Difference between revisions of "Economic effects of anti-crime security measures"

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[[Category:Economic]][[Category:Measure]][[Category:Safety]]
Households, the private sector (or producers), and the public sector (authorities) invest time and money in the prevention of crime. The avoidance of losses caused by criminal events generates primary and secondary benefits. The costs of crime mitigation contain the relatively straightforward direct expenditures on capital equipment and operational costs. Moreover, the security measures generate various types of secondary effects.The economic impacts of anti-crime security measures are, in essence, similar to the [#_Economic_impacts_of economic impacts of anti-terrorism measures].== Costs of crime mitigation ===== Direct expenses of security measures ===There are numerous types of security measures aimed at preventing or mitigating criminal events. Some of these measures involve monetary expenditures (e.g., locks, money safes, alarm systems, security guards, insurances, etc.), and others only involve [#_Opportunity_Costs_1 opportunity costs], such as the time required to take protective measures such as training a guard dog, or avoiding a high crime area. Public spending on sSecurity measures “could also involve consumption and investment in civilian matters (such as education, prevention and protection programmes) in addition to security-related spending on judiciary, police and military items”<ref name="ftn37"> Source: OECD (2004). ''The Security Economy''. ISBN 92-64-10772-X</ref>.The magnitude of the costs of security measures is significant, but very difficult to quantify in financial terms, since a lot of expenditures on safety measures have multiple purposes and do not automatically translate into higher costs or spending. An OECD study (2004)<ref name="ftn38"> Ibid.</ref> estimates the private security sector’s global annual turnover at over USD 100 billion. The private sector in the US has an turnover of USD 40 billion a year (Lenain ''et al''., 2002). In Germany, the turnover of the private security sector is thought to be 4 billion euro and in France and the United Kingdom around 3 billion euro. According to Stevens (2004)<ref name="ftn39"> Stevens (2004) in: OECD (2004). ''The Security Economy''. ISBN 92-64-10772-X</ref>, the industry growth is outpacing economic growth worldwide with 7-8 percent annual growth.=== Other examples of direct cost of security ===A Dutch study by SEO (2007)<ref name="ftn40"> SEO (2007). ''The costs of crime''. Commissioned by the Dutch Ministry of Security and Justice.</ref> states that preventive measures (including insurances) are primarily deployed to prevent property crimes and vandalism (83 percent of all registered criminal offences in the Netherlands). The measured total prevention costs for property crimes are estimated by SEO at almost 3 billion euro in 2005; The insurance costs at 275 million euro, and the insurance costs for vandalism at 178 million euro. An internet survey of the costs of security related to organizing the Summer Olympics, illustrates that these costs, increased from 2 to 3 percent in the nineties, to more than 6 percent for the Summer Olympics in Athens (2004)<ref name="ftn41"> Security costs for the Summer Olympics in Athens (2004) added up to USD 1.4 billion.</ref>. According to an article by The Guardian<ref name="ftn42"> The Guardian, December 5th 2011. ''London 2012 Olympics security costs almost double to £553m''.</ref>, the projected security costs for the 2012 London Olympics and Paralympics are estimated at GBP 553 million (± 5.7 percent of the total budget of GBP 9.3 billion). US Real estate studies suggest a sharp increase in the cost of security in privately owned buildings since 2001, covering items such as identity cards, scanners, security cameras and security personnel<ref name="ftn43"> Kinum, C. (2004). ''The Economic Impact of Heightened Security Measures on the Commercial Real Estate Market, Post 9/11''. AllBusiness.com.</ref>.=== Indirect expenses of security measures ===Security measures can also impact the economy as a whole. First of all, “tighter security may mean longer delivery times and disruption of global supply chains and of finely-tuned just-in-time delivery systems”<ref name="ftn44"> Stevens (2004). The emerging Security Economy: An Introduction. Published in: OECD (2004). ''The Security Economy''. ISBN 92-64-10772-X</ref>. “According to OECD simulations, measures introduced in the wake of September 11 could increase trading costs by 1 percent, leading to global welfare losses of around USD 75 billion per year. According to Brück, “a one-day delay in border controls has been estimated to generate costs of 0.5 percent of the value of the goods (Hummels, 2001)”. Hobijn (2001)<ref name="ftn45"> Hummels, D. (2001). Time as a Trade Barrier. Mimeo, Department of Economic, Purdue University, West Lafayette/Indiana. In: Brück (2004). Assessing the Economic Trade-offs of the Security Economy. Published in OECD (2004). ''The Security Economy''. ISBN 92-64-10772-X</ref>, however, claims that (on the long term) neither private nor public spending on security measures have a major impact on the economy<ref name="ftn46"> Brück (2004), warns to be a bit careful with this conclusion, since the future costs of security spendings are difficult to predict in general.</ref>. Brück (2004), however is a bit more careful since the future costs of security spendings are difficult to predict. == Benefits of crime migitation ==According to Brück (2004)<ref name="ftn47"> Brück (2004). Assessing the Economic Trade-offs of the Security Economy. In: OECD (2004). ''The Security Economy''. ISBN 92-64-10772-X</ref>, the benefits of security measures that mitigate crime are harder to determine than the costs: “They include the prevention of direct effects (such as loss of lives, health and physical endowments) and of indirect effects as well as the inherent benefits of security for risk-averse agents”.=== Investment in police and prisons ===According to Levitt (2004)<ref name="ftn48"> Levitt, S.D. (2004). Understanding why Crime fell in the 1990s: Four Factors that Exaplin the Decline and Six that do not. ''Journal of Economic Perspectives'' – Volume 18, Number 1 –Winter 2004- Pages 163- 190.</ref>, two of the four factors that appear to explain the sharp drop in US crime rates in the 1990s, is the investment in police (5.5 percent) and the increased prison population (8 to 12 percent)<ref name="ftn49"> The other two main explaining factors are the receding crack epidemic and the legalization of abortion.</ref>. Estimates of Levitt illustrate that the investments in extra police in the period have been attractive from a cost-benefit point of view, just like the increase in spending on prisons<ref name="ftn50"> Levitt (2004, p.179) states that there is prove that a further increase in imprisonment in the US may be less attractive than an simple cost-benefit analysis might suggest.</ref>. Crime rates in Europe and the US decreased since the early nineties while spending on security measures have risen steadily<ref name="ftn51"> Source: OECD (2004). ''The Security Economy''. ISBN 92-64-10772-X</ref>. However, there is not such a thing as a direct robust link between crime rates and security measures since other factors like a shift in crime (more burglaries instead of robberies), growing international trade, and an increase in terrorist events (in some western countries) are also important factors that explain the increase in demand for security measures.=== Designing Out Crime ===“Designing-out crime at the earliest stages in the planning process can be extremely effective in developing safer and more secure environments in which people can live and work”<ref name="ftn52"> Source: HM Government (2012). Protecting Crowded Places: Design and Technical Issues. Produced by the Home Office in partnership with the Centre for the Protection of National Infrastructure and the National Counter-Terrorism Security Office.</ref>. It also aims to reduce fear of crime and, in doing so, helps to improve people’s quality of life. Some examples of successes of Designing out Crime:* Vollaard & Van Ours (2011)<ref name="ftn53"> Vollaard, B., J.C. van Ours (2011). Does regulation of built-in security reduce crime? Evidence from a natural experiment. ''The Economic Journal'' (May 2011). Oxford: Blackwell Publishing.<br/> </ref> studied the effect of Dutch government regulations in 1991 regarding burglary-proof windows in all new-built homes in the Netherlands. They conclude that this regulation have reduced burglary in these new-built houses with 1.1 to 0.8 percent annually, a reduction of 26 percent. Hence, the social benefits of the regulation are likely to exceed the social costs.* …
 
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Security measures aiming to manage crime risk impose [[Economic impact|economic effects]] on society, the so-called '''economic effects of anti-crime security measures'''.
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==Description==
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Urban security has a cost at the point of build or refurbishment, and typically, the benefits come later. This page attempts to introduce the possible types of benefits and the costs. The impact of security measures on actual [[The economics of crime#Interaction of anti-crime measures and criminal behaviour|criminal behaviour]] is addressed elsewhere in Securipedia.
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==Costs of security==
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===Direct (primary) costs of security===
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There are several types of [[Security|security measures]]. Some of these measures involve monetary expenditures (e.g. locks, money safes, alarm systems, security guards, insurances, etc.), and others only involve [[Opportunity cost|opportunity cost]], such as the time required to take protective measures (e.g. training a guard dog, or avoiding a high crime area). Public spending on security measures could also involve investment in civilian matters such as education, prevention and protection programmes in addition to security-related spending on judiciary, police and military items<ref name=OECD> Source: OECD (2004): The Security Economy. ISBN 92-64-10772-X.</ref>.
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The magnitude of the [[Primary economic impact|direct (primary) costs]] of security measures is significant, but very difficult to quantify in financial terms<ref>One of the main reasons for this is that a lot of expenditures on safety measures have multiple purposes and do not automatically translate into higher costs or spending.</ref>. One of the main reasons for this is that a lot of expenditures on safety measures have multiple purposes, and do not automatically translate into higher costs or spending.
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Examples of direct costs:
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* A Dutch study by SEO economic research(2007)<ref name=SEO> SEO (2007). De kosten van criminaliteit [The cost of crime]. Commissioned by the Dutch Ministry of Security and Justice.</ref> states that preventive measures (including insurances) are primarily deployed to prevent property crimes and vandalism (83 percent of all registered criminal offences in the Netherlands). The measured total prevention costs for property crimes are estimated by SEO at almost 3 billion euro in 2005; The insurance costs at 275 million euro, and the insurance costs for vandalism at 178 million euro.
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* An internet survey of the costs of security related to organising the Summer Olympics illustrated that these costs increased from 2 to 3 percent in the nineties, to more than 6 percent for the Summer Olympics in Athens (2004)<ref name="ftn41"> Security costs for the Summer Olympics in Athens (2004) added up to USD 1.4 billion. Source: Zimbalist, A. (2010): Is It Worth It? Finance & Development. Vol. 47, Number 1. International Monetary Fund. Online: http://www.imf.org/external/pubs/ft/fandd/2010/03/zimbalist.htm</ref>. According to an article by The Guardian<ref name="ftn42"> The Guardian, December 5th 2011: London 2012 Olympics security costs almost double to £553m.</ref>, the projected security costs for the 2012 London Olympics and Paralympics are estimated at GBP 553 million (± 5.7 percent of the total budget of GBP 9.3 billion).
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*US Real estate studies suggest a sharp increase in the cost of security in privately owned buildings since 2001, covering items such as identity cards, scanners, security cameras and security personnel<ref name="ftn43"> Kinum, C. (2004): The Economic Impact of Heightened Security Measures on the Commercial Real Estate Market, Post 9/11. AllBusiness.com.</ref>.
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Direct costs can have both a temporary and permanent character. This distinction is relevant since, for example, security cameras require significant maintenance next to the start-up costs<ref> See e.g. Peter French (1998): The CCTV crime prevention bubble is set to burst unless extra money can be found to maintain public systems. Policy Review. Video Nation. Online: http://www.1in12.com/publications/cctv/bubble.html.</ref>.
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===Indirect (secondary) costs of security===
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Security measures can also have an [[Secondary economic impact|indirect (secondary) economic impact]] on the home economy.
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* Tighter security, for example, may imply longer delivery times and disruption of global supply chains and of finely-tuned just-in-time delivery systems<ref name="ftn44"> Stevens (2004): The emerging Security Economy: An Introduction. Published in: OECD (2004): The Security Economy. ISBN 92-64-10772-X</ref>.
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* According to OECD<ref name=OECD></ref> simulations, measures introduced in the wake of September 11 could increase trading costs by 1 percent, leading to global welfare losses of around USD 75 billion per year. According to Brück, a one-day delay in border controls has been estimated to generate costs of 0.5 percent of the value of the goods (Hummels, 2001).
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* A number of researchers have concerns that security measures just [[Crime displacement|displace crime]] to those that are less protected. Yet, according to the British Home security department<ref>Pease, K. & M. Gill (2011): Home security and place design: some evidence and its policy implications.</ref>"the weight of evidence on displacement (and there are various types) is that it is at worst only partial".
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* Hobijn (2001)<ref name="ftn45">Hobijn, B. (2002): What Will Homeland Security Cost?, Economic Policy Review, 8(2), pp. 21-33. In: Brück (2004). Assessing the Economic Trade-offs of the Security Economy. p.111. Published in OECD (2004): The Security Economy. ISBN 92-64-10772-X</ref>, nevertheless, claims that on the long term neither private nor public spending on security measures have a major impact on the economy (although also the indirect costs are very difficult to predict/measure)<ref name="ftn46"> The economist Brück (2004), warns to be a bit careful with this conclusion, since the future costs of security spendings are difficult to predict in general.</ref>.
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==Benefits of security==
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Security measures intend to increase the level of security, deterring crime, and/or at least mitigating the negative economic impact of crime. In essence, they increase actual and/or perceived risk to the offender and his or her effort, changing the [[The economics of crime|behaviour of the criminal]]. Put differently, anti-crime security measures positively influence the [[Economic effects of crime|costs of crime]].
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To make the concept of benefits of security measures more concrete, the following equation calculates the net benefit of a measures given estimates of its impact on crime and its costs:
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NB = [RISK] x [Reduction of <math>RISK_s</math>] - <math>C_s</math> (1)
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where:
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*''NB'' is the annual net benefit of a security measures
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*''[[Risk#About objective risk|RISK]]'' is the likelihood of an event realising X Impact.
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*''Reduction of <math>RISK_s</math>'' is the impact of the security measure in terms of percent risk reduction.
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*''<math>C_s</math>'' are the estimated cost of the security measure (annually)
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According to the economist Brück (2004)<ref name="ftn47"> Brück (2004): Assessing the Economic Trade-offs of the Security Economy. In: OECD (2004): The Security Economy. ISBN 92-64-10772-X</ref>, the benefits of security measures that mitigate crime are even harder to determine than the costs. However, in the view of an European research group<ref>Van Dijk, J. ''et al'' (2007): The Burden of Crime in the EU. Research Report: A Comparative Analysis of the European Survey of Crime and Safety (EU ICS) 2005. European Union, p.23.</ref>", the universal growth in the possession and use of private security measures by households and companies over the past few decades is a significant factor inhibiting crime". The benefits of security include direct effects (such as less property damage, loss of lives, health and physical endowments) and of indirect effects on the economy.
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===Direct (primary) benefits of security===
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The inflicted damage of crime (in monetary terms) is the start of an estimation of the economic benefits of security measures since they constitute the direct benefits of the mitigation measures. Examples of direct economic impacts of crime are: loss of property, physical damage to property, business interruption, mental and physical harm, insurance transactions.
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Crime rates in Europe and the US decreased since the early nineties while spending on security measures have risen steadily<ref name=OECD></ref>. However, there is not such a thing as a direct robust link between crime rates and security measures, since other factors like a [[Crime displacement|shift in crime]] (more burglaries instead of robberies), growing international trade, and an increase in terrorist events (in some western countries) are also important factors that explain the increase in demand for security measures.
  +
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===Indirect (secondary) benefits of security===
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Improvements in security have similar [[Secondary economic impact|indirect (secondary) economic effect]] as an improvement in urban environment, thereby raising the real wealth of households, companies and public authorities in the affected area. Specific examples of indirect effects are:
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* A reduction in insurance premiums
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* The [[Opportunity cost|opportunity cost]]<ref>Opportunity cost can be defined as any activity measured in terms of the value of the next best alternative foregone (not chosen).</ref>of police presence
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* An increase in tourist income and tourist employment
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* A decrease in long-term health costs (due to the reduction in victim-hood and an increase in psychological well-being)
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* A reduction in the carbon cost of crime<ref> Criminologist Ken Pease, has revealed the significance of crime on English and Welsh CO² output; an estimated total of 11.6 million tonnes - that's 2% of the UKs' total CO² emissions. See: Ken Pease (2009): The Carbon Cost of Crime and Its Implications. Online: http://www.securedbydesign.com/professionals/pdfs/The-Carbon-Cost-of-Crime.pdf</ref>
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* A reduction in costs of securing void areas
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* Less people who feel forced to move to another home<ref>"Crime levels and bad neighbours are the reason for almost ten million Britons moving home in the last five years" Source: Abbey National Survey (2007) In: Ken Pease (2009): The Carbon Cost of Crime and Its Implications. Online: http://www.securedbydesign.com/professionals/pdfs/The-Carbon-Cost-of-Crime.pdf.</ref>
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==Related subjects==
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*[[Economic|Economic main page]]
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* [[Economic impact]]
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**[[Economic impact of urban planning]]
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**[[Economic impact of security threats]]
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**[[Economic impact of security measures]]:
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***Economic effects of anti-crime security measures
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***[[Economic effects of anti-terrorism security measures]]
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**[[The economics of criminal and terrorist behaviour|Economics of criminal and terrorist behaviour]]
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*[[Economic tools]]
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*[[Economic output]]
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{{references}}

Latest revision as of 00:06, 20 January 2018

Security measures aiming to manage crime risk impose economic effects on society, the so-called economic effects of anti-crime security measures.

Description

Urban security has a cost at the point of build or refurbishment, and typically, the benefits come later. This page attempts to introduce the possible types of benefits and the costs. The impact of security measures on actual criminal behaviour is addressed elsewhere in Securipedia.

Costs of security

Direct (primary) costs of security

There are several types of security measures. Some of these measures involve monetary expenditures (e.g. locks, money safes, alarm systems, security guards, insurances, etc.), and others only involve opportunity cost, such as the time required to take protective measures (e.g. training a guard dog, or avoiding a high crime area). Public spending on security measures could also involve investment in civilian matters such as education, prevention and protection programmes in addition to security-related spending on judiciary, police and military items[1].

The magnitude of the direct (primary) costs of security measures is significant, but very difficult to quantify in financial terms[2]. One of the main reasons for this is that a lot of expenditures on safety measures have multiple purposes, and do not automatically translate into higher costs or spending.

Examples of direct costs:

  • A Dutch study by SEO economic research(2007)[3] states that preventive measures (including insurances) are primarily deployed to prevent property crimes and vandalism (83 percent of all registered criminal offences in the Netherlands). The measured total prevention costs for property crimes are estimated by SEO at almost 3 billion euro in 2005; The insurance costs at 275 million euro, and the insurance costs for vandalism at 178 million euro.
  • An internet survey of the costs of security related to organising the Summer Olympics illustrated that these costs increased from 2 to 3 percent in the nineties, to more than 6 percent for the Summer Olympics in Athens (2004)[4]. According to an article by The Guardian[5], the projected security costs for the 2012 London Olympics and Paralympics are estimated at GBP 553 million (± 5.7 percent of the total budget of GBP 9.3 billion).
  • US Real estate studies suggest a sharp increase in the cost of security in privately owned buildings since 2001, covering items such as identity cards, scanners, security cameras and security personnel[6].

Direct costs can have both a temporary and permanent character. This distinction is relevant since, for example, security cameras require significant maintenance next to the start-up costs[7].

Indirect (secondary) costs of security

Security measures can also have an indirect (secondary) economic impact on the home economy.

  • Tighter security, for example, may imply longer delivery times and disruption of global supply chains and of finely-tuned just-in-time delivery systems[8].
  • According to OECD[1] simulations, measures introduced in the wake of September 11 could increase trading costs by 1 percent, leading to global welfare losses of around USD 75 billion per year. According to Brück, a one-day delay in border controls has been estimated to generate costs of 0.5 percent of the value of the goods (Hummels, 2001).
  • A number of researchers have concerns that security measures just displace crime to those that are less protected. Yet, according to the British Home security department[9]"the weight of evidence on displacement (and there are various types) is that it is at worst only partial".
  • Hobijn (2001)[10], nevertheless, claims that on the long term neither private nor public spending on security measures have a major impact on the economy (although also the indirect costs are very difficult to predict/measure)[11].

Benefits of security

Security measures intend to increase the level of security, deterring crime, and/or at least mitigating the negative economic impact of crime. In essence, they increase actual and/or perceived risk to the offender and his or her effort, changing the behaviour of the criminal. Put differently, anti-crime security measures positively influence the costs of crime.

To make the concept of benefits of security measures more concrete, the following equation calculates the net benefit of a measures given estimates of its impact on crime and its costs:


NB = [RISK] x [Reduction of ] - (1)


where:

  • NB is the annual net benefit of a security measures
  • RISK is the likelihood of an event realising X Impact.
  • Reduction of is the impact of the security measure in terms of percent risk reduction.
  • are the estimated cost of the security measure (annually)

According to the economist Brück (2004)[12], the benefits of security measures that mitigate crime are even harder to determine than the costs. However, in the view of an European research group[13]", the universal growth in the possession and use of private security measures by households and companies over the past few decades is a significant factor inhibiting crime". The benefits of security include direct effects (such as less property damage, loss of lives, health and physical endowments) and of indirect effects on the economy.

Direct (primary) benefits of security

The inflicted damage of crime (in monetary terms) is the start of an estimation of the economic benefits of security measures since they constitute the direct benefits of the mitigation measures. Examples of direct economic impacts of crime are: loss of property, physical damage to property, business interruption, mental and physical harm, insurance transactions.

Crime rates in Europe and the US decreased since the early nineties while spending on security measures have risen steadily[1]. However, there is not such a thing as a direct robust link between crime rates and security measures, since other factors like a shift in crime (more burglaries instead of robberies), growing international trade, and an increase in terrorist events (in some western countries) are also important factors that explain the increase in demand for security measures.

Indirect (secondary) benefits of security

Improvements in security have similar indirect (secondary) economic effect as an improvement in urban environment, thereby raising the real wealth of households, companies and public authorities in the affected area. Specific examples of indirect effects are:

  • A reduction in insurance premiums
  • The opportunity cost[14]of police presence
  • An increase in tourist income and tourist employment
  • A decrease in long-term health costs (due to the reduction in victim-hood and an increase in psychological well-being)
  • A reduction in the carbon cost of crime[15]
  • A reduction in costs of securing void areas
  • Less people who feel forced to move to another home[16]

Related subjects

Footnotes and references

  1. 1.0 1.1 1.2 Source: OECD (2004): The Security Economy. ISBN 92-64-10772-X.
  2. One of the main reasons for this is that a lot of expenditures on safety measures have multiple purposes and do not automatically translate into higher costs or spending.
  3. SEO (2007). De kosten van criminaliteit [The cost of crime]. Commissioned by the Dutch Ministry of Security and Justice.
  4. Security costs for the Summer Olympics in Athens (2004) added up to USD 1.4 billion. Source: Zimbalist, A. (2010): Is It Worth It? Finance & Development. Vol. 47, Number 1. International Monetary Fund. Online: http://www.imf.org/external/pubs/ft/fandd/2010/03/zimbalist.htm
  5. The Guardian, December 5th 2011: London 2012 Olympics security costs almost double to £553m.
  6. Kinum, C. (2004): The Economic Impact of Heightened Security Measures on the Commercial Real Estate Market, Post 9/11. AllBusiness.com.
  7. See e.g. Peter French (1998): The CCTV crime prevention bubble is set to burst unless extra money can be found to maintain public systems. Policy Review. Video Nation. Online: http://www.1in12.com/publications/cctv/bubble.html.
  8. Stevens (2004): The emerging Security Economy: An Introduction. Published in: OECD (2004): The Security Economy. ISBN 92-64-10772-X
  9. Pease, K. & M. Gill (2011): Home security and place design: some evidence and its policy implications.
  10. Hobijn, B. (2002): What Will Homeland Security Cost?, Economic Policy Review, 8(2), pp. 21-33. In: Brück (2004). Assessing the Economic Trade-offs of the Security Economy. p.111. Published in OECD (2004): The Security Economy. ISBN 92-64-10772-X
  11. The economist Brück (2004), warns to be a bit careful with this conclusion, since the future costs of security spendings are difficult to predict in general.
  12. Brück (2004): Assessing the Economic Trade-offs of the Security Economy. In: OECD (2004): The Security Economy. ISBN 92-64-10772-X
  13. Van Dijk, J. et al (2007): The Burden of Crime in the EU. Research Report: A Comparative Analysis of the European Survey of Crime and Safety (EU ICS) 2005. European Union, p.23.
  14. Opportunity cost can be defined as any activity measured in terms of the value of the next best alternative foregone (not chosen).
  15. Criminologist Ken Pease, has revealed the significance of crime on English and Welsh CO² output; an estimated total of 11.6 million tonnes - that's 2% of the UKs' total CO² emissions. See: Ken Pease (2009): The Carbon Cost of Crime and Its Implications. Online: http://www.securedbydesign.com/professionals/pdfs/The-Carbon-Cost-of-Crime.pdf
  16. "Crime levels and bad neighbours are the reason for almost ten million Britons moving home in the last five years" Source: Abbey National Survey (2007) In: Ken Pease (2009): The Carbon Cost of Crime and Its Implications. Online: http://www.securedbydesign.com/professionals/pdfs/The-Carbon-Cost-of-Crime.pdf.