Crime and the Economic Downturn

Here are some headlines from 2008:

Keeping Wary Eye on Crime as Economy Sinks” – New York Times (October 9)

Economic downturn hits U.S. police with double whammy” – Reuters (October 21)

Will Recession Make Cities Dangerous Again?” – ABC News (December 4)

So what happened with the crime wave? As the figure below shows, in 2009 – when national unemployment crept toward double digits –rates of property crimes were at their lowest rates in decades, and 2010 has continued the trend.

Predicting a spike in crime in 2008 was not a far-fetched idea.

The chart suggests a correlation between the national unemployment rate and crime. For example, crime spiked during the early 1980s when unemployment was also on the rise, and dropped substantially during the 1990s when the economy was booming.

A Congressional Research Services report from 2008 summarizes the evidence on crime and unemployment rates:

“A review of the literature found large disparities in the magnitude of the correlation between unemployment and the property crime rate. Some researchers found a small relationship (unemployment accounts for about 2% of the change in the property crime rate); other researchers found a large relationship (unemployment may account for up to 40% of the change in the property crime rate), while still others found no relationship.”

The variability in study results stems from several factors including the time frames used to measure the effect of unemployment, the aggregation of the data (data from cities apparently showing larger effects, and lending some evidence to a relationship), and the selection of controls for other variables such as demographics and educational attainment. Still, the evidence on balance suggests a modest causal effect of unemployment on crime.

Basic economic theory would also support this idea – if participating in crime is a rational response to the lack of legitimate wages in the labor market, then the evaporation of jobs should encourage more people (especially young men with little education) to supplement their income through theft. Moreover, poor economic conditions increase stress, disrupt families, and weaken social ties. A widespread concern, with anecdotes in the news media, is that communities decimated by home foreclosures would fall prey to drug dealers and prostitution. On top of all this, we know that community police departments have been cutting budgets and resources, leading to fewer cops on the beat.

These theories beg a larger question as old as the study of criminology. To what extent is crime an economically motivated activity? Although scholars across the ideological spectrum do not agree on what led to a decline of crime in the 1990s, there is widespread effort to pin the success on non-economic factors. James Q. Wilson reviews some of the hypotheses in an article in the Wall Street Journal last year: declining use of crack cocaine, increasing incarceration acting as a deterrent to would-be criminals, “hot spot” policing leading to better management of difficult urban areas, and even Steve Levitt’s controversial hypothesis that legalized abortion decreased the birth rate of poor children that were at greatest risk for engaging in crime.

Because the “Great Recession” and its aftermath are an unprecedented source of economic dislocation and joblessness, far surpassing any of the recession in the last two decades one would have thought that any reductions in crime attributable to social, demographic, or cultural factors would have been swamped by the economic pressures to engage in criminal activity. Social scientists have been waiting with baited breath to see the impact of the recession appear in data on various social indicators, but little evidence has appeared that crime is on the rise. It may be the case that the data will still bear out a rising crime wave, given more time – we cannot yet gauge what the impact of the recession will be on children living in homes under great economic strain. Also, more disaggregated data may reveal diverging trends across the country. We know from other data that the rate of victimization by race differs during recessions, with higher rates of victimization of blacks than whites. The concentrated impact of the recession in high unemployment, high minority areas such as Detroit or Los Angeles may not be apparent from the national data.

For now, at least, the crime rate non-story is a reminder not to over-project the impact of the economic downturn. We have a lot to learn.

About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
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