| The Economics of Crime: Lessons for and from Latin America
Crime Distribution and Victim Behavior during a Crime Wave
The study of how crime affects different income groups faces the difficulty that crime-avoiding activities vary across these groups. Thus, a lower victimization rate in one group may not reflect a lower burden of crime, but rather a higher investment in crime avoidance. Moreover, protection activities by one group can displace crime onto another group. We take advantage of a dramatic increase in crime rates in Argentina during the late 1990s to document several interesting patterns. First, the increase in victimization experienced by the poor is larger than the increase endured by the rich. The difference appears large: low-income people have experienced increases in victimization rates that are almost 50% higher than those suffered by high-income people. Second, for home robberies, where the rich can protect themselves (by hiring private security, for example), we find significantly larger increases in victimization rates amongst the poor. In contrast, for robberies on the street, where the rich can only mimic the poor (by not using jewelry, for example), we find similar increases in victimization for both income groups. Third, we document direct evidence on pecuniary and non-pecuniary protection activities by both the rich and poor, ranging from the avoidance of dark places to the hiring of private security. Fourth, we estimate a negative correlation between changes in protection and mimicking and changes in crime victimization. Our findings are consistent with the presence of a negative externality on the poor arising from the protection expenditures of the rich.
Wealth and Poverty;
Selection and Staffing;
Crime and Corruption;