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The Changing Returns to Crime: Do Criminals Respond to Prices?

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  • Mirko Draca
  • Theodore Koutmeridis
  • Stephen Machin

Abstract

In economic models of crime individuals respond to changes in the potential value of criminal opportunities. We analyse this issue by estimating crime-price elasticities from detailed data on criminal incidents in London between 2002 and 2012. The unique data feature we exploit is a detailed classification of what goods were stolen in reported theft, robbery and burglary incidents. We first consider a panel of consumer goods covering the majority of market goods stolen in the crime incidents and find evidence of significant positive price elasticities. We then study a particular group of crimes that have risen sharply recently as world prices for them have risen, namely commodity related goods (jewellery, fuel and metal crimes), finding sizable elasticities when we instrument local UK prices by exogenous shifts in global commodity prices. Finally, we show that changes in the prices of loot from crime have played a role in explaining recent crime trends.

Suggested Citation

  • Mirko Draca & Theodore Koutmeridis & Stephen Machin, 2015. "The Changing Returns to Crime: Do Criminals Respond to Prices?," CEP Discussion Papers dp1355, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1355
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    Cited by:

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    2. Yu Aoki & Theodore Koutmeridis, 2019. "Shaking Criminal Incentives," Working Papers 2019-13, Business School - Economics, University of Glasgow.
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    4. Fetzer, Thiemo, 2023. "Did the policy response to the energy crisis cause crime? Evidence from England," The Warwick Economics Research Paper Series (TWERPS) 1459, University of Warwick, Department of Economics.
    5. Galiani, Sebastian & Jaitman, Laura & Weinschelbaum, Federico, 2020. "Crime and durable goods," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 146-163.
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    7. Randi Hjalmarsson & Stephen Machin & Paolo Pinotti, 2024. "Crime and the labor market," CEP Discussion Papers dp2044, Centre for Economic Performance, LSE.
    8. R Pickering & K Y Lim, 2024. "Does crime type matter in understanding the nexus between universal credit and crime? Evidence from England and Wales," Economic Issues Journal Articles, Economic Issues, vol. 29(1), pages 93-131, March.
    9. Aoki, Yu & Koutmeridis, Theodore, 2019. "Shaking Criminal Incentives," IZA Discussion Papers 12781, Institute of Labor Economics (IZA).
    10. Enrico Cantoni & Vincent Pons, 2021. "Strict Id Laws Don’t Stop Voters: Evidence from a U.S. Nationwide Panel, 2008–2018," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(4), pages 2615-2660.
    11. Corrado Giulietti & Brendon McConnell, 2020. "Kicking You When You're Already Down: The Multipronged Impact of Austerity on Crime," Papers 2012.08133, arXiv.org, revised Aug 2022.
    12. Kerri Agnew, 2020. "Crime highways: The effect of motorway expansion on burglary rates," Journal of Regional Science, Wiley Blackwell, vol. 60(5), pages 995-1024, November.
    13. Blesse, Sebastian & Diegmann, André, 2019. "Police reorganization and crime: Evidence from police station closures," ZEW Discussion Papers 18-044, ZEW - Leibniz Centre for European Economic Research, revised 2019.
    14. Carl Hase & Johannes Kasinger, 2024. "The Pass-through of Retail Crime," Papers 2407.07201, arXiv.org, revised Oct 2024.
    15. Campaniello, Nadia & Gavrilova, Evelina, 2018. "Uncovering the gender participation gap in crime," European Economic Review, Elsevier, vol. 109(C), pages 289-304.
    16. Tomas Brabenec & Josef Montag, 2016. "Criminals and the Price System: Evidence from Czech Metal Thieves," CERGE-EI Working Papers wp558, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    17. Laura Jaitman, 2019. "Frontiers in the economics of crime: lessons for Latin America and the Caribbean," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-36, December.
    18. Qi Ge & Ignacio Sarmiento Barbieri & Rodrigo Schneider, 2021. "Sporting Events, Emotional Cues, And Crime: Spatial And Temporal Evidence From Brazilian Soccer Games," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 375-395, January.
    19. Tannenbaum, Daniel I., 2020. "Does the disclosure of gun ownership affect crime? Evidence from New York," Journal of Public Economics, Elsevier, vol. 181(C).
    20. Pengfei Jia & King Yoong Lim & Ali Raza, 2020. "Crime, different taxation, police spending and embodied human capital," Manchester School, University of Manchester, vol. 88(5), pages 664-698, September.
    21. Diego De la Fuente, 2024. "Remittance Income and Crime in Mexico," Working Paper Series 1024, Department of Economics, University of Sussex Business School.
    22. Satadru Das & Naci Mocan, 2020. "Analyzing The Impact Of The World'S Largest Public Works Project On Crime," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1167-1182, July.

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    More about this item

    Keywords

    Crime; goods prices; metal crime; commodity prices;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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