Estimation of the costs of crime

The estimation of the impact (costs) of crime have received broad attention in economic literature and research, but the economic effect(s) and impact of crime on society is still an underexposed field of interest. The reason behind this is that it is very difficult to quantify the costs of, for example, the emotional and physical suffering of victims, or the quality of life that is reduced by the fear of crime. Below, we address some important methods used by economists to estimate the costs of crime.

Relevance for urban planners
Knowledge about the way the costs of crime are estimated is relevant for urban planners because of 2 major reasons:
 * 1) Because not all the offences committed are known and secondly and some intangible indirect effects are very difficult to measure it is very difficult to map the economic effects of crimes. As a result, urban planners should be very careful with interpreting available figures on costs of crime.
 * 2) Insight in the source of costs of crime, however, can help the urban planner to limit the total costs of crime. The total costs of property crime, for example, are much larger for society than that of most other types of crime.

Security issues typology
Before one can start the estimation of the costs of crime, it is important to categorize the crime offences that are going to be measured

Estimating the number of offences committed
One of the most important difficulties with mapping the economic effects of crime is the fact that only a fraction of all offences committed are known. Especially offences that don’t involve victims are only known if they are detected by public authorities/the police. Researchers developed several methods such as the use of assumptions, multipliers and specific statistical techniques to deal with this issue, but it remains difficult to include all effects, because one should also include effects on the change in behaviour, mental health (including production loss due to emotional damage) and the harm done to the social environment of the victim and criminal offender.

SEO, a Dutch economic research agency estimated the number of criminal offences committed in the Netherlands in 2005 (see table below):

Table: Number of offences committed in 2005 in the Netherlands (source: SEO, 2007, edited by Decisio, 2012])

Although the table above is illustrating the situation for the Netherlands, the relative ratios of the serious offences (such as manslaughter and sexual offences) versus the by far more common property crimes and vandalism are also applicable to other EU-countries.

Estimation of the costs of criminal offences
"In general, the costs of crime are determined by three steps".
 * 1) In the first step, the range of the research is established (perspective and time frame)
 * 2) "The second step involves determining the various cost factors that can be distinguished".
 * 3) "In the final step, the actual extent of the costs that were determined in the previous step is established" . For this, crime victim surveys are mostly the point of departure for most cost factors.

The biggest cost factor by far are caused by harm to the victims. Costs as a result of loss of production due to theft or vandalism are as well substantial cost factors. The table below illustrates an overview of the cost of criminal offences in the Netherlands.

Table: Total costs (in € mln.) of offences committed in 2005 in the Netherlands (source: SEO, 2007, edited by Decisio)

The table above illustrates furthermore that property damage results in the most damage, which is primarily due to the relatively high number of property crimes committed.The emotional consequences of crime could also lead to a loss of productivity.

Related subjects

 * The economic effects of crime
 * Economic tools