Economic effects of crime

Economic effects of crime

The identification and the estimation of the costs of crime have received broad attention in economic literature and research, but the effect(s) and impact of crime on society is still an underexposed field of interest. Key figures of societal and economic impact of crime are difficult to identify, although it is widely understood that crime can affect the local, regional and national economy.

In essence, the economic effects of (both terrorism and) crime are the opposite of the positive economic effects of urban development (or spatial development). The successful burglary of a dwelling house or commercial building, for example, will not only lead to the loss of goods, but also affects (accumulated) the local, regional (and sometimes even national) economy through the decrease of property value and direct investments, uncertainty and fear of crime. This relationship is illustrated below:

File:Economics of crime.png
Figure: Illustration of relationship between a security threat and the urban object/environment

Primary economic effects of crime

In general, approaches to estimate the direct impact of crime focus on three levels:

1. Costs in anticipation of crime: mainly costs of precaution measures to avoid crime such as locks, alarm prevention programs and surveillance.
2. Costs as a consequence of crime: for instance, loss of property, medical and health care costs, victim support etc.
3. Costs in response to crime: costs considering police, prosecution, court proceedings, sanctions etc.The identification and the estimation of the costs of crime is undertaken by several scientific researchers.

Moolenaar (2005), for example, estimated the total costs of crime in The Netherlands to be 20 billion euro in 2004; approximately 4.1 percent of the GDP. There is, however, a wide variation of estimations of the total direct costs of crime between countries. The table illustrates a brief, non-comprehensive, list of direct costs of crime for several countries:

Country	Year	Direct economic impact of crime
The Netherlands	2004	4.1% of the GDP
Wales and England	2000	6.5% of the GDP
United States	1999	11.9% of the GDP

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