Homicidal Homeless Unemployed Housewives: Why Crime No Longer Correlates With Economic Decline

Tyler Durden's picture

With demographics playing an ever more important role in economic outlooks and debate, one of the topics that (luckily) has not had need of much mention, is the role of crime in society, and especially in a society gripped by the worst recession in 70 years. The logical expectation would be that crime would have surged in a replica of what happened to New York (and the broader country) in the mid-70s. Oddly enough, and perhaps a main reason why this is not discussed as much, is because this particular recession has not seen the traditional pick up in the crime rate (doubly curious, considering that unlike Wall Street, police departments, and their staffing levels, are usually among the first to get the funding axe). As BNY's Nicholas Colas points out: "Given the severity of the recession, you might be rightfully inclined to think there’s been a least a slight uptick in crime, but surprisingly enough, you’d be wrong. With national crime statistics from the FBI now available through 2009 – which includes the worst of the recession so far – we point out that not only has crime not gotten worse, but it’s actually continued improve quite nicely (in most states, at least). Moreover, those surprisingly positive trends are part of an overall structural decrease in crime that began in the early 1990s.The structural decline in crime that began in the early 1990s explains why the crime spike during the aftermath of the dot-com bubble and 9/11 was less pronounced than previous  recessions, but it’s quite surprising that even given the severity of the financial crisis, crime rates expanded on previous declines. Yes,  there are many theories (outlined below) that partially explain this, but the results are as puzzling as they are welcome. Not even theft and burglary, which have historically increased during recessions (see Charts 2 and 3) showed the slightest uptick." Yet with those behind bars not counted in the unemployment rate equation, is a violent (pardon the pun) surge in crime precisely what the administration is hoping for?...

According to Colas, here are the key reasons for the secular decline in the crime rate:

  • Aging Population – According to many experts on the topic, the prime “crime-committing” years in a person’s life are between the ages of 18 and 22. With the average age of the population on the rise, there are fewer 18-22 years olds as a percentage of the population to contribute to the crime rate.
  • Three Strikes Laws – Enacted by various states through the 1970s, 80s and 90s, these laws mandate that felony offenders who commit a 3rd offense receive lengthy prison terms regardless of the nature of that third offense. Since the recidivism rate is generally thought of as high among these criminals, the laws have resulted in fewer violent offenders in the general population.
  • Legalization of Abortion in 1973 – This controversial theory (read the original Freakonomics book for a full description) proposes that the resulting drop in unwanted, unborn children (who were more likely to grow up in adverse conditions and therefore more likely to be associated with and exposed to crime) coincided with a sharp decline in crime in the early 1990s because that was the time when those children would have reached their peak crime-committing years. There is a summary here of the paper here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=174508. We aren’t endorsing or refuting the findings – just reporting the theory, for what that’s worth.
  • Dramatic uptake of social programs during the current recession – There are well over 41 million Americans receiving food stamps as of June 2010. That is up by over 15 million people from just two years ago and represents an all time record for participation in this  program. The benefits are about $130/month per person and many commentators have noted that the social stigma of the program has disappeared in the current difficult economic environment. To the degree that crimes like shoplifting are economically motivated, the greater use of the food stamp program could well be contributing to overall lower rates of crime.

BNY provide some additional data on crime reduction:

  • A sharply declining murder rate was clearly behind the overall drop in violent crime – on average, there were 8.8% fewer murders across all states from 2008 to 2009.
  • At the state level, only 7 states saw an increase in violent crime and property crime from 2008 to 2009 (Charts 4 and 5). Interestingly enough, Hawaii was the only state to show a rise in both violent and property crime.
  • West Virginia led the pack in terms of violent crime – its rate jumped 7 percentage points in 1 year, helped along by a 25 percentage point increase in murders. North Dakota, notably, saw its murder rate shoot up 98%, which contributed to its 5.8% increase in overall violent crimes. Rounding out the top 3, Arkansas experienced a 2.6% rise in violent crime.
  • As for property crime, Oklahoma (+3.4%), Hawaii (+2.6%) and New Hampshire (+1.8%) saw the biggest yearly increases in 2009. Burglary was a notable problem in New Hampshire (up 13.5%), Alaska (+9.6%) and Mississippi (12.5%), while motor vehicle theft rose in only 2 states – Alaska (+2.1%) and Wyoming (+4.4%).
  • Arizona, Montana, North Carolina and Georgia win the award for most improved – all 4 states appear in the top 10 for decreases in both violent crime and property crime (Charts 6 and 7). South Dakota overwhelmingly outpaced its peers in violent crime improvement, with a drop of 32.8%, as murder, forcible rape, robbery and aggravated assault were all down roughly 20 to 40 percentage points. Montana (-15.9%) and Arizona (-15.2%) rounded out the top 3.
  • Arizona (-13.0%), Nevada (-11.1%) and Oregon (-10.2%) saw the biggest declines in property crime last year. Seven of the top 10 experienced declines in car theft in excess of 20%, while the average across all states was a whopping 16.4% drop.

Lastly, Colas provides the following confirmation that crime is basically no longer tied to economic conditions, by comparing individual state unemployment rates in 2009 to where those states rank in violent crime rate improvement, property crime rate improvement, and shoplifting. As preface for the following chart, Colas notes:

  • Of the 13 states in the first quartile (i.e. the 25% with the worst unemployment rates), none rank in the first quartile of property crime rate improvement (i.e. the 7 states with increasing property crime rates and those at the bottom of the list in terms of improvement) and only 2 rank in the first quartile of violent crime rate improvement.
  • Additionally, only about 30% of the 25% of states with the highest unemployment rates appeared in the worst quartile for shoplifting. Apparently adverse economic conditions are not driving people to incremental petty theft.
  • At the other end of the spectrum, of the 25% of states with the lowest unemployment rates, only 1 (Montana) of the 12 ranked in the best (lowest) quartile for property crime improvement, while 4 appeared in the best quartile for violent crime improvement. Only 3 ranked in the quartile for fewest shopliftings.

Colas' conclusion:

Just as poor economic conditions don’t translate to equally poor crime conditions, stronger local economies are no guarantee of reduced trends in criminal activity. As we mentioned previously, the cost of crime to the economy is no small matter, but at least we’re safe in assuming the current downturn is likely not adding to those costs. And in a market where good news is hard to come by, we’ll take it.

Of course, this could be merely a preliminary bout of optimism: while we have not seen any definitive scientific literature on the matter, it could be the case that America is merely enjoying the ongoing delayed benefits of the longest period of fake cheap-credit prosperity. At some point the inflection point into crime may well be passed, and then the administration will have many more headaches on its plate than merely figuring out how to spin the latest negative employment report for general consumption.

One last observation: as a reminder there are currently 2.3 million Americans behind bars and paid for by taxpayers (oddly enough, the fact that the middle class that has to pay for the hard core criminals on Main Street and Wall Street is arguably worthy of its own post). Yet as a Pew research study notes, these are 2.3 million people who are not accounted for in the unemployment rate calculation (and at some point one would venture to guess these millions of criminals will re-enter the labor force, causing the unemployment rate to surge).

The economic crisis turned all eyes toward the nation’s unemployment rate, which recently crested above 10 percent—the highest level in a quarter century. Employment figures tell us much about the financial health of the nation, and are critical for understanding who is  moving ahead and who is falling behind. However, conventional methods of assessing employment exclude the men and women behind bars, resulting in an incomplete picture. Now, with more than 2.3 million adults incarcerated, the effect of this omission has become too substantial to ignore.

In other words, the unadjusted unemployment rate is likely about 11% when factoring all those who may at some point be released from jail.

Alternatively, for those inclined to look at the world in an Orwellian way, at some point wanton incarceration may just be the ticket to drop US unemployment to zero, although, granted, with 14 million Americans behind bars. Perhaps a spike in the crime rate is precisely what this administration needs...

 

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blunderdog's picture

The crime rate in Brooklyn has dropped significantly in recent years because the cops have become increasingly resistant to requests to file criminal complaints.

If you're mugged, and tell the cops, but they don't file a report, there was no crime.  Problem solved.

Whether this could be a factor on the national scale is far beyond my apprehension.

 

LeBalance's picture

There's lies, damn lies, and statistics - Twain

There's personal combat, shadow combat, and mind management combat - /snicker/

"What is the Matrix?" - Neo

"It is a prison for your mind." - Morpheus

blunderdog's picture

Ya know, I liked The Matrix as much as the next guy, but why the hell didn't the machines just BURN THE FOOD?!?

LowProfile's picture

There you go again, pointing out that what most people think is science fiction is really science fantasy.

suckapump's picture

Where performance is evaluate based on reductions in crime statistics, under-reporting of serious crimes doesn't actually happen, does it?

citationneeded's picture

Don't forget all the yuppie/hipster gentrification.

Kali's picture

Agree, have seen the same on the West coast.  They just aren't reporting or prosecuting crimes.  Shit, look at Wall Street/DC.  Has anybody gone to jail yet, other than Madoff?

Hedge Jobs's picture

this report totally misses the point. It is looking for violent crimes and petty theft, break and enter those sort of things. I would like to see the white collar crimes graphed against the recession im sure there would be a huge correlation. there is white collar crime everywhere, by the FED, the banksters, the "bailouts", war on terror, the mortgage fraud, fucking everywhere!

"Crime no longer correlates with economic decline" my arse it doesnt! it's fucking cuased it, and these white collar criminals that have sent the economy broke are walking around scott free!

Mr. Anonymous's picture

Well, prosecuted crimes may be down, but crime in general is way, way up.  It's just that it's all happening on Wall Street, and of course there, law enforcement doesn't walk the beat, let alone try to lock anybody up.

1100-TACTICAL-12's picture

In that regard, crime is @ an all time high...

Fox Moulder's picture

The criminals moved to Wall Street where they are safe from prosecution.

Bob's picture

Dramatic uptake of social programs during the current recession – There are well over 41 million Americans receiving food stamps as of June 2010. That is up by over 15 million people from just two years ago and represents an all time record for participation in this  program. The benefits are about $130/month per person and many commentators have noted that the social stigma of the program has disappeared in the current difficult economic environment. To the degree that crimes like shoplifting are economically motivated, the greater use of the food stamp program could well be contributing to overall lower rates of crime.

Duh!  What the haters fail to comprehend is that the welfare and people on welfare that they so despise represent a threat to their own lovely lives if not provided the basic sustenance for living.  Is that not common sense?

It's the social contract (sorry, it doesn't embrace the altruism that idealistic advocates of austerity for the poor preach):  In exchange for not robbing you, we must be fed a few crumbs from your tables. 

The End

CrockettAlmanac.com's picture

Hand over your wallet. Now.

Bob's picture

Call your caseworker, you preevert!

CrockettAlmanac.com's picture

Don't be a "hater." It's just wealth redistribution and that's a good thing.

Hand over the wallet.

Bob's picture

I know, I shouldn't have been so offensive.  And I do get it.  But there is reasonable ground to meet in the middle.  At least, for the majority of us. 

Last I knew, welfare represented less than 1% of the federal budget.  Compare that to welfare for the elite parasites who are raping the middle class. 

Hell, the Fed alone charges us 1% on every dollar created just to exponentially profit on our own money.  There's no comparison with welfare.  Welfare for the poor, that is.

CrockettAlmanac.com's picture

Well sure -- that's the scam. The government makes it sound like redistributing wealth helps regular folks when in fact the vast majority of stolen wealth goes to political cronies.

If the government didn't take half of every dollar folks make then they could better care for their friends, family and charities and all the poor folks would be far better off than they will ever be with government "safety nets."

But more importantly, I don't mind if you break the fourth wall, but never break character.

So fork over the wallet or yer gonna get it!

Bob's picture

LOL.  Alright, "haters" was a low blow: I'm sorry

I'd don't buy equating the poor with political cronies, but we both know how this debate goes.  No hope of common ground. 

You'll be glad to know, however, that the lump in my pocket doesn't mean I'm glad to see ya--I'm packing, too. 

Peace.

CrockettAlmanac.com's picture

I didn't equate the poor with political cronies. I agreed with you that little money goes to the poor while most goes to connected bigwigs. That's the scam of the safety net. It ain't the little guy who is kept safe.

When the bankers finally blow up this economy and walk off with their ill gotten gains what do you think will happen to the 40 million people on food stamps? Might not the crime stats rise at that time? Are we doing anyone any favors by pretending that "we" will take care of them when in reality the entire system is heading for a crash?

Bob's picture

Interestingly, Chase handles most states' food stamp EBT card accounts.  I wonder what their profit margin is on that service? 

If/when there's a crash, I suspect that the majority of us will be in the same boat and that we'll be amazed by our willingness to be our brothers' keepers . . . when forced to do so.  Which speaks to the "social contract" I mentioned earlier. 

Have a good one, CA. 

CrockettAlmanac.com's picture

I agree, with the caveat that folks will then welcome intelligent, productive people who will get society back on its feet by creating goods, services and jobs. For a time, no one will call the (relatively) rich man a parasite because all will know first hand the true value of the entrepreneurial mind.

StychoKiller's picture

On the other hand, what's the point in robbing beggars that come to your door?

CrockettAlmanac.com's picture

He robs from the poor and gives to the rich -- stupid bitch!

http://www.youtube.com/watch?v=qLkhx0eqK5w

TooBearish's picture

Does Shadow Stats track the real crime rate - adjusted for hedonics ?- i.e. cops don't prosecute violent crimes anymore - driving violations and domestic disputes top their list of "criminal engagement"....

banksouttacontrol's picture

Seems like most walked on debt...getting away with white collar crime has cut both ways..

I would say there was a bloodless financial revoloution of sorts.

There are a lot of folks in jail for stealing minimal amounts and a lot of regular folk got away with many if not hundreds of thousand in debt.

still the bankers take the cake they walked on trillions.

really who are the criminals.

 

 

DukkButt's picture

Didn't report the stereo faceplate being stolen from my truck. When you know there is no chance of recovery, you don't even bother to report the crime.

blunderdog's picture

Dude, I'll 'fess up.  Given your taste in music, I swiped that thing as a public service.

Burn all those Styx 8-tracks and I'll give it back.

To give some props: kickin' bass tubes in that ride, yo.  And I liked the dangling decorations, too.

TheGreatPonzi's picture

Does anybody have considered the fact that the crime statistics may be purely and simply forged, just like most gov statistics nowadays?

You can't on the one hand complain about the fraudulent economic stats, and on the other hand take the crime stats for granted.

The stats in USSR were marvellous, too. The country was better year after year. Until someone discovered that they were massively forged.

CrockettAlmanac.com's picture

But surely the government wouldn't lie to us, would they?

StychoKiller's picture

Once again, Oceania has exceeded its production quota for Victory gin and shoes and arrested more thought criminals -- praise Big Brother!

Hondo's picture

Assumes all the crime taking place is being recorded (we know that hasn't been the case in the past). I know in my community crime is up and there is community wide concern to the point that the city budget in other areas is being cut in order to hire additional police officers.

Xedus129's picture

Could be the fluoride in the water, the aluminum in the air.  OR it could be the fact that everyone (and I mean everyone) is on some form of an SSRI or similar drug, and those of us that aren't are getting it from the water.  OR we could just be too fat to fit through the windows and rob stuff.

CrockettAlmanac.com's picture

It's not just Atlas that has shrugged. Two-bit thugs and shysters just ain't got the moxie these days.

sushi's picture

It's criminal deflation. A two bit crook is not worth a plugged nickel these days Blame Bernanke.

voltaic's picture

In 2009 there were unemployment benefits for all jobless who qualified. In 2010 there are now up to 4 million who have exhausted all unemployment benefits and about 90,000 a week are joining that list (I wonder why government felt the need to feed the bonus demands of Wall Street's worst, but fail to help the long-term unemployed). Most of those who exhausted benefits did not find new work, but simply exhausted all unemployment. As those people get more desperate, don't be surprised to see crime increase in 2010. 

vachon's picture

Define 'crime'.  I'm seeing a lot more auto accidents in my neck of Florida and I hear the same in othr parts of the country, albeit anecdotally.  I think there's probably more passive-agressive stuff going on, especialy with men and women who would not in other circumstances show up on any statistics.

gwar5's picture

I was surprised by lack of crime.

I think it means people are either really concerned about the economy or are saving up on ammo.

 

Bob's picture

Chris Rock's cure for firearm crime: A $5000 tax per bullet.  That way, "if a nigga get shot, you know he did somethin' to earn it." 

Shameful's picture

Black market bullet time!  Guys with progressive presses turning into the new suppliers.  Might be nice, then the little guy can make money at his press at home to :)

nmewn's picture

Got dies? is the new mantra ;-)

Hephasteus's picture

Calling the cops was so 20th century.

Jake3463's picture

Since politicians use these statistics to run on and Police captains use these statistics to get keep their jobs, basically unless you make a shit load of noise, you have difficulty getting a report filed.

I have a friend who lives in a neighborhood that had a thug move in.  In the past month there has been plenty of break-ins and property damage.  No police reports.   Reason being that the local politicians like to run on crime being down every year and the Police Cheif knows that if crime isn't down, he loses his job.  Unless there is an insurance company demanding a report to be filed for a claim filing nothing gets filed.

My friend bought a street sweeper.  Hopefully the thug breaks into his house and the problem is legally taken care of.  Of course he is white and the thug is hispanic so it might become a political issue.

Maos Dog's picture

Be careful, Streetsweeper is now a class iii weapon. That sucks, i know. So I got a Saiga semi-auto instead with the 20rd drum mag.

RockyRacoon's picture

The US made Streetsweeper version of the Striker shotgun, with 18" elongated barrel to comply with US firearms laws.

http://world.guns.ru/shotgun/sh09-e.htm

digalert's picture

These stats were discovered dozens of years ago. Contrary to popular belief, hard times don't equate to an increase in crime.

americanspirit's picture

It's because people are having a hard time figuring out who needs killing the most. Once that becomes clear, it's strap on the vest time. I'm guessing it won't be long.

nmewn's picture

So I guess we can discard the tired ole canard that the availability of guns increases violence and crime as well.

Bout time.

"According to the NICS figures, 14 million guns were sold in 2009, the biggest year since the system began recording data in 1998. The NICS figures are considered the most accurate measurement of gun sales because federal law requires that a NICS check be done prior to every firearm sale in America.

In fact, there were nearly 2 million more guns sold in the United States in 2009 than in 2008, the next best year for gun sales, when 12.7 million NICS checks were recorded."

http://www.cnsnews.com/news/article/75359

14 million more bitchez ;-)