Economy
1:15 pm
Mon October 1, 2012

Centre College Research Says Costs of Crime More Widespread than Many Believe

“The Cost of Crime,” a new study by a Centre College professor, quantifies the burden of crime by estimating the annual cost of crime in the United States. Many studies measure crime by looking at raw numbers of thefts, murders and other criminal activities. David A. Anderson, Centre College’s Paul G. Blazer Professor of Economics, warns that these numbers can be misleading, especially when the number of crimes goes in one direction while the severity of crimes goes in the other.

For example, Anderson notes that “a recent decrease in the number of thefts was accompanied by such a large increase in the average amount stolen that total victim losses actually increased.” Anderson says that scale issues make cost a better gauge of crime’s burden than counts of crimes.

Studies that do look at the cost of crime tend to focus on direct costs—dollars worth of stolen items, policing costs and the cost of the prison system. Yet Anderson finds that most of the costs of crime are indirect and include the opportunity cost of time, the costs of fear and agony, and private expenditures on crime prevention.

“When we consider the time and money spent locking things up, installing security systems, purchasing protective firearms, and providing medical care for victims,” Anderson says, “the full cost of crime is revealed to be much larger.”

This is Anderson’s first study on the topic in 13 years. His 1999 study found the annual cost of crime in the United States to be $2.4 trillion (in 2012 dollars).

The study appears in Foundations and Trends in Microeconomics, Vol. 7: No 3.

“The the annual cost of crime in the United States for one year is now about $3.2 trillion dollars, which is roughly the combined cost of the wars in Afghanistan and Iraq from 2001 to 2011,” Anderson says. “We spend $2.7 trillion a year on health care. The burden of crime exceeds that by half a trillion dollars.”

Quantifying these enormous costs, Anderson says, provides a strong rationale for prioritizing activities that deter criminal activity, including increasing the presence of law enforcement officers and improving education efforts and social programs.

The study in full text is available here.