1. US Crime Trends: The Role of Inflation
Richard Rosenfeld
University of Missouri – St. Louis
USA

2. The Great Anomaly: Crime Rates and the Great Recession of 2008
Crime typically rises during economic downturns and falls during recoveries
US crime rates fell during the “Great Recession”
Why did crime rates not respond to the recent recession as they had in the past?
The role of inflation

3. Was the Great Recession Different?
Unlike in previous recessions, inflation rates at historic lows
Prices dropped in 2009 for first time in over 60 years
Impressionistic evidence of inflation – crime connection
1930s: price deflation
1950s: low inflation
1960s: rising inflation
1970s: stagflation
Falling crime rates
Rising crime rates

4. Prior Research

5. Price Revolutions and Crime Over Time
Four major inflation epochs
Medieval price revolution (1180 – 1350)
Sixteenth century
Eighteenth century
Twentieth century
Each price revolution followed by a period of “equilibrium” – falling or stable prices
Crime and disorder rise during price revolutions and decline as prices equilibrate
Source: David Hacket Fischer, The Great Wave: Price Revolutions and the Rythm of History (New York: Oxford, 1996)

6. The Contemporary Period
Scattered studies of inflation effects on crime
All show significant positive effect
Little theoretical development
Why does inflation matter?
How does inflation differ from other indicators of economic adversity?
More widespread
More immediate
Closer relationship to demand for stolen goods

7. Inflation and the Market for Stolen Goods
Supply
Offenders sell or trade goods they do not consume or give away
Offenders respond to incentives, including demand for stolen goods
Demand
Consumers “trade down” as prices rise
Stolen goods are “inferior goods”: demand increases as prices rise (or aggregate income falls)
Acquisitive crime rises with increases in demand for stolen goods

8. Inflation and Acquisitive Crime Rates in the USA, 1960 – 2012

9. Great Recession

12. Do Inflation Effects on US Crime Rates Withstand Controls for Other Economic Indicators?

13. Current Study*
Effects of multiple economic conditions on US property and violent crime rates, 1960 – 2012
Exploratory model averaging
Unemployment
Real GDP per capita
Real household income
Consumer sentiment
Inflation
Controls
Imprisonment rate
Age 15-24
Quadratic time function
Short and long run effects
Error correction models
Forecasting future crime rates
*Rosenfeld, Richard, and Aaron Levin “Acquisitive Crime and Inflation in the United States:
” Journal of Quantitative Criminology (Online: DOI /s ).

14. Single Equation Error Correction Modela
Δyt = a + b0ΔXt + b1Yt-1 + b2X t-1 + et
Error correction rate
Short run effect of X Long run effect of X
Total long-run impact of X (long-run multiplier) = b2 / - b1
a Adapted from Best (2008)

17. Forecasts

19. Does the Drop in Inflation Explain Why Acquisitive Crime Rates Fell During the 2008-09 Recession?
Acquisitive crime decreased by 5% between 2008 and 2009 or by -183 crimes per 100k
Inflation fell from 3.8% in 2008 to -.4% in 2009
Predicted change in acquisitive crime given the change in inflation (all other variables at their means) = -197 crimes per 100k
Had inflation remained unchanged, the predicted change in acquisitive crime = -17 crimes per 100k

20. Diagnostic and Sensitivity Tests

21. Crime and Inflation in Europe*
European robbery and burglary rates have declined since the mid-1990s
Inflation rates in Europe track those in the USA and have converged across nations
Robbery and burglary reductions significantly associated with declining inflation in Europe
*Rosenfeld, Richard “Crime and Inflation in Cross-National Perspective.” Crime and Justice
43:

25. Outstanding Issues
Does inflation condition the effects on crime of other economic indicators?
Does inflation influence other conditions related to crime (e.g., family disruption, alcohol and drug use, criminal justice spending)?
Is violent crime linked to inflation, directly or indirectly through acquisitive crime?
Measuring the missing link in the relationship between crime and inflation: change over time in the price of stolen goods
Have the US and Europe entered a new period of equilibrium after the price revolution of the twentieth century?

26. Further Reading
Arvanites, Thomas M., and Robert H. Defina Business cycles and street crime. Criminology 44: Blumstein, Alfred, and Joel Wallman, eds The Crime Drop in America. Revised edition. New York: Cambridge University Press. Cantor, David, and Kenneth C. Land Unemployment and crime rates in the Post-World War II United States: A theoretical and empirical analysis. American Sociological Review 50: 317–332. Chiricos, Theodore G Rates of crime and unemployment: An analysis of aggregate research evidence. Social Problems 34: Cook, Philip J., and Gary A. Zarkin Crime and the business cycle. Journal of Legal Studies 14: 115–28. Easterly, William, and Stanley Fischer Inflation and the poor. Journal of Money, Credit, and Banking 33: Ehrlich, Isaac Participation in illegitimate activities: A theoretical and empirical investigation. Journal of Political Economy 81: Gould, Eric D., Bruce A. Weinberg, and David B. Mustard Crime rates and local labor market opportunities in the United States: Review of Economics and Statistics 84:

27. Reading, cont.
Grogger, Jeffrey T Market wages and youth crime. Journal of Labor Economics 16: Lauritsen, Janet L., and Karen Heimer Violent victimization among males and economic conditions. Criminology & Public Policy 9: 665–692. Raphael, Steven, and Rudolf Winter-Ebmer Identifying the effect of unemployment on crime. Journal of Law and Economics 44: Rosenfeld, Richard Crime is the problem: Homicide, acquisitive crime, and economic conditions. Journal of Quantitative Criminology 25: Rosenfeld, Richard Changing crime rates. In Crime and Public Policy, edited by James Q. Wilson and Joan Petersilia. New York: Oxford University Press. Rosenfeld, Richard and Robert Fornango The impact of economic conditions on robbery and property crime: The role of consumer sentiment. Criminology 45: Rosenfeld, Richard and Steven F. Messner The crime drop in comparative perspective: The impact of the economy and imprisonment on American and European burglary rates. British Journal of Sociology 60: Sutton, Mike Supply by theft: Does the market for second-hand goods play a role in keeping crime figures high? British Journal of Criminology 38: Venkatesh, Sudhir Alladi Off the Books: The Underground Economy of the Urban Poor. Cambridge, MA: Harvard University Press.