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

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  • 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
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    References listed on IDEAS

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    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.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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).
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    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.

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    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

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