New research released today by the Social Market Foundation reveals the extent of the relationship between property crime rates and the changing prices of consumer goods and suggests that investments in security and ‘predictive policing’ – where police work adapts to market prices – could help lower crime rates.
The study, It’s prices, stupid: Explaining falling crime rates in the UK, analyses monthly data from the London Metropolitan Police Service and Office for National Statistics to find the link between changes prices for consumer goods and property crime rates for these goods during the period 2002-12 (see Figure 1).
It finds that the rise in theft of goods such as mobile phones, bicycles, jewellery, and the decline in audio equipment, TVs and DVDs taken from properties in London is closely linked to the price of those goods (see Figure 2 and Table 1 below). The research indicates that a 10% increase in prices is associated with a 3.5% increase in crime and that this relationship is particularly strong in the short-run, which indicates that criminals are fast at responding to the changing value of consumer goods. These goods represent usual ‘target items’ for criminals in average burglaries or thefts.
Further analysis of commodity-related goods – such as jewellery, fuel and metals – where there is an efficient resale markets (for example, the scrap metal recycling industry – see Figure 3 below) confirms the existence of a significant, causal crime-price relationship, especially for metals where there was a price induced crime boom in the mid-to-late 2000s.
The paper makes a number of suggestions for how policy can take account of this link between prices and crime, including:
- Investments in security – Since the returns to crime matter so significantly, investments in security could have a greater role reducing crime than previously thought. For example, the spread of technologies that aid device security (e.g. tracking devices such as ‘find my iphone’) have the effect of lowering the net returns to theft. Provided that criminals find it difficult or costly to adapt to and overcome such technologies, investments in security have the potential to kill off the incentives for theft.
- Predictive policing – Since crime tracks the value of goods so tightly it would be viable to begin planning police responses to theft as market prices start to rise or fall. For example, increases in metals or other commodity prices could be used as a signal to increase monitoring or patrols relating to the potential theft of these goods.
Report author, Mirko Draca of the University of Warwick’s Centre for Competitive Advantage in the Global Economy (CAGE) commented:
“The evidence presented here for London indicates that a strong relationship between prices and crime exists across a full range of goods. Falls in the value of key, commonly stolen goods appear to have driven down the returns to property crime.
Our evidence from London is compelling enough to suggest that prices deserve serious further investigation as a main driver of property crime. The simple policy implication of this would be to focus on efforts to force down the return to crime and respond to variations in returns.”
NOTES TO EDITORS:
- A copy of the report, It’s prices, stupid: Explaining falling crime rates in the UK, is attached to this release.
- About the Social Market Foundation:
The Social Market Foundation (SMF) is an independent, non-partisan think tank. We believe that fair markets, complemented by open public services, increase prosperity and help people to live well. We conduct research and run events looking at a wide range of economic and social policy areas, focusing on economic prosperity, public services and consumer markets. The SMF is resolutely independent, and the range of backgrounds and opinions among our staff, trustees and advisory board reflects this. smf.jynk.net
- About CAGE:
Established in January 2010, CAGE is a research centre in the Department of Economics at the University of Warwick. CAGE is carrying out a ten year programme of innovative research. The centre’s research programme is focused on how countries succeed in achieving key economic objectives such as improving living standards, raising productivity, and maintaining international competitiveness, which are central to the economic wellbeing of their citizens. Our research analyses the reasons for economic outcomes both in developed economies like the UK and emerging economies such as China and India. We aim to develop a better understanding of how to promote institutions and policies which are conducive to successful economic performance and endeavour to draw lessons for policy makers from economic history as well as the contemporary world. Research at CAGE examines how and why different countries achieve economic success. CAGE defines ‘success’ in terms of well-being as well as productivity. The research uses economic analysis to address real-world policy issues. The centre is distinctive in providing a perspective that draws on economic history as well as economic theory and is applied to countries at various different stages of economic development. www.warwick.ac.uk/cage
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