Effects of Unemployment on Crime

Topics: Crime, Inflation, Regression analysis Pages: 6 (1202 words) Published: September 3, 2011
Term Project Report:
The effect of unemployment of crime

Table of Contents

Regression Analysis5-6
What affects do the unemployment rates have on crime level?

1. Purpose Statement

The purpose of this project is to determine how the rate of criminal activity (CRIME) is affected by the rate of unemployment (UNEMP), while also considering the affects of the fluctuation of Consumer Price Index (CPI). This study uses a time-series analysis with 30 annual observations, from 1969 to 2009. The information was taken from several sources; considering mainly: The Bureau of Labor Statistics and The Bureau of Justice web site. The model is: CRIME = UNEMP+CPI

2. Definition of Variables

The dependent variable is defined as the Crime Rate (CRIME). This will take into account the annual rate of both violent and property crimes committed during a measurable time period, of 1970 to 2001. The independent variables are:

• UNEMP (Unemployment Rate) This variable was chosen because when the lack of available opportunity exists to provide income and the means to provide for ones self and/or a family, it puts a negative pressure on an individual to resort to basic survival. We will look at the corresponding annual rate of unemployment over a period of time, from 1970 to 2001. • CPI is Consumer Price Index, which measures changes through time in the price level of consumer goods and services purchased by households. This variable was chosen because it is a determinant for the level of prices paid by urban consumers for a market basket of consumer goods and services, which turns signifies how out of reach basic goods and services might be for those without resources of income. We will look at the corresponding annual consumer price index over a period of time, from 1970 to 2001. The relationship between CRIME and the independent variables should be a positive one because when the unemployment rate and the consumer price index decreases, it increase the ability of the households to obtain goods and services, as mentioned before, puts reduces the pressure on the individual to resort to criminal activity.

3. Data Description

The data obtained for the purpose of this report was compiled by obtaining a sample of 30 years and obtaining an annual rate for CRIME, which includes both violent and property crimes. These statistics were obtained from the Bureau of Justice and the online data collection. In addition, the independent variables data obtained include the rate of unemployment and consumer price index for each year selected, which was obtained from the U.S. Bureau of Labor.

4. Regression Analysis

The model was calculated using one period = 1 year for the CRIME variable. The results are shown in the table below: Crime = UNEMP(138.371725) +CPI (2.291143153)
Table 1
|Regression Statistics |  |  |  |  | | |R Square |0.383040391 | | | | | |Adjusted R Square |0.340491453 | | | | | |Standard Error |251.618294 | | | | | |Observations |32 | | | | | |ANOVA |df |SS |MS |F |Significance F | |Residual |29 |1836041 |63311.77 | | | |Total...

References: Crime = UNEMP(138.371725) +CPI (2.291143153)
Table 1
Due to the level of significance of the independent variable, CPI, a second regression calculation was performed in which only CRIME (dependent) and UNEMP (independent) were recorded. The results are as follows:
Crime = UNEMP(115.8516423)
Retrieved on September 9, 2010 from:
3. Historical US Crime Rate Data Table
Retrieved on September 9, 2010 from:
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