Sociology

The Relationship between Economics and Crime



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It has been well documented over many decades of study that there is a tight relationship between economic prosperity and all types of crime, from minor misdemeanors to the violent, from the petty to the highest levels of organized and corporate crime. A clear link has been demonstrated on a global scale between money laundering and financial crisis. From purse-snatchings to murder, the number of crimes has always decreased in prosperous times, and increased whenever the economy has declined.

It is tempting to link this increase in crime simply to opportunistic financial gain, arguing that as the number of legal jobs decreases, supply and demand naturally increases the number of criminals willing to prey on the rest of society. However, the relationship of crime and economy is correlated, not necessarily causal. If the supply-demand curve were the dominant factor in crime increase, there should be no reason for rapes and domestic violence also to increase during times of economic stress. Another odd blip is that during the Great Depression, the rate of property crimes did increase, but not in proportion to the decline of the economy. A clearer picture requires more detailed data than just cities, calendar time, and type of crime.

More specific data, both regional and longitudinal, shows increases in all types of criminal victimization closely linked to regions and times of greater economic inequality, which in turn is also linked to a greater incidence of social problems. At the same time, criminal profile broadens. In other words, despite the Jesse James and Robin Hood legends, crime does not redistribute wealth. Instead, crime disproportionately affects the poorest sectors of society, making the poor poorer and the rich richer. This kind of distinction is lost in most crime statistics.

For this reason, in the criminology literature, it is no longer thought that it is poverty which is linked to crime. That kind of thinking has been out of date for over a century. Instead, the focus now is on societal inequality. The distinction is that of absolute deprivation and relative deprivation. In other words, is everyone in the area more or less equally poor, or are some clearly better off than others? The greater the inequality, the greater the documented amount of crime of all kinds, which in turn hits the poorest areas the hardest. This demonstrates the static link, but not yet the economic one.

Most normal economic peaks benefit most of society, thus decreasing inequality by a greater or lesser amount. However, during standard recessions, poverty increases in some societal strata disproportionately, leading to greater economic inequality. Additionally, the last few cycles have eaten away at the middle class, creating an even greater economic inequality. In contrast, during the Great Depression, everyone knew somebody who had lost his job, which meant that most of society was poor together.

This finding is similar to data from the field of job satisfaction. Greater overall job satisfaction is consistently reported in fields where everyone working together is close to the same job rank, in jobs with built-in advancement caps. Lesser overall job satisfaction is consistently reported in fields with greater rank inequalities.

It is ironic that this growth in crime not only increases the value of the underground economy, but also creates growth in one industry sector. Just as the profits of the military industrial complex increase in times of war, so do the profits of the security and law enforcement industries during times of economic difficulty combined with greater societal inequality. The number of prisoners in the United States currently stands at 2.1 million, or just under 0.6% of the total population. The prison system alone employs almost half a million people, with nearly another million working in the field of law enforcement. By comparison, the number of unemployed people in the United States increased by 851,000 in February 2009 alone.

Although this makes security and law enforcement jobs among the few recession-proof careers, it does create a conflict of interest. After all, in this sector, job security and continued high dividends depend entirely on a steady or growing crime rate. The higher the prisoner population, the greater are the earnings of a privatized prison system. This suggests that where security and aspects of law enforcement are privatized, this sector finds it profitable to encourage a public view of rising crime rates, whatever the cost to society, and may also find it profitable to lobby for tightened laws and stricter sentences for minor crimes. A related statistic shows that there is a small but consistent increase in police force sizes during election years: 2% during mayoral years, 2.1% during gubernatorial years.

The reverse, a long-term decline in prisoner numbers due to a declining crime rate, would spell economic disaster for the security and law enforcement industries. However, it could conceivably lighten the tax burden. After all, privatized prisons are still paid for from the public coffers.

This leads to the question of whether some part of the increased crime rate during times of economic recession combined with economic inequality might be due to stricter laws and stricter enforcement of laws during such times. This is an area that has surprisingly little research.

Non-linked references

Cantor D, Land K. (1985). Unemployment and crime rates in the post World War II United States: A theoretical and empirical analysis. Amer Sociol Rev 50:317-332.

Cook PJ, Zarkin GA. (1985). Crime and the business cycle. J Legal Stud 14:115-28.

Herzog S. (2005). The relationship between economic hardship and crime: The case of Israel and the Palestinians. Sociol Perspect 48(2):189-211.

Levitt SD. (1997). Using electoral cycles in police hiring to estimate the effect of police on crime. Amer Econ Rev 87:270-90.

MacDonald Z. (2002). Official crime statistics: Their use and interpretation. Econ J 112(447):F85-F106.

Saridakis G. (2004). Violent crime in the United States of America: A time-series analysis between 1960 and 2000. Eur J Law Econ 18(2):203-221.

Stenson K, Cowell D, eds. (1991). The Politics of Crime Control. London: Sage.

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