Monday, 3 September 2012

The amazing fall in urban crime rates, and the downside

The Economist has an article about the sharp decline in crime in American cities since the early 1990s, noting that there is no consensus over what caused it. This disagreement isn't that surprising since so many factors may be contributing to crime at once, and since the debate also has some ideological and political significance.

But it is really worth emphasising just how large has been the drop in crime in US cities, because it's important not just on its own terms but for what it says about where our cities are headed. The longest reliable historical record of crime in US cities is probably the homicide rate in New York City, which the late Eric Monkkonen compiled for every year between 1800 and 1999. You can find his data series here. It includes not just the number of homicides but the rate per 100,000 residents, and I have updated the series to 2011 with homicide data from the NYPD and population data from Wikipedia

I think there is good evidence for the theory that lead poisoning (from car exhaust and lead paint) had a lot to do with these trends, partly because it helps explain why crime rates fell not just in the US but across Europe too (see Kevin Drum on this subject, including relevant links). I'm sure improvements in policing helped too. But in a way what caused the fall in crime is less interesting than what knock-on effects it will have.

People understandably put a high value on safety and are willing to pay a price premium to live in low-crime areas. So you would expect the fall in urban crime levels to have contributed to higher urban house prices, and at least in the case of New York you would be right - this research estimates that falling crime rates explain about a third of the mid-1990s increase in NYC house prices.

These price rises show that people really value the safer urban environments created by lower crime. But higher housing costs may not be good news for everyone, especially tenants facing higher rents. If New York City had built a lot of new housing to cope with rising housing demand it would have been able to moderate (but probably not eliminate) these price increases and allow more people to enjoy living in a great city with falling crime rates, but instead higher demand fed straight into higher prices. It would be tragic if this pattern was repeated elsewhere and low-income people pushed out of cities just as they finally become more liveable.

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