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Personal Indebtedness, Community Characteristics And Theft Crime

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  • Stuart McIntyre

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Abstract

Becker (1968) and Stigler (1970) provide the germinal works for an economic analysis of crime. The approach they outlined has been utilised to consider the response of crime rates to a range of economic, criminal and socioeconomic factors. Until recently however this did not extend to a consideration of the role of personal indebtedness in explaining the observed pattern of crime. This paper builds on a recent publication in the literature (McIntyre & Lacombe 2012), and using the Becker (1968) and Stigler (1970) framework, extends to a fuller consideration of the relationship between personal indebtedness and theft crimes. We also extend the existing empirical literature by building on recent extensions of the Becker (1968) model to the case of non-expected utility. This extension provides an interesting and useful way of motivating the observed level of crime, which better reflects the reality of criminality. We adopt the cumulative prospect theory approach in motivating the personal indebtedness and theft crime relationship. There has been a large increase in personal debt in the past decade, which combined with the recent global recession, has led to a large increase in personal insolvencies. This paper uses data available at the neighbourhood level for London, UK on county court judgments (CCJ?s) granted against residents in that neighbourhood for the years 2003 to 2005. We use this as our measure of personal indebtedness, and examine the relationship between a range of community characteristics (economic, socioeconomic, etc), including the number of CCJ?s granted against residents, and the observed pattern of theft crimes using spatial econometric methods. Specifically, we estimate three common spatial econometric models, the spatial error model, the spatial autoregressive model and the spatial Durbin model using Bayesian methods, before calculating posterior model probabilities to select the best model. Our results demonstrate the importance of personal indebtedness in explaining the observed pattern of theft crimes, as well as reinforcing a number of key conclusions in the existing literature. Our results are broadly consistent across time, but vary by crime type as is expected. Our results highlight a number of interesting areas for future research which we will pursue.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa13p1176.

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Date of creation: Nov 2013
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Handle: RePEc:wiw:wiwrsa:ersa13p1176

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Keywords: Spatial Econometrics; Crime; Personal Debt; Economic Conditions;

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References

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  1. Carmichael, Fiona & Ward, Robert, 2001. "Male unemployment and crime in England and Wales," Economics Letters, Elsevier, vol. 73(1), pages 111-115, October.
  2. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  3. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
  4. Stigler, George J, 1970. "The Optimum Enforcement of Laws," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 526-36, May-June.
  5. Alm, James & McClelland, Gary H. & Schulze, William D., 1992. "Why do people pay taxes?," Journal of Public Economics, Elsevier, vol. 48(1), pages 21-38, June.
  6. McIntyre, Stuart G. & Lacombe, Donald J., 2012. "Personal Indebtedness, Spatial Effects and Crime," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2012-83, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Stephen P. Zeldes, . "Consumption and Liquidity Constraints: An Empirical Investigation," Rodney L. White Center for Financial Research Working Papers 16-88, Wharton School Rodney L. White Center for Financial Research.
  8. Caroline Elliott & Dan Ellingworth, 1998. "Exploring the relationship between unemployment and property crime," Applied Economics Letters, Taylor & Francis Journals, vol. 5(8), pages 527-530.
  9. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 175-200, Fall.
  10. McIntyre, Stuart G. & Lacombe, Donald J., 2012. "Personal indebtedness, spatial effects and crime," Economics Letters, Elsevier, vol. 117(2), pages 455-459.
  11. Reilly, Barry & Witt, Robert, 1992. "Crime and Unemployment in Scotland: An Econometric Analysis Using Regional Data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 39(2), pages 213-28, May.
  12. Pyle, David & Deadman, Derek, 1994. "Crime and Unemployment in Scotland: Some Further Results," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(3), pages 314-24, August.
  13. Sanjit Dhami & Ali al-Nowaihi, 2011. "An extension of the Becker proposition to non-expected utility theory," Discussion Papers in Economics 11/41, Department of Economics, University of Leicester.
  14. G�ran Therborn & K.C. Ho, 2009. "Introduction," City, Taylor & Francis Journals, vol. 13(1), pages 53-62, March.
  15. Nicholas C. Barberis, 2012. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," NBER Working Papers 18621, National Bureau of Economic Research, Inc.
  16. Stuart McIntyre & Donald Lacombe, 2012. "Personal Indebtedness, Spatial Effects and Crime," Working Papers 1209, University of Strathclyde Business School, Department of Economics.
  17. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," NBER Working Papers 13265, National Bureau of Economic Research, Inc.
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