David Bjerk Robert Day School of Economics and Finance Claremont McKenna College 500 East Ninth Street, Claremont CA 91711 Ph: 909-607-4471 firstname.lastname@example.org April 25, 2010
Abstract This paper develops a model of crime analyzing how such behavior is associated with individual and neighborhood poverty. The model shows that even under relatively minimal assumptions, a connection between individual poverty and both property and violent crimes will arise, and moreover, "neighborhood" e¤ects can develop, but will di¤er substantially in nature across crime types. A key implication is that greater economic segregation in a city should have no e¤ect or a negative e¤ect on property crime, but a positive e¤ect on violent crime. Using IV methods, I show this implication to be consistent with the empirical evidence. Keywords: Crime; Segregation; Neighborhood E¤ects; Instrumental Variables; Poverty.
“I don’ care if I got money, or work Monday through Friday. I just go shoot a t motherf*@#er on the weekends. If that’ what need to be done to keep my hood s and my young ones around here safe, then that’ what to get done” (quoted by s Landesman, 2007).
High rates of crime and violence in poor neighborhoods have been described by numerous scholars and journalists (Wilson, 1987; Krivo and Peterson, 1996; Kotlowitz, 1991; Patterson, 1991; Messner and Tardi¤, 1986, to name just a few). However, the quote above from a man residing in a high-poverty housing project in south Los Angeles emphasizes that not only is crime a large part of life in high-poverty neighborhoods, but also that violent crimes may often serve a quite di¤erent purpose than basic property crime. Namely, while the motivation for basic property crimes is generally purely monetary, becoming involved in violent crime may have a defensive motivation as well. While this defensive motivation for violence has long been recognized by sociologists (Massey 1995; Anderson, 1999) and more recently by economists (Silverman, 2004; O’ Flaherty and Sethi, 2010), the mechanisms through which such motivations are exacerbated by individual and neighborhood poverty are less well understood. This paper attempts to explicitly model some of the key distinctions between participation in violent crimes versus basic property crimes, as well as the ways such participation decisions might be a¤ected by an individual’ own economic circumstances as well as the economic circumstances of his neighs bors. The paper also considers the broader implications of how these forces interact with the degree to which a city is segregated by economic status to a¤ect overall crime rates. While there may be numerous, and possibly quite complex, paths through which poverty and neighborhood characteristics may a¤ect criminal behavior, the model developed here traces out the implications of two quite simple assumptions regarding behavior and criminal interactions. The …rst is simply that individuals incur diminishing marginal utility in money. The second is with respect to how violent crimes di¤er from basic property crimes. Speci…cally, when it comes to basic property crimes, I assume that by choosing to become a thief at any given period in time, an individual will simply have additional consumption beyond his legal income in that period. Alternatively, when it comes to violent crimes, I assume that individuals can choose to become either a thug (i.e., an individual who engages in violence) or a law-abider (i.e., an individual who does not engage in violence). This will mean that when two law-abiders encounter one another in their neighborhood, they pass each other without incident. On the other hand, when a law-abider encounters a thug, the thug will 2
attack him and take some of his money. However, when two thugs encounter one another, violence can still ensue but not necessarily with certainty. More importantly though, even when violence...