IDEAS home Printed from https://ideas.repec.org/p/fip/fednsr/542.html
   My bibliography  Save this paper

Crime, house prices, and inequality: the effect of UPPs in Rio

Author

Listed:
  • Claudio Frischtak
  • Benjamin R. Mandel

Abstract

We use a recent policy experiment in Rio de Janeiro, the installation of permanent police stations in low-income communities (or favelas), to quantify the relationship between a reduction in crime and the change in the prices of nearby residential real estate. Using a novel data set of detailed property prices from an online classifieds website, we find that the new police stations (called UPPs) had a substantial effect on the trajectory of property values and certain crime statistics since the beginning of the program in late 2008. We also find that the extent of inequality among residential prices decreased as a result of the policy. Both of these empirical observations are consistent with a dynamic model of property value in which historical crime rates have persistent effects on the price of real estate.

Suggested Citation

  • Claudio Frischtak & Benjamin R. Mandel, 2012. "Crime, house prices, and inequality: the effect of UPPs in Rio," Staff Reports 542, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:542
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr542.pdf
    Download Restriction: no
    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr542.html
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. Fabio Veras Soares & Sergei Suarez Dillon Soares & Marcelo Medeiros & Rafael Guerreiro Osorio, 2006. "Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty," Working Papers 21, International Policy Centre for Inclusive Growth.
    3. Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-833, April.
    4. Mario J. Rizzo, 1979. "The Effect of Crime on Residential Rents and Property Values," The American Economist, Sage Publications, vol. 23(1), pages 16-21, March.
    5. Bruce L. Benson & Simon W. Bowmaker, 2005. "Economics of crime," Chapters, in: Simon W. Bowmaker (ed.), Economics Uncut, chapter 4, Edward Elgar Publishing.
    6. Thaler, Richard, 1978. "A note on the value of crime control: Evidence from the property market," Journal of Urban Economics, Elsevier, vol. 5(1), pages 137-145, January.
    7. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    8. Katherine Kiel & Melissa Boyle, 2001. "A Survey of House Price Hedonic Studies of the Impact of Environmental Externalities," Working Papers 0111, College of the Holy Cross, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gorrín, Jesús & Morales-Arilla, José & Ricca, Bernardo, 2023. "Export side effects of wars on organized crime: The case of Mexico," Journal of International Economics, Elsevier, vol. 144(C).
    2. Wojciechowski, Thomas & Morash, Merry, 2024. "Convicted women's trajectories of community and financial adversity and race," Journal of Criminal Justice, Elsevier, vol. 94(C).
    3. Jose Ramon Morales Arilla, 2019. "The Impact of the Mexican Drug War on Trade," CID Working Papers 109a, Center for International Development at Harvard University.
    4. Lawani, Abdelaziz & Reed, Michael R. & Mark, Tyler & Zheng, Yuqing, 2019. "Reviews and price on online platforms: Evidence from sentiment analysis of Airbnb reviews in Boston," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 22-34.
    5. G. D'Alessio, 2018. "Well-being, the Socio-economic Context and Price Differences: the North-South Gap," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3, pages 471-498.
    6. Taggert J. Brooks & Brad R. Humphreys & Adam Nowak, 2020. "Strip Clubs, “Secondary Effects” and Residential Property Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(3), pages 850-885, September.
    7. Sunday Emmanuel Olajide & Mohd Lizam, 2016. "Determining the Impact of Residential Neighbourhood Crime on Housing Investment Using Logistic Regression," Traektoriâ Nauki = Path of Science, Altezoro, s.r.o. & Dialog, vol. 2(12(17)), pages 6.8-6.6.17, December.
    8. Enrique Javier Burbano Valencia & María Isabel Zafra Sanz, 2017. "Homicidio y precios de la tierra: un análisis espacial en Santiago de Cali," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 40(113), pages 147-159, Mayo.
    9. Julie Litchfield & Caio Piza, 2017. "Estimating the Willingness to Pay for Tenure Security in Brazilian Favelas," Working Paper Series 0117, Department of Economics, University of Sussex Business School.
    10. Matthew Aaron Richmond & Jeff Garmany, 2016. "‘Post-Third-World City' or Neoliberal ‘City of Exception'? Rio de Janeiro in the Olympic Era," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 40(3), pages 621-639, May.
    11. Taggert J. Brooks & Brad R. Humphreys & Adam Nowak, 2016. "Strip Clubs, “Secondary Effects,†and Residential Property Prices," Working Papers 16-17, Department of Economics, West Virginia University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Taggert J. Brooks & Brad R. Humphreys & Adam Nowak, 2020. "Strip Clubs, “Secondary Effects” and Residential Property Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(3), pages 850-885, September.
    2. Taggert J. Brooks & Brad R. Humphreys & Adam Nowak, 2016. "Strip Clubs, “Secondary Effects,†and Residential Property Prices," Working Papers 16-17, Department of Economics, West Virginia University.
    3. Elisa Facchetti, 2025. "Police infrastructure, police performance, and crime: evidence from austerity cuts," IFS Working Papers W24/16, Institute for Fiscal Studies.
    4. Paolo Pinotti, 2012. "The economic costs of organized crime: evidence from southern Italy," Temi di discussione (Economic working papers) 868, Bank of Italy, Economic Research and International Relations Area.
    5. Grodecka, Anna & Hull, Isaiah, 2019. "The Impact of Local Taxes and Public Services on Property Values," Working Paper Series 374, Sveriges Riksbank (Central Bank of Sweden).
    6. Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2015. "On the Distributive Costs of Drug-Related Homicides," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    7. Muñoz-Morales, Juan & Singh, Ruchi, 2023. "Do school shootings erode property values?," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    8. John William Hatfield & Katrina Kosec & Luke P. Rodgers, 2024. "Housing values and jurisdictional fragmentation," Public Choice, Springer, vol. 201(1), pages 83-122, October.
    9. Erasmo Giambona & Rafael P. Ribas, 2023. "Unveiling the Price of Obscenity: Evidence From Closing Prostitution Windows in Amsterdam," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(3), pages 677-705, June.
    10. Nowak, Adam & Sayago-Gomez, Juan, 2018. "Homeowner preferences after September 11th, a microdata approach," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 330-351.
    11. Phaneuf, Daniel J. & Liu, Xiangping, 2016. "Disentangling property value impacts of environmental contamination from locally undesirable land uses: Implications for measuring post-cleanup stigmaAuthor-Name: Taylor, Laura O," Journal of Urban Economics, Elsevier, vol. 93(C), pages 85-98.
    12. Deller, Steven C. & Ottem, Thomas D., 2001. "Crime And The Quality Of Life In Wisconsin Counties," Staff Papers 12652, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    13. Janet Currie & Michael Mueller-Smith & Maya Rossin-Slater, 2022. "Violence While in Utero: The Impact of Assaults during Pregnancy on Birth Outcomes," The Review of Economics and Statistics, MIT Press, vol. 104(3), pages 525-540, May.
    14. Isaiah Hull & Anna Grodecka-Messi, 2022. "Measuring the Impact of Taxes and Public Services on Property Values: A Double Machine Learning Approach," Papers 2203.14751, arXiv.org.
    15. Woei-Chyuan Wong & Adilah Azhari & Nur Adiana Hiau Abdullah & Chee Yin Yip, 2019. "Estimating the impact of crime risk on housing prices in Malaysia," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 13(5), pages 769-789, November.
    16. Bruijn, L. Michelle & Ribas, Rafael P., 2022. "“No drugs in my back yard:” The ambivalent reception of cannabis retailers," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 103-121.
    17. Tsur Somerville & Jake Wetzel, 2022. "Environmental hazards: The microgeography of land‐use negative externalities," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(2), pages 468-497, June.
    18. Rohner, Dominic & Mueller, Hannes & Schönholzer, David, 2017. "The Peace Dividend of Distance: Violence as Interaction Across Space," CEPR Discussion Papers 11897, C.E.P.R. Discussion Papers.
    19. David M. Vetter & Kaizô I. Beltrão & Rosa M. R. Massena, 2013. "The Impact of the Sense of Security from Crime on Residential Property Values in Brazilian Metropolitan Areas," Research Department Publications IDB-WP-415, Inter-American Development Bank, Research Department.
    20. Marius Brülhart & Gian-Paolo Klinke & Andrea Marcucci & Dominic Rohner & Mathias Thoenig, 2023. "Price and Prejudice: Housing Rents Reveal Racial Animus," CESifo Working Paper Series 10369, CESifo.

    More about this item

    Keywords

    amenity value; real estate; wealth distribution;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednsr:542. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.