Income inequality and crime in the United States
TL;DR: In this paper, the authors investigated the relationship between income inequality and crime and found that there is a strong and robust effect of relative income inequality on burglary, and that the effect on robbery is also strong in most cases.
About: This article is published in Economics Letters.The article was published on 2008-10-01. It has received 144 citations till now. The article focuses on the topics: Income inequality metrics & Income distribution.
Citations
More filters
TL;DR: Results were consistent with psychosocial explanations of links between income inequality and homicide; however, the causal relationship between inequality, trust and homicide remains unclear given the cross-sectional design of this study.
Abstract: Background: Theories of why income inequality correlates with violence suggest that inequality erodes social capital and trust, or inhibits investment into public services and infrastructure. Past research sensed the importance of these causal paths but few have examined them using tests of statistical mediation. Methods: We explored links between income inequality and rates of homicide in 33 countries and then tested whether this association is mediated by an indicator of social capital (interpersonal trust) or by public spending on health and education. Survey data on trust were collected from 48 641 adults and matched to country data on per capita income, income inequality, public expenditures on health and education and rate of homicides. Results: Between countries, income inequality correlated with trust ( r = −0.64) and homicide ( r = 0.80) but not with public expenditures. Trust also correlated with homicides ( r = −0.58) and partly mediated the association between income inequality and homicide, whilst public expenditures did not. Multilevel analysis showed that income inequality related to less trust after differences in per capita income and sample characteristics were taken into account. Conclusion: Results were consistent with psychosocial explanations of links between income inequality and homicide; however, the causal relationship between inequality, trust and homicide remains unclear given the cross-sectional design of this study. Societies with large income differences and low levels of trust may lack the social capacity to create safe communities.
200 citations
TL;DR: Higher inequality in the outcomes of an economic game led participants to take greater risks to try to achieve higher outcomes, suggesting that inequality may promote a range of poor outcomes, in part, by increasing risky behavior.
Abstract: Rising income inequality is a global trend. Increased income inequality has been associated with higher rates of crime, greater consumer debt, and poorer health outcomes. The mechanisms linking inequality to poor outcomes among individuals are poorly understood. This research tested a behavioral account linking inequality to individual decision making. In three experiments (n = 811), we found that higher inequality in the outcomes of an economic game led participants to take greater risks to try to achieve higher outcomes. This effect of unequal distributions on risk taking was driven by upward social comparisons. Next, we estimated economic risk taking in daily life using large-scale data from internet searches. Risk taking was higher in states with greater income inequality, an effect driven by inequality at the upper end of the income distribution. Results suggest that inequality may promote poor outcomes, in part, by increasing risky behavior.
136 citations
Cites background from "Income inequality and crime in the ..."
...Nations and states with higher levels of economic inequality tend to have higher rates of self-defeating decision making related to money, including crime (2), gambling (3), and greater consumer debt (4)....
[...]
TL;DR: In this article, the authors use a dataset that decomposes the number of terrorist acts into domestic and transnational incidents and use split sample and smooth transition regression (STaR) estimation techniques to allow for a nonlinear relationship between terrorism and poverty.
Abstract: In spite of the common wisdom that poverty breeds terrorism, in their meta-study, Gassebner and Luechinger (2011) report that the two robust explanatory variables for terrorism are population and various measures of democratic freedom, but not per capita GDP. Their results from 13.4 million different regressions estimated using various combinations of the 65 variables contained in 43 different studies indicate no significant causal effects between terrorism and per capita GDP. We add to the large and growing literature on the relationship between terrorism and poverty in two ways. First, unlike previous studies, we use a dataset that decomposes the number of terrorist acts into domestic and transnational incidents. We show that poverty has a very distinct effect on each type of terrorism. Second, we use split sample and smooth transition regression (STaR) estimation techniques to allow for a nonlinear relationship between terrorism and poverty. When we account for the nonlinearities in the data and distinguish between the two types of terrorist events, we find that poverty has as a very strong influence on domestic terrorism and a small, but significant, effect on transnational terrorism.
107 citations
TL;DR: The authors provides a critical discussion of recent research on the inequality-wellbeing link and suggests strategies for social scientists seeking new insights into the consequences of income inequality for subjective welfare. But it remains unclear whether people living in areas of high income disparity feel better off or less well off than people in environments where everyone is more equal.
Abstract: Research findings on the consequences of income inequality for subjective wellbeing (i.e. life satisfaction and happiness) remain inconclusive. Some researchers report a positive spill-over from income inequality, others report negative effects, and still others find no significant outcomes whatsoever. Therefore, it remains unclear whether people living in areas of high income disparity feel better off or less well off than people living in environments where everyone is more equal. This paper provides a critical discussion of recent research on the inequality-wellbeing link and suggests strategies for social scientists seeking new insights into the consequences of income inequality for subjective welfare.
84 citations
Posted Content•
[...]
TL;DR: In this paper, the authors consider the relationship between inequality and crime using data from urban counties and find that inequality has no effect on property crime but a strong and robust impact on violent crime, with an elasticity above 0.5.
Abstract: This paper considers the relationship between inequality and crime using data from urban counties. The behavior of property and violent crime are quite different. Inequality has no effect on property crime but a strong and robust impact on violent crime, with an elasticity above 0.5. By contrast, poverty and police activity have significant effects on property crime, but little on violent crime. Property crime is well explained by the economic theory of crime, while violent crime is better explained by strain and social disorganization theories.
68 citations
References
More filters
TL;DR: In this article, the generalized method of moments (GMM) estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables.
Abstract: This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables. We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying restrictions and Hausman specification tests.
26,580 citations
TL;DR: In this paper, the authors investigate the robustness and causality of the link between income inequality and violent crime across countries and examine the correlation between the Gini index and homicide and robbery rates within and between countries.
Abstract: We investigate the robustness and causality of the link between income inequality and violent crime across countries. First, we study the correlation between the Gini index and homicide and robbery rates within and between countries. Second, we examine the partial correlation by considering other crime determinants. Third, we control for the endogeneity of inequality by isolating its exogenous impact on these crime rates. Fourth, we control for measurement error in crime rates by modeling it as both unobserved country effects and random noise. Finally, we examine the robustness of this partial correlation to alternative measures of inequality. The panel data consist of nonoverlapping 5‐year averages for 39 countries during 1965–95 for homicides and 37 countries during 1970–94 for robberies. Crime rates and inequality are positively correlated within countries and, particularly, between countries, and this correlation reflects causation from inequality to crime rates, even after controlling for ot...
966 citations
[...]
TL;DR: In this article, the authors consider the relationship between inequality and crime using data from urban counties and find that inequality has no effect on property crime but a strong and robust impact on violent crime, with an elasticity above 0.5.
Abstract: This paper considers the relationship between inequality and crime using data from urban counties. The behavior of property and violent crime are quite different. Inequality has no effect on property crime but a strong and robust impact on violent crime, with an elasticity above 0.5. By contrast, poverty and police activity have significant effects on property crime, but little on violent crime. Property crime is well explained by the economic theory of crime, while violent crime is better explained by strain and social disorganization theories.
777 citations
TL;DR: In this article, the authors argue that the link between income inequality and violent property crime might be spurious, complementing a similar argument in prior analysis by the author on the determinants of homicide.
Abstract: This article argues that the link between income inequality and violent property crime might be spurious, complementing a similar argument in prior analysis by the author on the determinants of homicide. In contrast, Fajnzylber, Lederman & Loayza provide seemingly strong and robust evidence that inequality causes a higher rate of both homicide and robbery/violent theft, even after controlling for country-specific fixed effects. The results in the present article suggest that inequality is not a statistically significant determinant, unless either country-specific effects are not controlled for or the sample is artificially restricted to a small number of countries. The reason for the link between inequality and violent property crime being spurious is that income inequality is likely to be strongly correlated with country-specific fixed effects, such as cultural differences. A high degree of inequality might be socially undesirable for any number of reasons, but that it causes violent crime is far from proven.
140 citations
TL;DR: A comprehensive review of the crime literature indicates varying and often opposing hypotheses of relationships between property crime and socioeconomic conditions such as poverty, business cycle conditions, demographics, criminal justice system actions, and family structure as mentioned in this paper.
Abstract: .
A comprehensive review of the crime literature indicates varying and often opposing hypotheses of relationships between property crime and socioeconomic conditions such as poverty, business cycle conditions, demographics, criminal justice system actions, and family structure. Employing measures of each of the hypothesized factors, time-series models for robbery, burglary, and vehicle theft are estimated from yearly and national Uniform Crime Report (UCR) data for the period 1959 through 1992 and are used to test these hypotheses' current empirical relevance. The empirical findings selectively confirm the importance of macroeconomic stability and criminal justice system actions in reducing property crime activity. In contrast, decreases in absolute poverty and general income inequality are associated with increased criminal activity; and age demographics and family/community structure apparently have little impact on any of the analyzed property-crime trends, A reduction in inflation apparently decreases property crimes.
139 citations