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Endogeneity in Casino Revenue and Crime Rates: The Case of Las Vegas, Nevada

Author

Listed:
  • Man-Keung Kim

    (Utah State University)

  • Arwin Pang

    (National Chung Hsing University)

  • Wei Bao

    (University of Mississippi)

  • Ryan Bosworth

    (Utah State University)

Abstract

This paper investigates relationships among casino revenue, crime rates, and the number of visitors in Las Vegas, Nevada. Numerous studies have attempted to assess the impact of casino activities on crime rates but have provided inconclusive results. Some studies have found that casino activities increase crime rates, while others find no significant relationship between casino gambling and crime rates. But all studies that have found casinos increase crime rates do not adjust the crime rate for the number of visitors to the area. The impact of casino activities on crime rates disappears, however, when crime rates are adjusted for visitors. This study revisits the question with consideration for the potential endogeneity among variables. This paper addresses endogeneity concerns by estimating the impact of casino activities on crime using a system of equations to represent casino activities, adjusted crime rates, and visitors. Three stage least squares is used to estimate the system. Results show that the impact of casino activities on crime rates persists even after crime rates are adjusted for the visitors. Efforts to reduce crime can be effective in boosting the Las Vegas regional economy.

Suggested Citation

  • Man-Keung Kim & Arwin Pang & Wei Bao & Ryan Bosworth, 2016. "Endogeneity in Casino Revenue and Crime Rates: The Case of Las Vegas, Nevada," The Review of Regional Studies, Southern Regional Science Association, vol. 46(3), pages 223-236, Winter.
    • Handle: RePEc:rre:publsh:v46:y:2016:i:3:p:223-236
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    References listed on IDEAS

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    More about this item

    Keywords

    casino; endogeneity; crime rate;
    All these keywords.

    JEL classification:

    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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