Crime, unemployment & peer effects

Crime seems to be rising. The British Crime Survey reports a 2% rise in all crime in the 12 months to June 2011. Although statisticians say this is not statistically significant, the rise in theft from households is significant.

This is just what you’d expect when unemployment is rising. I say this not because  I’m a liberal lefty, but because I’m an economist. The first rule of economics is that people respond to incentives. And when you’re unemployed you have more incentive to commit crime. This is partly because you have less to lose - you’ll not lose your job if you go to prison - and partly because, being poor you have a higher marginal utility of consumption and thus a stronger desire for money.

This paper estimates that a one percentage point rise in the UK unemployment rate leads to a rise in robberies, burglaries and thefts of around 45,000. And this paper finds that long-term unemployment is strongly associated with violent crime, perhaps because it leads to a feeling of alienation.

All this raises a question. If unemployment raises crime, why has the increase in crime been so small?

It’s because something else is going on. The decision to commit crime (or not) is not merely one taken by a rational maximizing isolated individual. It has a social dimension. People are more likely to commit crime if others in their social networks do, and less likely to do so if their peers are law-abiding. If your friends are robbers, there’s a high chance you will be too.

These peer effects mean that trends in crime can feed on themselves. If crime falls for several years - as it did in the 90s and 00s - it might continue to do so, because there are fewer “bad apples” to influence others to commit crime.

What we’re seeing now is the interplay of these two forces: higher unemployment is tending to raise crime, but the favourable peer pressures caused by a lack of crime recently is tending to reduce it.

And herein lies a danger. If further rises in unemployment lead to more crime, then we could get a further rise in crime, as the peer effects arising from there being more criminals magnify the initial  increase in crime.

Comments

[Rob]

"It’s because something else is going on. The decision to commit crime (or not) is not merely one taken by a rational maximizing isolated individual. It has a social dimension. People are more likely to commit crime if others in their social networks do, and less likely to do so if their peers are law-abiding. If your friends are robbers, there’s a high chance you will be too."

Isn't that what you'd expect from rational maximizers? It becomes rational to do something if the evidence suggests that doing so is profitable, and seeing other people do it (and get away with it, one presumes) is such evidence. If anything, the peer effect response is a perfect example of rationality in a way that, say, an emotional/moral response would not be.

I can see why you pointed out that an "isolated" individual would not follow others into crime, for the fairly obvious reason that they wouldn't be aware of there being anything to follow. But if we relax the condition of isolation, then the more rational they are, the more likely they are to follow evidence gleaned from observing others.

[CharlieMcMenamin]

*If your friends are robbers, there’s a high chance you will be too.*

That's plausible. But it doesn't necessarily work for rarer crimes - it sounds much less plausible to say people murder because they hang out with murderers.

& for some kinds of crime it may be plausible that hanging out with people who routinely take part in legal-but-judged-(by some at least)-to-be-unethical behaviour may increase your propensity to commit crime. I'm thinking of the sort of white collar crime one finds in the City.

[Keith]

I can see this as correct with property crime both need and resentment could raise economic crimes. With violent crime that is rarer and I am not sure unemployment is relevant except as social stress. The issue I would highlight is gender roles. Unemployment might produce more violence against women if men cannot be primary earners and thus also harm to children would arise which might increase future crime by disrupting the social development of children. Unemployed men who lose or cannot get a partner as an effect of unemployment might be more prone to violence as also to suicide, self harm and self destructive action like excessive drinking. Alcohol and drugs and depression are all going to disrupt social integration and those effects of unemployment may show up only slowly as a rise in crime. white collar crime I guess has an element of status seeking about it. The "need" fed by crime here is not the desire to spend money on children but the need to keep up in the rat race of status. Money as value marker.

[pablopatito]

In the 80s house crime paid well. You could sell stolen video recorders, tellies, computers and games consoles for good money down the pub. If someone robbed my house today they'd be lucky to make £200. So why bother? This change in the market value of stolen goods, caused by a long-term decline in the cost of consumer items, has to be taken into account when analysing long term trends, don't you think?