For a long time, economists have been absorbed in crime. One of the economists that advanced the assertion is Gary Becker, who asserts in his 1968 seminal study that all crimes are economic and all criminals are coherent. Others that modeled the relationship between wealth and crime are Ehrlich, 1973, and Block & Heineke, 1975. Almost all these approaches model taking part in criminal activity as a substitute for genuine employment.
According to Becker’s 1968 seminal paper on crime and punishment, the economist suggests that criminals make a cost-benefit analysis on the possible rewards for committing a crime and the chances of being caught and subjected to legal consequences. Becker also posited that places with high-income inequality have higher rates of crime. The punishment for being caught committing a crime will, however, depend on the Los Angeles criminal lawyer you hire after being caught.
Ehrlich (1996) makes the same argument that the projected net revenues determine the amount of crime. Net earnings equal gross income, less forgone wages of legitimate employment, and the possible penalties associated with the crime. As per Ehrlich’s economic model, it would be easy to assume that increase in wealth should result in decreased crime since inevitable returns from legitimate employment increase. But if the rise in crime applies only to a person and his or her environment, then the crime rate will increase. From this viewpoint, the relationship between wealth and crime is ambiguous, although most empirical studies prove there is a negative correlation between wealth and crime.
The increased availability of data has furthered these theoretical studies. One of the data that has been dramatically relied upon to further these studies is the Uniform Crimes Report (UCR) from the FBI. UCR data has proved more beneficial because it is available annually and at a county level. Additionally, it classifies crimes in eight categories. The downside of the data is that it only consists of reported crimes. Based on statistics, during the recent recession in 2009, there has been crime reduction in the U.S., considering that before the recessions, crimes in the country were on the rise. All manners of crime reduced during the downturn eliminating the notion that poverty is the source of all criminal activities. This affirmed that the root course of crime is not poverty but rather income inequality.
Based on the analysis conducted from the data, an increase in wealth increases the returns of crime faster than forgone returns from legitimate employment in poor locations. But in a vibrant place, an increase in wealth results in reduced crimes.
The relationship between wealth and crime has been examined by organizations like the World Bank and the United Nations too. The studies show that the crime of robbing is common in areas of extreme poverty like Latin America and the Caribbean. But the studies also show that places where there is a large gap between the rich and the poor have overwhelming crime rates.
The World Bank’s 2002 study also showed that there is a correlation between crime rates and an increase in wealth inequality. The study found that reducing poverty can reduce crime rates because countries with high GDP reported fewer crimes.
A survey by Gallup, which is a polling firm, has also proved to support Becker’s theory. The organization conducted a poll among 148,000 people in one hundred and forty-two countries. They wanted to find out the observation by people about crime and:
- Whether they have trust in law enforcement officers
- Whether they feel secure trekking home
- If they have lost money or assets to theft
- Whether they have experienced assault before
Testing the correlation between the inquiries above and the extent of income disparity proves that there is a strong correlation between wealth and crime. For instance, 4/5 of respondents in Venezuela never feel safe walking home because of the rampant cases of kidnapping in the country. The income distribution in Venezuela is unequal because of the large margin between the rich and the poor.
In contrast, Norway, which is among the income equal countries in the world, had 95 percent of the respondents claiming they felt safer walking home. It shows that equality in income reduces the rate of crimes.
Further investigations have, however, showed that the wealthy people are involved in more crimes than the poor, which gainsay the postulation that crime is prime amongst the poor in society. In 1993, for instance, $200 billion was lost through fraud and misappropriation by the rich or wealthy. In the same year, 15.3 billion dollars was lost through blue-collar crimes. On the issue of violent crimes, 23,271 people lost their lives in street murders. In contrast, 318,368 others died because of the decisions made by large corporations through pollution and disregard of employee safety at the workplace. Why is it that the wealthy hire the best Los Angeles criminal lawyer and their white-collar crimes get fewer media coverage? It shows the public perception of crime is classist.
So, what is your take on all this? Is the solution to combating crime investing in security personnel and resources? I think no. The answer to crime is bridging the gap between the wealthy and the poor.