Economic Downturns and Crime
Kristin M. Finklea
Analyst in Domestic Security
July 28, 2009
Congressional Research Service
7-5700
www.crs.gov
R40726
CRS Report for Congress
P
repared for Members and Committees of Congress
Economic Downturns and Crime
Summary
The United States is currently in the midst of a recession that some analysts believe will be the
longest-lasting economic downturn since the Great Depression. Various indicators of economic
health, such as the unemployment rate and foreclosures, have reached their worst showings in
decades over the past few months. The troubled state of the economy has revived the long-
standing debate concerning whether economic factors can be linked to increases in the nation’s
crime rates. This report examines the available research on how selected economic variables may
or may not be related to crime rates.
There are multiple macroeconomic indicators, such as the consumer price index or real earnings,
that can serve as estimates of economic strength. Specifically, during the current economic
downturn, some reference the unemployment rate and the proportion of home foreclosures as
proxies for economic health. Therefore, most of the discussion in this report utilizes
unemployment and foreclosure data in discussing the relationship between the economy and
crime.
A number of studies have analyzed the link between the unemployment rate and crime rates (with
a greater focus on property crime), some theorizing that in times of economic turmoil, people
may turn to illicit rather than licit means of income. However, a review by CRS found a lack of
consensus concerning whether the unemployment rate has any correlation with the property crime
rate. A number of studies analyzed by CRS that did find a correlation between the unemployment
rate and the property crime rate generally examined time periods during which the unemployment
and property crime rates moved in tandem. Conversely, some studies that used longer time-
horizons tended to find no direct link between the unemployment rate and the property crime rate.
The link between foreclosures and crime rates has not been reviewed as comprehensively by
social scientists as other broader macroeconomic variables—namely, unemployment. Most of the
literature in the field focuses on whether abandoned houses can be linked to increases in crime
rather than looking at the particular role that foreclosures may play. The literature reviewed
suggests that there is some correlation between abandoned houses and the property crime rate
(but not, however, the violent crime rate). With respect to the relationship between foreclosures
and crime rates, some of the studies found that foreclosures did have an impact on the violent
crime rate (but not the property crime rate). However, the limited number of studies examining
the relationship between foreclosure rates and crime rates complicates any attempt to draw firm
conclusions.
While much research on the relationship between economic variables and crime rates has focused
on macroeconomic variables such as unemployment and home foreclosures, some research
suggests that other economic variables, such as gross domestic product (GDP) or gross state
product (GSP), as well as consumer sentiment, could fluctuate more closely with crime rates and
could thus serve as better proxies for evaluating the relationship between the economy and crime.
Policy makers continue to be concerned with potential impacts—such as increased crime—that
the current economic downturn may have on the nation. As a result, some have suggested that
focus should be placed on increasing the resources of state and local police departments (i.e.,
increasing the number of police officers). In addressing this concern, however, Congress may opt
to consider whether the current downturn in the economy is in fact related to crime rates. This
report will be updated as needed.
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Contents
Introduction ................................................................................................................................ 1
Crime Rates During Recessions .................................................................................................. 2
Research on Crime Rates and Recessions .............................................................................. 4
Impact of Unemployment on Crime ............................................................................................ 5
Theories................................................................................................................................ 5
Overview of the Literature .................................................................................................... 6
Factors Affecting Conclusions About the Unemployment-Crime Relationship ....................... 7
Home Foreclosures and Crime Rates ........................................................................................... 9
Theories................................................................................................................................ 9
Overview of the Literature .................................................................................................. 10
Other Economic Indicators........................................................................................................ 11
Gross Domestic Product (GDP)/Gross State Product (GSP)................................................. 12
Consumer Sentiment ........................................................................................................... 12
Issues for Congress ................................................................................................................... 13
Current Economic Downturn Relationship to Crime Rates .................................................. 14
Relationship of Number of Law Enforcement Officers and Crime Rates.............................. 14
Figures
Figure 1. Violent Crime Rate and Recessions .............................................................................. 3
Figure 2. Property Crime Rate and Recessions ............................................................................ 4
Contacts
Author Contact Information ...................................................................................................... 15
Acknowledgments .................................................................................................................... 15
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Economic Downturns and Crime
Introduction
The International Monetary Fund (IMF) has noted that “[t]he financial market crisis that erupted
in August 2007 has developed into the largest financial shock since the Great Depression.”1 The
United States is currently in the midst of a broad recession that some believe will also be the
longest-lasting economic downturn since the Great Depression.2 Various indicators of economic
strength, such as the unemployment rate and foreclosures, have reached their worst showings in
decades over the past few months. While some newspapers across the country have been
publishing stories linking the current economic downturn with localized increases in crime,3
others have reported decreases in crime.4 The troubled state of the economy has sparked debate
concerning whether economic factors can affect crime.
Any increase in crime rates during a period of economic uncertainty could exacerbate an already
difficult situation for communities across the United States. Congress has recently voiced concern
over this issue, with the Senate Committee on the Judiciary holding a hearing on January 8, 2009,
concerning the need to increase funding for federal programs that provide support for state and
local law enforcement agencies.5 Congress responded by passing legislation that authorized over
$3 billion in funding for law enforcement assistance.6 Advocates of increasing funding for state
and local law enforcement assistance believe that additional funding is needed for a number of
reasons, including that crime rates tend to increase during periods of economic uncertainty and
that state law enforcement agencies are facing budget cuts and may be forced to stop hiring new
officers or filling vacated positions.7 Opponents of this funding argue that there is no documented
link between economic downturns and increases in crime rates, and that the federal grant
programs in question are inefficient.8
This report examines the relationships between selected variables of economic strength and
crime. 9 It begins with an overview of crime rates during times of economic recession in the
1 International Monetary Fund, World Economic Outlook: Housing and the Business Cycle, April 2008, Chapter 1.
2 See, for example, Robert Gavin, “Hope Abounds, But So Does the Fear,” Boston Globe, January 21, 2009.
3 See, for example, Lauren King, “Statistics Point to Increase in Crime During Recessions,” The Virginian-Pilot & The
Ledger-Star, January 19, 2009; Andy Giegerich, “White-Collar Crime Strikes Often in Times of Recession,” Denver
Business Journal, May 26, 2009; Gary Stoller, “Hotel Crime Rises in Recession, but Hotels Say They're Still Safe,”
USA Today, May 19, 2009.
4 See, for example, Allison Klein, “Major Cities’ Plummeting Crime Rates Mystifying,” The Washington Post, July
20, 2009.
5 U.S. Congress, Senate Committee on the Judiciary, Helping State and Local Law Enforcement During an Economic
Downturn, 111th Cong., 1st sess., January 8, 2009.
6 In response to the current economic crisis, funding for the two main federal grant programs related to state and local
law enforcement assistance—the Community Oriented Policing Services (COPS) and the Justice Assistance Grants
(JAG) programs—was included in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5).
7 Proponents of increased funding for state and local law enforcement also argue that hiring law enforcement officers
will provide economic stimulus at the local level by creating new jobs. U.S. Congress, Senate Committee on the
Judiciary, Helping State and Local Law Enforcement During an Economic Downturn, 111th Cong., 1st sess., January 8,
2009.
8 Opponents of this increased funding also argue that hiring additional police officers may not stimulate the economy.
U.S. Congress, Senate Committee on the Judiciary, Helping State and Local Law Enforcement During an Economic
Downturn, 111th Cong., 1st sess., January 8, 2009.
9 This report discusses the relationship between economic indicators and crime rates in terms of whether there is a
correlation between a given indicator and crime. A positive correlation exists when increases in one variable are
(continued...)
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United States. It then reviews the existing literature in the field analyzing various data sets that
examine whether the unemployment rate and foreclosures can be related to increases in the
national crime rate. This report focuses primarily on national-level data rather than on state- or
local-level data. Because of the aggregation of national-level data, local trends may be lost.
Therefore, this report presents a picture of the relationship between crime and economic
indicators for the nation as a whole, but it does not discuss these relationships that may exist at
the state or local level. Further, conclusions drawn about the relationship between national crime
rates and economic variables may not be generalizable to the relationship between the economy
and crime in all states and localities around the country.10 In essence, there may exist a
relationship between the economy and crime in specific areas of the country, even if this
relationship is not visible at the national level.
The report also considers other economic indicators that may warrant further research with
respect to their relationship with crime. Lastly, the report raises several issues that Congress may
debate should it consider the relationship between the current economic downturn and crime,
including whether increases in crime rates are related to periods of economic turmoil and whether
hiring additional police officers can reduce crime.
Crime Rates During Recessions
According to the National Bureau of Economic Research (NBER), “[a] recession is a significant
decline in economic activity spread across the economy, lasting more than a few months,
normally visible in production, employment, real income, and other indicators. A recession begins
when the economy reaches a peak of activity and ends when the economy reaches its trough.”11
NBER has identified six recessions in the United States since 1960.12
Figure 1 and Figure 2 illustrate the violent and property crime rates, respectively, from 1960
through 2007. 13 Both figures identify each of the six recessions identified by the NBER. In
general, property crime rates increased fairly steadily from the early 1960s through the mid-1980s
(...continued)
accompanied by increases in another variable. A negative correlation, on the other hand, occurs when increases in one
variable are accompanied by decreases in another variable. One important concept is the idea that correlation does not
imply causation; the presence of two sets of data (two variables) showing similar trends does not indicate that changes
in one variable cause any visible changes in the other. Instead, a correlation shows that changes in one variable can, to
some extent, predict changes in another variable. Many of the studies discussed in this report attempt to find causal
links between certain variables that are examined, but are unable to draw firm causal conclusions because of the
correlational nature of the research.
10 An analysis of such data at the state or local level may be difficult because of the differing nature of crime across
various states, counties, cities, neighborhoods, or even streets. For instance, while some neighborhoods may exhibit a
relationship between certain types of crime and the economy, other neighborhoods may exhibit a relationship between
different types of crime and the economy or may not exhibit a relationship at all.
11 National Bureau of Economic Research, “Determination of the December 2007 Peak in Economic Activity,”
December 11, 2008.
12 For more information about past recessions in the United States, see CRS Report RL31237, The 2001 Economic
Recession: How Long, How Deep, and How Different From the Past? by Marc Labonte and Gail E. Makinen.
13 This analysis of the relationship between crime rates and recessions is based on a simple correlation. CRS did not
control for any other variables when evaluating this relationship. Further, CRS did not perform any other statistical
analyses to assess the relationship between crime rates (as reported by the Federal Bureau of Investigation’s Uniform
Crime Report) and periods of economic recession (as identified by the National Bureau of Economic Research).
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and violent crime rates continued to increase through the early 1990s. Both property crime and
violent crime rates have generally been decreasing since the early 1990s. Figure 1 and Figure 2
show that, since 1960, there has been no consistent relationship between periods of economic
recession and the crime rates. While the violent crime and property crime rates did increase
during some recessions (generally in the 1970s), during others they either remained relatively
stable or actually decreased.
Figure 1. Violent Crime Rate and Recessions
1960-2007
Source: CRS presentation of the FBI’s Uniform Crime Report (UCR) data as wel as National Bureau of
Economic Research (NBER) data.
Notes: Official UCR data is not yet available for 2008. Preliminary 2008 data can be found at http://www.fbi.gov/
ucr/ucr.htm.
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Figure 2. Property Crime Rate and Recessions
1960-2007
Source: CRS presentation of the FBI’s Uniform Crime Report (UCR) data as wel as National Bureau of
Economic Research (NBER) data.
Notes: Official UCR data is not yet available for 2008. Preliminary 2008 data can be found at http://www.fbi.gov/
ucr/ucr.htm.
Research on Crime Rates and Recessions
CRS was unable to find any literature examining potential links between recessions in the United
States and crime rates. Instead, the literature in the field tends to focus on the impact that
macroeconomic trends have on crime rates. With a recession defined as “a significant decline in
economic activity spread across the economy,” this leaves open the possibility that any number or
combination of economic variables may be affected in a recession. It also suggests that no two
recessions may be the same, and thus some economic variables may be at greater flux during
some recessions than during others. This poses challenges in analyzing the relationship between
recessions—in general—and crime. Consequently, researchers tend to use individual economic
indicators, such as the unemployment rate, as a proxy for the state of the economy. However, any
given indicator may not be generalizable to the state of the economy as a whole during any one
given recession or across recessions.14
Despite the limitations in using specific economic variables as proxies for a complex economic
state, this methodology does allow researchers to isolate variables and analyze their individual
effects. Specifically, during the current economic downturn, many have referred to the
14 Generalizability is typically defined as the extent to which the results generated by a variable being studied can be
applied to other settings, times, or groups of subjects and be expected to deliver a similar outcome.
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unemployment rate and the proportion of home foreclosures as proxies for economic health. The
following sections will examine these particular economic indicators in order to see whether they
can be linked to increases in the crime rates.
Impact of Unemployment on Crime
The unemployment rate is one of the most widely referenced economic indicators. In discussions
of potential impacts of the economy on crime rates, many scholars and policy makers use the
unemployment rate as a proxy for economic strength. Congress has shown interest in the
relationship between the economy—unemployment, in particular—and crime rates since the
1970s.15 The current recession, which has been accompanied by a rise in the unemployment rate,
has once again focused attention on the relationship between unemployment and crime rates. In
fact, according to the Bureau of Labor Statistics, “[s]ince the start of the recession in December
2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate
has risen by 2.3 percentage points,” to 7.2% in December 2008.16 The unemployment rate has
continued to increase, and reached 9.5% in June 2009. That rate represents the highest level of
unemployment in the United States since the early 1980s.17
Theories
Researchers and scholars have several theories concerning the relationship between
unemployment and crime. One of these theories, the economic theory of crime, assumes that
people make rational choices between legitimate activities and criminal activities as a source of
economic gain.18 More specifically, the comparison is between the economic benefit of legitimate
work versus that of violent or property crime, after accounting for crime-related costs such as
incarceration. Although the theory was originally formulated with an application to all crimes,
many researchers have used it in discussions of unemployment and property crime. This theory
predicts a positive correlation between unemployment and property crime; in other words, that
increases in the unemployment rate will be correlated with increases in property crime rates. The
reason for this positive correlation, according to the economic model, is that during periods when
there are fewer opportunities for legitimate income, people may turn to illegal activities, while
when more jobs are available, the risks of committing a crime may be weighed against the
opportunity for legitimate work.
A second theory factors both the motivation to commit crimes as well as the opportunities
available to commit crimes.19 On one hand, this theory concurs with the economic theory of crime
in predicting that the unemployment rate may be positively correlated with the crime rates
15 U.S. Congress, House Committee on the Judiciary, Subcommittee on Crime, Unemployment and Crime, 95th Cong.,
1st sess., September 27, 1978.
16 Bureau of Labor Statistics, “The Unemployment Situation: December 2008,” USDL 09-0004, January 9, 2009.
17 Historical unemployment data is available from the Bureau of Labor Statistics at http://data.bls.gov/PDQ/servlet/
SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000.
18 Gary S. Becker, “Crime and Punishment: An Economic Approach,” The Journal of Political Economy, vol. 76, no. 2
(March-April 1968), pp. 169-217. Richard B. Freeman, “Why do so Many Young American Men Commit Crimes and
What Might We do About it?,” The Journal of Economic Perspectives, vol. 10, no. 1 (Winter 1996), pp. 25-42.
19 David Cantor and Kenneth C. Land, “Unemployment and Crime Rates in the Post-World War II United States: A
Theoretical and Empirical Analysis,” American Sociological Review, vol. 50 (June 1985), pp. 317-332.
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because of increased criminal motivation (with potential benefits of legitimate work weighed
against potential costs of crime). However, the theory simultaneously predicts that unemployment
may be negatively correlated with the property crime rate, because during periods of increasing
unemployment, there may be decreased criminal opportunities for reasons including that potential
targets/victims may also be unemployed and thus better able to guard their property. Similarly, the
theory predicts that unemployment may be negatively correlated with the violent crime rate using
two assumptions: (1) during periods of unemployment, individuals may have more time to spend
in situations (i.e. home and neighborhood) where people may be more close-knit, and (2) violent
crimes more often involve casual acquaintances or strangers rather than individuals with close
relations (based on Department of Justice and Uniform Crime Report data).20 If unemployment
had an equal effect on increasing criminal motivation and decreasing criminal opportunity, this
theory would predict no correlation between unemployment and crime rates. If the effects on
increased motivation were stronger than the effects on decreased opportunity, this theory would
predict (as does the economic model of crime) a positive correlation between unemployment and
the property crime rate.
Overview of the Literature
A number of studies analyzing the relationship between unemployment and crime rates tend to
find small statistically significant correlations between unemployment and the property crime rate
but not between unemployment and the violent crime rate. During congressional hearings on
unemployment and crime in 1979 and 1981, Congress heard testimony that there is a positive, but
generally insignificant, relationship between unemployment and crime rates, and that this
relationship holds true more often for the property crime rate than for the violent crime rate.21 A
review of the literature found large disparities in the magnitude of the correlation between
unemployment and the property crime rate. Some researchers found a small relationship
(unemployment accounts for about 2% of the change in the property crime rate);22 other
researchers found a large relationship (unemployment may account for up to 40% of the change
in the property crime rate),23 while still others found no relationship.
20 Ibid., p. 320.
21 From remarks by Dr. Ann Dryden Witte, Department of Economics, University of North Carolina, Chapel Hill, at
U.S. Congress, Joint Economic Committee, The Social Costs of Unemployment, 96th Cong., 1st sess., October 31, 1979.
Also from remarks by Dr. Ann Dryden Witte, Department of Economics, University of North Carolina, Chapel Hill, at
U.S. Congress, House Committee on the Judiciary, Subcommittee on Crime, and House Committee on Education and
Labor, Subcommittee on Employment Opportunities, Unemployment and Crime, 97th Cong., 1st sess., October 27,
1981, pp. 191-222.
22 Steven D. Levitt, “Understanding why crime fell in the 1990s: Four factors that explain the decline and six that do
not,” The Journal of Economic Perspectives, vol. 18, no. 1 (Winter 2004), pp. 163-190.
23 Steven Raphael and Rudolf Winter-Ebmer, “Identifying the effect of unemployment on crime,” Journal of Law and
Economics, vol. XLIV (April 2001), pp. 259-283. The Government Accountability Office cites this research in their
report linking poverty with crime. See U.S. Government Accountability Office, Poverty in America: Economic
Research Shows Adverse Impacts on Health Status and Other Social Conditions as well as the Economic Growth Rate,
GAO-07-344, January 2007, p. 16, http://www.gao.gov/new.items/d07344.pdf. Steven Raphael and Rudolf Winter-
Ember evaluated the relationship between state unemployment rates and state property crime rates for the time period
from 1971 through 1997. In their analysis, Raphael and Winter-Ember controlled for several variables, including
alcohol consumption per capita, average income, race, age, poverty, city size, incarceration rate, and military spending.
Similar to Steven Levitt’s results, they found that a one percentage point decrease in the unemployment rate was
associated with a 1.6%-2.3% decrease in the property crime rate. Constraining their analysis to the time period between
1992-1997, they found that a one percentage point decrease in the unemployment rate may have been associated with
up to a 5% decrease in the property crime rate; Raphael and Winter-Ember thus attribute 40% of the overall decline in
(continued...)
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Steven Levitt examined empirical studies on the relationship between unemployment and the
property crime rate between 1973 and 2001. Assimilating the findings across five studies
including his own research, Levitt concluded that
controlling for other factors, almost all of these studies report a statistically significant but
substantively small relationship between unemployment rates and property crime. A typical
estimate would be that a one percentage point increase in the unemployment rate is
associated with about a one percent increase in property crime.24
Levitt estimated that changes in the economy (unemployment) accounted for only about 2% of
the changes in the property crime rate between 1991 and 2001. He argued that most of the decline
in the property crime rate during the 1990s can be attributed to non-economic factors (increases
in the number of police, increases in the prison population, the receding crack epidemic, and
increases in abortion25) rather than the declining unemployment rate.26
Factors Affecting Conclusions About the Unemployment-Crime
Relationship
In reviewing the literature examining the relationship between unemployment and the property
crime rate, CRS identified several issues that may affect policy makers’ abilities to draw
conclusions about the true relationship between unemployment (as a proxy for economic
strength) and crime. For one, the effects of the unemployment rate on the property crime rate may
better explain property crime trends during some time periods than during others. For example,
Theodore Chiricos reviewed 63 studies, some of which evaluated the unemployment-crime
relationship between 1960 and 1970, and some of which evaluated this relationship after 1970.27
Although the 1960s saw a decrease in unemployment and the 1970s saw an increase in
unemployment, both decades witnessed a general increase in the property crime rate.
Consequently, Chiricos’s research suggests an “inconsistent” relationship between unemployment
and property crime rates during the 1960s and a positive relationship during the 1970s.28 Eric
Gould and his colleagues evaluated the relationship between unemployment and the property
crime rate between 1979 and 1997, and similarly found that the significance of the relationship
was dependent on the time period.29 They found a strong, short-term correlation for the years
1993 through 1997, but determined that there was no evidence for a long-term relationship
(...continued)
the property crime rate between 1992 and 1997 to a drop in unemployment. These findings indicate that the
conclusions drawn about the effects of unemployment on the property crime rate may be time-period-sensitive.
24 Steven D. Levitt, “Understanding why crime fell in the 1990s: Four factors that explain the decline and six that do
not,” The Journal of Economic Perspectives, vol. 18, no. 1 (Winter 2004), pp. 170.
25 Levitt based the claim that abortion was a factor contributing to the declining crime rate in the 1990s on two
assumptions: (1) unwanted children are at a greater risk for crime, and (2) legalized abortion led to a decrease in the
number of unwanted births and thus a decrease in the number of children later at risk for crime.
26 Steven D. Levitt, “Understanding why crime fell in the 1990s: Four factors that explain the decline and six that do
not,” The Journal of Economic Perspectives, vol. 18, no. 1 (Winter 2004), pp. 170.
27 Theodore G. Chiricos, “Rates of Crime and Unemployment: An Analysis of Aggregate Research Evidence,” Social
Problems, vol. 34, no. 2 (April 1987), pp. 187-212.
28 Ibid., p. 199.
29 Eric D. Gould, Bruce A. Weinberg, and David B. Mustard, “Crime Rates and Local Labor Market Opportunities in
the United States: 1979-1997,” The Review of Economics and Statistics, vol. 84, no. 1 (February 2002), pp. 45-61.
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between unemployment and the property crime rate between 1970 and 1997. Further, Steven
Levitt concluded that there was a statistically significant, but substantively small, impact of
unemployment on the property crime rate during the 1990s.30 Even looking within the 1990s,
there is a stronger correlation between unemployment and the property crime rate in the late
1990s than in the early 1990s.31 Because the conclusions drawn about the relationship between
unemployment and the property crime rate differ not only across larger time periods, but across
shorter segments of time, it is difficult for researchers to predict the effect—if any—that today’s
unemployment rate will have on the property crime rate.
Secondly, the source of the data and its level of aggregation, both for unemployment and for
crime statistics, appears to affect the strength of the relationship between these variables.32 For
example, Theodore Chiricos found that the “level of aggregation” of the data influenced the
conclusions. Of the studies he examined using state-level data, 21% revealed a significant
positive relationship between unemployment and the property crime rate, while 14% of the
studies showed a significant negative relationship. Of those studies that relied on city-level data, a
larger proportion showed a significant positive relationship, while a smaller proportion of the
studies showed a significant negative relationship.33 Chiricos suggested that whereas state-level
data may be relatively heterogeneous (e.g., it includes a wider variety of socioeconomic
variables), city-level data may be more homogenous and thus more likely to reflect the specific
trends observed within a given group of individuals in the city. Therefore, in considering potential
effects of the current economic downturn on crime rates, it may be that the unemployment-crime
relationship differs across various parts of the country. If this relationship is not consistent across
the country, it may affect conclusions drawn about unemployment-crime trends across the nation
as a whole.
Thirdly, there may be external factors that affect the unemployment-crime relationship. If there
were a direct link between unemployment and the property crime rate, varying one would
necessarily vary the other. The lack of conclusive evidence for a strong, or even significant,
correlation between the two suggests that the unemployment rate may have an indirect
relationship with the property crime rate. Although unemployment is correlated with overall
economic conditions, it may not fully capture other key economic indicators such as work hours,
employment stability, and wages.34 Some researchers, for example, have found that employment
stability and wages may correlate more strongly with the property crime rate than does
unemployment.35 Eric Gould and colleagues demonstrated that, although the increased
unemployment of non-college-educated men was associated with an increase in the property
30 Steven D. Levitt, “Understanding why crime fell in the 1990s: Four factors that explain the decline and six that do
not,” The Journal of Economic Perspectives, vol. 18, no. 1 (Winter 2004), pp. 163-190.
31 Franklin E. Zimring, “The Usual Suspects: Imprisonment, Demography, and Economy,” in The Great American
Crime Decline (New York: Oxford University Press, 2007).
32 The effect of the level of data aggregation on the relationship between unemployment and crime was also discussed
in congressional testimony by Dr. Ann Dryden Witte, Department of Economics, University of North Carolina, Chapel
Hill, at U.S. Congress, Joint Economic Committee, The Social Costs of Unemployment, 96th Cong., 1st sess., October
31, 1979.
33 Theodore G. Chiricos, “Rates of Crime and Unemployment: An Analysis of Aggregate Research Evidence,” Social
Problems, vol. 34, no. 2 (April 1987), pp. 193-197.
34 Thomas M. Arvanites and Robert H. Defina, “Business Cycles and Street Crime,” Criminology, vol. 44, no. 1 (2006),
pp. 139-164.
35 From remarks by Dr. Ann Dryden Witte, Department of Economics, University of North Carolina, Chapel Hill, at
U.S. Congress, Joint Economic Committee, The Social Costs of Unemployment, 96th Cong., 1st sess., October 31, 1979.
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crime rate, a decrease in wages for this demographic group was actually more strongly
correlated.36
Home Foreclosures and Crime Rates
The current recession has been linked by some observers to falling home prices and an increase in
mortgage delinquencies that have led to home foreclosures.37 Essentially, as home prices have
fallen over the past two years, homeowners across the country have increasingly found
themselves owing more on their mortgages than the market value of their homes. This, in turn,
has led to a rapid increase in the delinquency rate on mortgage payments and to the rate at which
banks have entered into the foreclosure process. As mentioned earlier, the IMF indicates that the
economic recession began in December 2007. Home foreclosure data from that time (the fourth
quarter of 2007) indicate that 2.04% of all home loans were in foreclosure.38 The most recent data
indicate that the percentage has increased, as 3.85% of all home loans were in foreclosure at the
end of March 2009.39 Given the current economic climate and the increase in home foreclosures
across the nation, there has been much interest concerning what kind of impact foreclosures,
which can lead to houses sitting empty for some time, have on crime rates. Although a large
number of newspaper articles have cited anecdotal evidence that crime rates increase in
neighborhoods where many foreclosures have occurred,40 there is a dearth of scientific studies on
the impact that home foreclosures have on crime rates. In fact, the only recent academic study
addressing the link between foreclosures and crime that CRS identified examined this
foreclosure-crime relationship in one particular locale rather than on a national level.41
Theories
The main literature analyzing crime rates through the spectrum of the housing market has
descended from the “broken windows” theory elucidated by James Wilson and George Kelling in
1982. According to this theory, physical signs of disorder in a neighborhood (such as broken
windows, graffiti, and abandoned buildings) generate apathy and fear among the residents of that
neighborhood. Wilson and Kelling argue that “at the community level, disorder and crime are
usually inextricably linked, in a kind of developmental sequence.”42 The authors reason that as
more houses become abandoned in a neighborhood, the neighborhood begins to feel untended to
36 Eric D. Gould, Bruce A. Weinberg, and David B. Mustard, “Crime Rates and Local Labor Market Opportunities in
the United States: 1979-1997,” The Review of Economics and Statistics, vol. 84, no. 1 (February 2002), pp. 45-61.
37 See, for example, Christopher Foote, Kristopher Gerardi, and Lorenz Goette, et al., Reducing Foreclosures: No Easy
Answers, National Bureau of Economic Research, Working Paper 15063, Cambridge, MA, June 2009; Sudeep Reddy,
“Recession, Tight Credit Compound Housing Woes,” Wall Street Journal, December 24, 2008; “Home ownership:
Shelter, or burden?” The Economist, April 16, 2009.
38 Mortgage Bankers Association, National Delinquency Survey, Fourth Quarter 2007.
39 Mortgage Bankers Association, National Delinquency Survey, First Quarter 2009.
40 See, for example, Christopher Snowbeck, “St. Paul neighborhood hit hard by foreclosures is glad to see homes
selling but worried about who’s buying,” Pioneer Press, May 3, 2009. See also Carolyn Said, “Vacant foreclosed
homes spawn blight, crime,” San Francisco Chronicle, May 3, 2009, p. A-1.
41 Dan Immergluck and Geoff Smith, “The Impact of Single-family Mortgage Foreclosures on Neighborhood Crime,”
Housing Studies, Vol. 21, No. 6, 851-866, November 2006. Hereafter referred to as Impact of Foreclosures on Crime.
42 James Q. Wilson and George L. Kelling, “Broken Windows: The Police and Neighborhood Safety,” The Atlantic,
March 1982.
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its residents, leading to an increase in the delinquent activities and ultimately the crime that will
occur there. Wilson and Kelling suggest that by focusing policing on minor misdemeanor laws
(such as graffiti, vandalism, and loitering), urban police departments could help reduce more
serious crime. This has come to be known as “order maintenance” policing, and it has been
adopted as a strategy by many urban police departments across the country.43 A number of studies
have shown a relationship between physical signs of disorder in a neighborhood and increasing
crime. However, there is mixed evidence concerning whether there is a causal link between
neighborhood disorder and crime, and whether “order maintenance” policing can reduce crime
rates.44
It is important to note, however, that the neighborhood declines measured in many of these
studies usually take place over an extended period of time—often longer than a decade—while
home foreclosures can occur suddenly. However, if foreclosed properties remain on the market
for extended periods of time, or become abandoned or blighted, they may accelerate the process
of neighborhood decline. The impact that foreclosures have on neighborhoods can also differ
widely depending on the characteristics of the particular neighborhood involved. In
neighborhoods where demand for residential property is strong, or neighborhoods where
foreclosures are not heavily concentrated, foreclosures may not have much of an impact. On the
other hand, if foreclosures are concentrated heavily in one particular neighborhood, or if
foreclosures take place in neighborhoods with low demand for residential property, the impact on
the neighborhood may be significant.45
Overview of the Literature
The only recent academic study addressing the link between foreclosures and crime that CRS was
able to identify analyzed the housing market and crime rates in Chicago.46 After controlling for a
number of socioeconomic factors, the authors concluded that violent crime—but not property
crime—was linked to increases in neighborhood foreclosures. The authors noted that, given their
statistical analysis, a 1% increase in foreclosures would be accompanied by a 2.3% increase in
violent crime. They also noted that property crimes may have been underreported because they
were related to vacant or abandoned houses, or because they took place in lower-income
neighborhoods, where residents may be less likely to report property crimes than residents in
comparable higher-income neighborhoods.47 Because the study was restricted to a large urban
center, however, it has limited generalizability to other, less urban parts of the country.48
43 Bernard E. Harcourt and Jens Ludwig, “Broken Windows: New Evidence from New York City and a Five-City
Social Experiment,” The University of Chicago Law Review, Vol. 73, No. 1, (Winter, 2006), pp. 271-320. Hereafter
referred to as New Evidence from New York City.
44 For a perspective on why order maintenance policing may be ineffective, see New Evidence from New York City. For
an opposing viewpoint, see George L. Kelling and William H. Sousa, Jr., “Do Police Matter? An Analysis of the
Impact of New York City’s Police Reforms,” Manhattan Institute Civic Report, No. 22, December 2001.
45 Impact of Foreclosures on Crime.
46 Impact of Foreclosures on Crime.
47 Ibid., p. 863.
48 As mentioned earlier, generalizability refers to whether a study’s results can be applied to other populations than the
one studied. In this case, urban areas are very different from rural or suburban areas in a number of socioeconomic
variables that may inhibit this study’s ability to predict the relationship between foreclosures and crime in non-urban
areas.
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Moreover, the study analyzed one year of data.49 This focus on one year of data may make it
difficult to extrapolate the study’s results over a longer period; instead, the study represents a
snapshot of one place in time.
Similar findings regarding the relationship between home foreclosures and crime rates come from
the Charlotte-Mecklenburg Police Department (CMPD) in North Carolina. The CMPD examined
a five-year period from 2003 through 2007 and concluded that “[v]iolent crime rose consistently
during the 5-year period in the high-foreclosure neighborhoods, but remained significantly lower
in the low-foreclosure neighborhoods, except in 2004.”50 Property crime rates did not appear to
be as closely linked to foreclosures as were violent crime rates. Moreover, the authors did not
control for other factors (such as the age of homes in foreclosure) that may have contributed to
the difference in violent crime between the high-foreclosure neighborhoods and other
neighborhoods.
Another study identified by CRS from the 1990s examined the relationship between foreclosures
and crime—specifically, the impact of crime on foreclosures rather than the impact of
foreclosures on crime. The study concluded that increases in crime rates led to increases in
mortgage delinquencies and foreclosures.51 The authors found that crime rates were inversely
related to property values in the United States; decreases in property values were one of the chief
determinants of increases in mortgage delinquency rates leading to foreclosures. It should be
noted that this is not a direct relationship between crime and foreclosures, but rather an indirect
relationship; crime is linked to property values, and property values are linked to mortgage
delinquencies, which are in turn linked to foreclosures. The author concluded that increases in
violent crime had a three-year lag effect on decreasing property values, while increases in
property crime had a more immediate one-year lag effect on decreasing property values.
However, the author did not control for other socioeconomic, neighborhood, and financial
characteristics that could have contributed to or accounted for the decreases in property values.
Conversely, as previously noted, the use of aggregate data could have had a dampening effect on
the study’s results.
Other Economic Indicators
While much research on the relationship between economic variables and crime rates has focused
on macroeconomic variables such as unemployment and home foreclosures, some research
suggests that other economic variables could fluctuate more strongly with crime rates and could
thus serve as better proxies for evaluating the relationship between the economy and crime.
49 The study used 2000 census tract data for the population in the city, and 2001 crime data and business count data.
50 Michael Bess, “Assessing the Impact of Home Foreclosures in Charlotte Neighborhoods,” Geography and Public
Safety, Vol. 1, No. 3, October 2008, p. 2. “High-foreclosure” neighborhoods were those that had a high rate of
foreclosure compared to similar houses in the “low-foreclosure” neighborhoods.
51 Robert Feinberg, The Impact of Crime Rates on Residential Mortgage Default, Mortgage Banking, June 1997, pp.
63-67.
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Gross Domestic Product (GDP)52/Gross State Product (GSP) 53
For example, in examining factors affecting the property crime rate between 1980 and 1997, Reza
Fadaei-Tehrani and Thomas Green ran a correlation between six different independent variables
(GDP, median income, education expenditures, poverty rate, drug seizures, and unemployment)
and the property crime rate. They did not find a significant relationship between unemployment—
the most highly examined economic variable—and the property crime rate. They did, however,
determine that a decrease in the property crime rate was significantly related to an increase in
public expenditures for education, median income, and gross domestic product (GDP).54
Together, these three variables accounted for about 74% of the variation in the property crime rate
from 1980 through 1997, and the GDP accounted for about 28%. These results suggest that crime
rates—the property crime rate, in particular—may be linked to the economy, but that researchers
may not see the relationship by studying traditional macroeconomic factors such as
unemployment.
Thomas Arvanites and Robert Defina utilized inflation-adjusted, per capita gross state product
(GSP) as an indicator of economic strength and found a significant relationship between GSP and
the property crime rate from 1986 through 2000.55 They argue that GSP may be a more valid
proxy for economic strength than the unemployment rate because while the unemployment rate
may correlate with overall economic conditions, it may not reflect changes in other economic
indicators such as work hours, wages, job mobility, and job security—other key indicators of
economic conditions. One particular limitation of using this data range (1986-2000) is that crime
rates were generally declining during that time; a larger range would allow the researchers greater
generalizability of their findings. Like many of the other studies, the correlational nature of these
studies does not allow for conclusions about causality.56
Consumer Sentiment
Researchers have suggested that consumer sentiment may correlate with crime rates, particularly
for those crimes that may be, to some extent, economically motivated. The idea behind the use of
a broader gauge for the economy than concrete macroeconomic factors is the notion that “[a]s the
economy deteriorates, one’s ability to meet their financial and emotional needs, regardless of
her/his employment status, may become strained.”57 In direct response to this idea, Richard
Rosenfeld and Robert Fornango used annualized values from the Index of Consumer Sentiment
52 According to the Bureau of Economic Analysis, gross domestic product is “the market value of goods and services
produced by labor and property in the United States, regardless of nationality; GDP replaced gross national product
(GNP) as the primary measure of U.S. production in 1991,” http://www.bea.gov/glossary/glossary.cfm.
53 Gross state product, also referred to as GDP by state, is the value added in production by the labor and capital located
in a state. GDP for a state is derived as the sum of the GDP originating in all industries in the state. Bureau of
Economic Analysis, “Gross domestic product by State,” September 19, 2008.
54 Reza Fadaei-Tehrani and Thomas M. Green, “Crime and Society,” International Journal of Social Economics, vol.
29, no. 10 (2002), pp. 781-795.
55 Thomas M. Arvanites and Robert H. Defina, “Business Cycles and Street Crime,” Criminology, vol. 44, no. 1 (2006),
pp. 139-164.
56 As discussed earlier, correlation does not imply causation.
57 David Cantor and Kenneth C. Land, “Unemployment and Crime Rate Fluctuations: A Comment on Greenberg,”
Journal of Quantitative Criminology, Vol. 17, pp. 329-42, 2001. p. 331.
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(ICS)58 as a proxy for how individuals perceived the economy and contrasted it with UCR data
for crimes they deemed to be economically motivated, such as robbery, burglary, and larceny.59
Results from their analyses indicated that consumer sentiment was more highly correlated with
robbery and property crimes than more traditional measures of the economy, such as the
unemployment rate. These results underscore the importance of analyzing perceived economic
conditions in addition to actual economic conditions. One particular limitation of this study,
however, is that the researchers did not consider the effect of consumer sentiment on violent
crimes other than robbery. Many violent crimes, including murder and assault, may have a nexus
to economic motivation, such as a robbery that ends up with the victim being accidentally killed.
However, most of the research reviewed by CRS failed to establish a reliable link between
economic variables and violent crimes.
Issues for Congress
As discussed earlier, no two recessions are identical, and thus some economic variables may be at
greater flux during some recessions than during others. Similarly, as illustrated in Figure 1 and
Figure 2, crime rates may fluctuate more during some recessions than during others. If crime
rates were to increase during the current recession, policy makers may focus on the nature of the
relationship between this recession and crime rates. The literature reviewed by CRS has several
possible implications for policy makers. It does not appear that recessions—as measured by
macroeconomic variables such as the unemployment rate or home foreclosures—can be
definitively linked to increases in crime rates. However, preliminary research on other (though
less-studied) factors, such as GDP (or GSP) as well as consumer sentiment, indicates there may
be some correlation between these factors and crime rates, and these relationships warrant further
research. In addition, research on economic indicators and crime rates using aggregate data—
particularly on the national level—appears to produce less conclusive results than research using
state or city-level data.
Congress has expressed concern over whether the current economic downturn may be partnered
with an increase in crime. The Senate Committee on the Judiciary held a hearing on January 15,
2009, concerning whether there is a need to increase federal assistance to state and local law
enforcement agencies. Congress then passed legislation that, among other things, authorized over
$3 billion in funding for law enforcement assistance.60 Issues that the 111th Congress may
consider could include whether the current downturn in the economy is related to crime rates and,
if so, whether increases in the number of law enforcement officers will affect crime rates.
58 Both the Confidence Board and the University of Michigan, Index of Consumer Sentiment publish monthly
consumer confidence ratings. The Index of Consumer Sentiment is calculated based on individuals’ responses to
questions about personal finances, outlook for the economy, and buying conditions for durables. Richard Curtin, The
University of Michigan’s Consumer Sentiment Index, Surveys of Consumers, the University of Michigan, September 1,
2007.
59 Richard Rosenfeld and Robert Fornango, “The impact of economic conditions on robbery and property crime: The
role of consumer sentiment,” Criminology, vol. 45, no. 4 (2007), pp. 735-769.
60 In response to the current economic crisis, funding for the two main federal grant programs related to state and local
law enforcement assistance—the Community Oriented Policing Services (COPS) and the Justice Assistance Grants
(JAG) programs—was included in the American Recovery and Reinvestment Act of 2009 (P.L. 111-16).
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Current Economic Downturn Relationship to Crime Rates
The current economic climate has led some to speculate that increases in unemployment and
home foreclosures could lead to increases in crime. However, CRS found little historical evidence
of correlation between broad macroeconomic trends or foreclosures and crime rates, and the
literature on the relationship between unemployment and crime rates provided mixed results.
However, as noted, research using city- and state-level data rather than aggregate national data
demonstrated stronger relationships between economic variables and crime rates—particularly
property crime rates. This suggests that some areas of the country may experience a greater
relationship between the economic downturn and crime rates than other areas. Consequently, one
policy option may involve determining those localities that are experiencing larger increases in
crime and directing state and local law enforcement assistance to those areas.
As mentioned earlier, our review did find limited evidence of some correlation between crime and
microeconomic indicators such as consumer sentiment. This could suggest that how people
perceive the economy may be more related to increases in crime than any tangible economic
trends. This may be of interest to Congress, given the highly negative view of the economy
revealed by recent surveys of consumer sentiment. The University of Michigan consumer
sentiment survey used by CRS in this report, for example, reached 55.3—its lowest level in
almost three decades—in November, 2008, and then rebounded slightly to 68.7 in May, 2009.61 If
the past correlation between consumer sentiment and crime holds true, this indicator suggests that
crime rates may be increasing in the near future—particularly if consumer sentiment remains low
or further declines.
Relationship of Number of Law Enforcement Officers and Crime
Rates
If crime rates do, in fact, increase during economic downturns (something that the literature and
data are inconclusive about), policy makers may be interested in what measures can be taken to
address the potential increase in crime that may be caused by the current recession. Some have
suggested that additional funding be made available for state and local law enforcement agencies
to hire additional police officers in order to counteract any potential increases in crime rates
generated by the declining economy. This line of thought is related to the deterrence theory of
crime, which predicts that increasing law enforcement (in this case by increasing the police force)
has a deterrent effect on crime.62 Policy makers have often discussed whether increasing the
number of police on the streets will subsequently decrease the incidence of crime.
CRS reviewed the empirical literature that has evaluated the impact of the size of the police force
on crime rates.63 Overall, the results of these investigations indicate that there is no conclusive
evidence regarding the impact of police force size on national crime rates; the studies reported all
possible results—law enforcement increased crime, decreased crime, and had no effect on
61 In November, 2008, the consumer sentiment level reached 55.3. See University of Michigan Consumer Sentiment
Graph, Federal Reserve of Bank St. Louis, http://research.stlouisfed.org/fred2/series/UMCSENT?cid=98.
62 Samuel Cameron, “The Economics of Crime and Deterrence: A Survey of Theory and Evidence,” Kylos, vol. 41, no.
2 (1988), pp. 301-323.
63 The information in this paragraph was provided by CRS analyst, Nathan James.
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crime.64 The total body of research suggests that law enforcement may have little impact on the
amount of crime. However, researchers have acknowledged that past research suffered from a
series of methodological and analytical problems, which could mean that any conclusions drawn
from those studies are dubious. Some of the most recent research—which some argue is more
methodologically sound than past research—suggests that more law enforcement officers could
have a negative impact on crime. Yet, as some experts have noted, the ability to study the
relationship between law enforcement levels is limited by the amount of data available and the
current theory about what factors impact crime rates.65
Congress may face the issue of whether funding additional law enforcement officer positions is a
cost-effective method of reducing crime, or whether there may be other ways to support the
states’ criminal justice systems.66 Congress may also consider whether it might be more effective
to fund programs that address other correlates of crime rather than funding state and local law
enforcement hiring programs such as Community Oriented Policing Services (COPS).
Author Contact Information
Kristin M. Finklea
Analyst in Domestic Security
kfinklea@crs.loc.gov, 7-6259
Acknowledgments
Blas Nuñez-Neto and Nathan James contributed to early drafts of this report.
64 “Violent crime” included homicide, rape, robbery, and aggravated assault. John E. Eck and Edward R. Maguire,
“Have Changes in Policing Reduced Violent Crime? An Assessment of the Evidence,” in The Crime Drop in America,
Revised Edition, ed. Alfred Blumstein, Joel Wallman (New York: Cambridge University Press, 2006), pp. 210-214.
65 Franklin E. Zimring, The Great American Crime Decline (New York: Oxford University Press, 2007), pp. 78-79.
66 For a discussion of the costs and benefits of increasing law enforcement positions (and in particular through the
COPS Program), see CRS Report RL33308, Community Oriented Policing Services (COPS): Background, Legislation,
and Funding, by Nathan James.
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