Download Prison Spending and Urban Crimes Rates

John Grigsby
10/4/11
Capstone Proposal: Second Draft
I look to study the impact of prison spending on crime rates in large
American cities. Many studies have examined the effect of prisoner populations on
crime rates, but few have examined the impact that the quality of prison
accommodations could have on crime.
In order to understand the relationship between prison spending and crime,
we must first propose a model of crime. I would argue that a person would commit a
crime if the marginal benefit of committing that crime outweighs the marginal cost.
The marginal benefit and marginal cost of crime may depend on certain
unobservable factors, such as social gains (perhaps in some cultures, committing
crimes may lead to being perceived as “cool”) or social costs (in other cultures,
committing crimes may be looked down upon). For the purpose of this analysis, I
ignore these costs and benefits and examine simply the wealth effect. Therefore, I
would argue that a person would commit a crime if his/her expected wealth after
committing the crime is greater than his/her wealth now. This person’s expected
wealth will depend on three things – the probability of getting caught, his/her
wealth if caught and his/her wealth upon successful completion of the crime. The
probability of getting caught will depend on factors such as police presence and
criminal intelligence. A person’s wealth after successfully completing a crime will
depend on factors such as the income in the area (which will affect the value of
goods available to steal). His/her wealth if caught will depend directly on the
harshness of the punishment received and the probability of getting a job upon
release. This is where my analysis will lie. If districts spend a large amount of money
on prisons so that living conditions in a prison are agreeable, the disincentive for
crime may be reduced and crime rates may rise as a result. Indeed, anecdotal
evidence shows that particularly poor people may commit crimes so that they can
go to prison and receive reliable meals and reasonable accommodation. I aim to
quantify this effect.
This could represent an important policy question. If increased spending on
prisons increases crime rates, it will be important to weigh the benefit of providing
humane conditions to prisoners and the social cost of increase crime when
considering how much to spend on prisons.
There are some challenges associated with answering this question, however.
First, spending on prisons is not homogeneous – if a district is spending money on
improved food and living conditions, it may spur crime, but if it is spending money
to hire more wardens or prison guards, it may make crime less attractive. Therefore,
in my regression analysis, I will seek to control for the number of wardens in a given
prison, if I can find that data. The second issue is that crime and prison spending
may be co-determined. This can happen through two avenues. If crime rates are
high, incarceration rates are likely to be high too, so net spending will likely rise.
This may overestimate any positive effect of spending on crime. Therefore, I will
have to scale my data so that I examine “prison spending per inmate” rather than
simply prison spending. The other mechanism could be that increased crime rates
John Grigsby
10/4/11
could spur higher spending per capita on prisons, as politicians seek to show the
public that they are doing something about rising crime rates. However, in this case,
most of the increased spending will likely be on prison staff, so controlling for the
number of wardens per inmate should control for this effect.
Galster and Lim put forward a model of crime, which highlights some
important and interesting variables that must be considered in my research. They
argue that crimes will only be committed if the expected benefit of committing the
crime is greater than or equal to the expected cost of the crime. Thus, things such as
police presence, which affects the probability of incurring a cost for the crime,
should play a role in determining the crime rate. However, they also believe that the
key component in determining a city’s crime rate is the crime rate of the previous
two years and their interactions. They argue that a high crime rate in the past leads
to a higher crime rate in the present, as if crime reaches a certain threshold, more
people will be wooed by the rewards of crime and by the fear generated by not
engaging in criminal activity. They find that this is indeed the case at a statistically
significant level for 2 of the 3 cities they studied. Furthermore, they find that the
impact a shock in crime rate has on future crime rates is not especially long-lived,
and usually dies out within 5 or 10 years. This has important consequences for my
research, as it suggests that looking at just 1 or 2 years back may not be enough to
accurately judge the effect police have on crime; rather, I may have to consider the
culture that is created by police presence in an area and see how that affects crime
in that area.
Braga surveys several studies that deal with problem-oriented policing’s
effect on crime. These studies examine the effect that increasing policing in problem
areas in various cities has on the crime rate of that area and the surrounding areas.
They found that increased targeted policing does have a significant role in
decreasing an area’s crime rate. Furthermore, they find that these decreases in
crime are not accompanied by a significant spill over effect, as the eviction of
criminals from one area does not significantly impact surrounding areas (not
usually at least). Thus he argues that this method of problem-oriented policing is an
effective way to combat crime.
Levitt (1996) estimates the impact of prison population size on crime rates,
using an instrumental variable approach. He instruments for prison population with
changing prison overcrowding litigation. He finds that reducing the prison
population by 1 prisoner leads to an increase of fifteen Index I crimes per year. This
implies that the threat of prison has a strong deterrent effect on crime or at least
that most criminals are repeat offenders, whose removal from the streets leads to a
large reduction in crime.
I plan to use prison-level data from the Bureau of Justice Statistics, which
shows both spending on prisons and the number of inmates in each of those prisons
from 1996 through 2006. I will then use county-level data from the National Crime
Victimization Survey to obtain the crime rate. Implicit in my analysis will be the
John Grigsby
10/4/11
assumption that potential criminals consider the conditions of their local prisons
rather than prisons on a national level.
References
Braga, Anthony A., “The Effects of Hot Spots Policing on Crime,” Annals of the
American Academy of Political and Social Science 578 (Nov., 2001): 104-125
Accessed from http://www.jstor.org/stable/1049870 on 10/28/10
Galster, George and Lim, Up, “The dynamics of neighborhood property crime rates,”
Annals of Regional Science 43 (Dec., 2009): 925-945.
Levitt, Steven D., “Understanding Why Crime Fell in the 1990s: Four Factors that
Explain the Decline and Six that Do Not,” Journal of Economic Perspectives, Vol. 18,
No. 1, (Winter, 2004), pp. 163-190
Levitt, Steven D., “The Effect of Prison Population Size On Crime Rates: Evidence
from Prison Overcrowding Litigation,” The Quarterly Journal of Economics, MIT
Press, Vol. 111, No. 2 (May, 2006), pp. 319-51
Williams, Kirk R., “Economic Sources of Homicide: Reestimating the Effects of
Poverty and Inequality,” American Sociological Review Vol. 49, No. 2 (Apr., 1984), pp.
283-289