to fighting crime.
The bottom-down approach is not adored by many. It involves valuing the cost of crime that has already been committed against identifiable individuals. Determining the value of a stolen car or of damaged property is achievable, but when it comes to estimating the cost of intangible aspects like psychological trauma or the loss of a loved one, the cost is just but a guess. There is certainly no value that can be placed on a human life; no amount of money will make one “complete” or compensate the loss of a relative of a friend.
The top-down approach is better, no argument; but estimating the WLP is no easy task. Several ways have been used in studies to try to estimate this practice, most notably housing market data. Trying to identify what people are willing to pay to live in safer neighborhoods is quite hard since there are other associated attributes which are difficult to measure. Lynch and Rasmussen tried to measure the effect of crime on house prices and concluded that the cost of crime has no impact on the house prices although houses in crime prone area are more discounted.
Cohen et al. suggest that using the benefit cost analysis for the development of crime policy is the way forward. Going by this principle, it seems there is massive under-investment in many crime prevention programs which have high benefit to cost ratios. Simple crime prevention actions like increasing the police in the streets have a benefit cost ratio as high as 8.5:1. Ludwig and Phillips seem to think that large-scale Head-Start program has a favorable benefit-cost ratio. The only exception seems to be mass incarceration, with Donohue not convinced that incarcerating the marginal person passes the benefit-cost test at the massive levels of incarceration being experienced. Ludwig acknowledges that swelling the prison numbers decreases crime but is of the idea that the opportunity cost of incarceration can be forgone by having programs such as early childhood interventions.
Conclusion
The cost of crime is a two headed topic, with part of the cost going to the losses due to the crime and the other part being the cost incurred to prevent crime. The quality of crime has been on the increase as offenders look for more advanced ways to avoid being caught. Hackers have gotten smatter, as recent cases will attest. Emerging trends have also seen white collar offenders hide their tracks well and eventually avoid being caught. Even sex offenders have upped their game and can woo people to their places of crime with attractive offers on the internet All these have led to a dramatically increase in the cost of crime, and the trend is expected to continue as the government looks to find more advanced (hence more expensive) ways of dealing with crime. The resources devoted to crime fighting are expected to increase as time passes. It is a cost many will e willing to pay to ensure that neither they nor their loved ones fall victim of crime. The benefit-cost ratio method of determining whether a crime prevention method is worth the dollars is a vital tool that will enable the reduction, if not eradication of crime, by employing the right methods. Intervention at a small age is one way that can help reduce the crime rate. Creating employment opportunities is another way that can also be used to reduce crime and hence reduce the cost of crime.

References

Cohen, Mark A. "Pain, suffering, and jury awards: A study of the cost of crime to victims." Law and Society Review (1988): 537-555.

Lynch, Allen K., and David W. Rasmussen. "Measuring the impact of crime on house prices." Applied Economics 33, no. 15 (2001): 1981-1989.

McCollister, Kathryn E., Michael T. French, and Hai Fang. "The cost of crime to society: New crime-specific estimates for policy and program evaluation." Drug and alcohol dependence 108, no. 1 (2010): 98-109.

Miller, Ted R., Mark A. Cohen, and Shelli B. Rossman. "Victim costs of violent crime and resulting injuries." Health Affairs 12, no. 4 (1993): 186-197.

Gibbons, Steve. "The Costs of Urban Property Crime*." The Economic Journal 114, no. 499 (2004): F441-F463.

Ludwig, Jens. "The costs of crime." Criminology & Public Policy 9, no. 2 (2010): 307-311.

Aos, Steve, Marna Miller, and Elizabeth Drake. "Evidence-based public policy options to reduce future prison construction, criminal justice costs, and crime rates." Fed. Sent. R. 19 (2006): 275.

Entorf, Horst, and Hannes Spengler. Crime in Europe: Causes and consequences. Springer Science & Business Media, 2002.

James, Doris J. "Profile of jail inmates, 2002." (2004).

Donohue III, John J. "Assessing the relative benefits of incarceration: Overall changes and the benefits on the margin." Do prisons make us safer? The benefits and costs of the prison boom (2009): 269-342.

Miller, Ted R., Mark A. Cohen, and Brian Wiersema. "Victim costs and consequences: A new look." (1996).

Cohen, Mark A., Alex R. Piquero, and Wesley G. Jennings. "Studying the costs of crime across offender trajectories." Criminology & Public Policy 9, no. 2 (2010): 279-305.

Donohue, John, and Jens Ludwig. "More Cops." (2007).