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

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==Benefits of security==
  
==Benefits of security==
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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 even 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.
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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 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.
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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.
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===Direct (primary) benefits of security===
  
===Direct (primary) benefits of security===

Revision as of 16:33, 13 December 2012

Economic effects of anti-crime security measures

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, starting with the costs. For more information on economic effects of specific security measures, see:

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 (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, 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)[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].

Indirect (secondary) costs of security

Security measures can also have an indirect (secondary) economic impact on the home economy. For example tighter security may imply longer delivery times and disruption of global supply chains and of finely-tuned just-in-time delivery systems[7]. 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)[8], 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 difficutl to predict/measure)[9].

Benefits of security

According to Brück (2004)[10], 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[11]"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. 


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.



Direct (primary) benefits of security

Investment in police and prisons

According to Levitt (2004)[12], 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)[13]. Estimates of Levitt illustrate that the investments in extra police in the concerning period have been attractive from a cost-benefit point of view, just like the increase in spending on prisons[14].

Crime rates in Europe and the US decreased since the early nineties while spending on security measures have risen steadily[15]. 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 (secundary) benefits of security

Related subjects

Footnotes and references

  1. ↑ 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). 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.
  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. ↑ Stevens (2004). The emerging Security Economy: An Introduction. Published in: OECD (2004). The Security Economy. ISBN 92-64-10772-X
  8. ↑ 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
  9. ↑ Brück (2004), warns to be a bit careful with this conclusion, since the future costs of security spendings are difficult to predict in general.
  10. ↑ Brück (2004). Assessing the Economic Trade-offs of the Security Economy. In: OECD (2004). The Security Economy. ISBN 92-64-10772-X
  11. ↑ 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.
  12. ↑ 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.
  13. ↑ The other two main explaining factors are the receding crack epidemic and the legalization of abortion.
  14. ↑ 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.
  15. ↑ Source: OECD (2004). The Security Economy. ISBN 92-64-10772-X

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