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Estimating Costs of Crime

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Handbook of Quantitative Criminology

Abstract

This chapter reviews the theory, methods, and evidence on estimating the costs of crime. Criminal justice policy analysts increasingly want to know more about an intervention or project: not only “does it work?” but also “is it cost effective?” or “does it contribute positive net benefits?” To answer many questions of this kind, requires estimates of the costs of different types of crime so that the benefits from a crime reduction policy can be assessed.This chapter outlines how such estimates are normally made by economists and some of the alternative methods that are sometimes appropriate. It gives examples, including a comparison of costs across countries for a similar offence type. There are many different types of costs of crime estimates in the literature – including many that are “incomplete” or poorly founded.Part of our purpose is to help users become informed about the different approaches and their limitations. The chapter is primarily limited to estimates of the cost of traditional “street crime,” and largely ignores white collar, corporate, and regulatory crimes. However, many of the techniques discussed are also appropriate to estimating the costs of these other types of crimes.

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Notes

  1. 1.

    Becker (1968) also would include property transfers, but he theorized that they approximate true social costs if the market for fencing was competitive.

  2. 2.

    The concept of “present value” is fundamental to economics and is relatively easy to understand. A dollar today is worth more than a dollar tomorrow in purchasing power due to inflation. Similarly, a dollar next year is worth less than having a dollar today, since I could just as easily take that dollar and invest it at current interest rates and have more than a dollar next year. Thus, when economists talk about the “present value” of a future income stream, they are simply computing the amount of money today that would be equivalent to the amount needed in future years, after accounting for the fact that (a) prices and wages increase over time, and (b) today’s dollars can be invested and interest compounded. Except in rare circumstances, present value is always less than future value.

  3. 3.

    Note that these are “net” discount rates, as they already account for inflation. Thus, for example, a 2% discount rate would be consistent with long-term cost of living increases of 4% and long-term interest rates of 6%.

  4. 4.

    See also “Mainstreaming Methodology for Estimating Costs of Crime” (www.costsofcrime.org, last accessed 11/05/09) for a detailed taxonomy and discussion of methodologies for estimating the costs of crime.

  5. 5.

    For a summary of the development of the BCS see Jansson (2007).

  6. 6.

    www.cica.gov.uk (last accessed 11/05/09).

  7. 7.

    Regardless of the theoretical concerns, Cohen (1990) finds that the jury award method yields estimates of the cost of an index crime that are consistent with the property value studies.

  8. 8.

    For an overview of the contingent valuation method, see Mitchell and Carson (1989). See also Cohen (2009).

  9. 9.

    The figure for England is lower still, but it fails to distinguish between rape and other sexual offences, so is almost certainly an underestimate. Rape is a more serious offence than many other sexual offences, and thus will typically result in longer terms of imprisonment and thus higher costs.

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Author information

Authors and Affiliations

  1. Resources for the Future, Inc., Washington, DC, USA

    Mark A. Cohen

  2. Owen Graduate School of Management, Vanderbilt University, Nashville, TN, USA

    Mark A. Cohen

  3. Centre for Criminal Justice Economics and Psychology, The University of York, York, UK

    Roger Bowles

Authors
  1. Mark A. Cohen
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  2. Roger Bowles
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Editor information

Editors and Affiliations

  1. College of Criminology, Florida State University, West Call Street 643, Tallahassee, 32306, U.S.A.

    Alex R. Piquero

  2. Inst. Criminology, Hebrew University of Jerusalem, Jerusalem, 91905, Israel

    David Weisburd

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Cohen, M.A., Bowles, R. (2010). Estimating Costs of Crime. In: Piquero, A., Weisburd, D. (eds) Handbook of Quantitative Criminology. Springer, New York, NY. https://doi.org/10.1007/978-0-387-77650-7_8

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