Economic Downturns and Crime

The economic downturn imposes significant costs on families.  But does it also increase crime?

Mayor Bloomberg recently mentioned to me that crime in New York City has declined despite the ongoing recession – which seemed surprising to me, so I looked into it a bit more.  Homicide in New York City is indeed down 23 percent so far in 2009, and crime overall is down 13 percent (pdf).  On the other hand, some experts believe crime will increase as the recession continues because "offenders feel a sense of desperation and believe there is no hope to improve their situation."  So what are the facts?

There is vast amount of economic research on the linkages between crime and the economy.  Most of this research finds that property crime rises during recessions – albeit only moderately.  In a recent review of the literature, Steve Levitt concluded that a five percentage point increase in unemployment rates generates about a five percent increase in property crime rates.  So a neighborhood that typically has 20 property crimes a year might experience one more during a severe recession.

For violent crime, especially for homicide rates, the research findings are more ambiguous.  Indeed, some studies find that that homicides decline during recessions (see for example, Raphael and Winter-Ebmer, 2001).  One reason may be that alcohol use tends to decline during recessions (another potentially surprising finding), and that the reduction in alcohol use reduces violent crime, as suggested in a 2008 paper by Garrett and Ott.

Such a potential link between economic downturns, alcohol, and crime highlights the fact that crime is not the only behavior that changes during recessions, and there are complicated interactions that can lead to what might appear to be counterintuitive results.

Other results suggest that automobile accidents decline when the economy turns down, because people tend to drive less.  Unfortunately, one indicator that tends to go up during recessions is suicide.  A variety of studies find that suicide rises during economic downturns, though most of the studies are old and the effect tends to be modest.

The bottom line is that recessions, which impose substantial economic costs, have complicated and sometime surprising effects beyond purely economic ones.  Although property crime increases moderately, as do suicides, the evidence suggests that violent crime shows no strong relationship with the business cycle.