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The Cost of Avoiding Crime: The Case of Bogotá

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  • Alejandro Gaviria

    ()

  • Carlos Medina

    ()

  • Leonardo Morales

    ()

  • Jairo Nuñez

    ()

Abstract

We use hedonic price models to estimate the value households are willing to pay to avoidviolent crime in the city of Bogotá. We find that households living in the highestsocioeconomic level (stratum 6) pay up to 7.2% of their house values in order to preventaverage homicide rates from increasing in one standard deviation. Households in stratum 5pay up to 2.4% of their house values to prevent homicide rates from increasing. The resultsindicate the willingness to pay for security by households in Bogotá, and additionally,reveal that a pure public good like security, ends up creating urban private markets thatauction security. These markets imply different levels of access to public goods among thepopulation, and actually, the exclusion of the poorest. We find as well evidence of negativecapitalization of the rate of attacks against life, and positive capitalization of the presenceof police authority.

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Bibliographic Info

Paper provided by BANCO DE LA REPÚBLICA in its series BORRADORES DE ECONOMIA with number 004600.

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Length: 32
Date of creation: 13 Apr 2008
Date of revision:
Handle: RePEc:col:000094:004600

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Keywords: Housing Demand; Crime; Illegal Behavior; Law Enforcement;

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References

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  1. Hunt, Jennifer, 2003. "Teen Births Keep American Crime High," IZA Discussion Papers 757, Institute for the Study of Labor (IZA).
  2. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "Inequality and Violent Crime," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 1-40, April.
  3. Carlos Medina & Leonardo Morales, 2006. "Stratification and Public Utility Services in Colombia: Subsidies to Households or Distortions on Housing Prices?," BORRADORES DE ECONOMIA 003528, BANCO DE LA REPÚBLICA.
  4. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
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  7. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  8. John Donohue & Steven Levitt, 2000. "The Impact of Legalized Abortion on Crime," NBER Working Papers 8004, National Bureau of Economic Research, Inc.
  9. Leonardo Morales Zurita & Fabio Alberto Arias Arbeláez, 2008. "La calidad de la vivienda en Bogotá: Enfoque de precios hedónicos de hogares y de agregados espaciales," REVISTA SOCIEDAD Y ECONOMIA - CIDSE, UNIVERSIDAD DEL VALLE - CIDSE.
  10. John J. Donohue & Steven D. Levitt, 1999. "Legalized Abortion and Crime," JCPR Working Papers 104, Northwestern University/University of Chicago Joint Center for Poverty Research.
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  14. Heinemann, Alessandra & Verner, Dorte, 2006. "Crime and violence in development : a literature review of Latin America and the Caribbean," Policy Research Working Paper Series 4041, The World Bank.
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  16. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, vol. 46(7), pages 1323-1357, July.
  17. Gyourko, Joseph & Kahn, Matthew & Tracy, Joseph, 1999. "Quality of life and environmental comparisons," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 37, pages 1413-1454 Elsevier.
  18. Roback, Jennifer, 1988. "Wages, Rents, and Amenities: Differences among Workers and Regions," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 23-41, January.
  19. Carlos Medina & Jairo Núñez, 2006. "La Oferta De Servicios Del Sector Financiero Formal En Bogotá," DOCUMENTOS CEDE 003043, UNIVERSIDAD DE LOS ANDES-CEDE.
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Citations

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Cited by:
  1. Carlos Medina & Christian Posso & Jorge Andrés Tamayo, 2011. "Costos de la violencia urbana y políticas públicas: algunas lecciones de Medellín," BORRADORES DE ECONOMIA 009076, BANCO DE LA REPÚBLICA.
  2. Carlos Medina & Leonardo Morales & Jairo Nuñez, . "Quality of Life in Urban Neighborhoods in Colombia: The Cases of Bogotá and Medellín," Borradores de Economia 536, Banco de la Republica de Colombia.
  3. Carlos Medina & Jorge Andrés Tamayo Author-Email jtamayca@banrep.gov.co, . "An Assessment of How Urban Crime and Victimization Affects Life Satisfaction," Borradores de Economia 640, Banco de la Republica de Colombia.
  4. Leonardo Morales, 2013. "Peers Effects on a Fertility Decision: an Application for Medellín Colombia," BORRADORES DE ECONOMIA 010975, BANCO DE LA REPÚBLICA.
  5. Leonardo Morales, 2013. "Peers Effects on a Fertility Decision: an Application for Medellín Colombia," Borradores de Economia 777, Banco de la Republica de Colombia.

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