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Crime and the Recent Financial Crisis

Crime and the Recent Financial Crisis. a study on crime in north Carolina from 2007-2009. Introduction. Introduction. Conventional Wisdom: “street” crime is countercyclical Controversy: many exceptions 1982: year the worst postwar recession hit bottom

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Crime and the Recent Financial Crisis

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  1. Crime and the Recent Financial Crisis a study on crime in north Carolina from 2007-2009

  2. Introduction

  3. Introduction • Conventional Wisdom: “street” crime is countercyclical • Controversy: many exceptions • 1982: year the worst postwar recession hit bottom • 1960s: period of sustained economic growth and declining unemployment

  4. Examples of Why might crime be linked to economic conditions • Legitimate Opportunities • Criminal Opportunities • Use of Criminogenic Commodities • The Criminal Justice System Response to Crime

  5. Literature Review

  6. Social Aspects of the Business Cycle – Thomas (1927) • Related various detrended measures of crime with an indicator of business conditions for Britain • Findings • Robbery and Burglary (-.44) • Larceny (-.25) • Violent Crimes (+.06)

  7. An Economic Analysis of Crime and Punishment in England and Wales, 1894-1967 – Wolpin (1978) • Analyzed unemployment, GDP per capita, and weekly wage for manual manufacturing workers against crime data • Findings: • Robbery and burglary • Homicide

  8. Crime and the Business Cycle – Cook and Zarkin(1985) • “For two important types of crimes, robbery and burglary, there is strong evidence of a countercyclical pattern. Recessions do indeed increase the rate at which these crimes are committed. These conclusions are supported by both nonparametric and regression analysis of U.S. crime rates since 1933.”

  9. What happened during the financial crisis of 2007-2009?

  10. 10 Year Crime trend in north Carolina Source: North Carolina Department of Justice

  11. 2007-2009: Decline in Crime in NC Source: North Carolina Department of Justice, Census Estimates

  12. 2007-2009: Decline in Crime in NC Source: North Carolina Department of Justice, Census Estimates

  13. Why did crime not increase? • Drug Markets • 1970’s: Heroin • Late 1980’s – Early 1990’s: Crack • Policing • Compstat-type accountability systems • Real-time crime information • Target Hardening • Cell phones/cameras • New car security systems

  14. Why did crime not increase? • Economic Stimulus • Economic stimulus spending, especially unemployment benefits • Declining Criminal Opportunities • High unemployment rates -> occupied houses • People carry less cash/valuables • Demographics • Median age at highest point ever in 2010 • Incarceration • US has highest incarceration rate

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