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The Economics of Crime: Investigating the Drugs-Crime Channel - Empirical Evidence from Panel Data of the German States

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  • Entorf, Horst
  • Winker, Peter

Abstract

The rising trends both in drug addiction and crime rates are of major public concern in Germany. Surprisingly, the economic theory of crime seems to ignore the drugs-crime nexus, whereas the criminological literature considers illicit drug use a main reason of criminal activities. This paper provides an econometric assessment of the drugs-crime channel within a Becker-Ehrlich model of crime supply. Estimations based on panel data from the German states allows us to take into account further factors that might influence both drug abuse and crime. The results indicate that drug offences have a significant impact, in particular on property crimes. We attribute this finding to a strong economic-related channel of drug abuse on crime. --

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Paper provided by University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 29.

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Date of creation: 2001
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Handle: RePEc:zbw:wuewep:29

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  1. Steven D. Levitt & Sudhir Alladi Venkatesh, 1998. "An Economic Analysis of a Drug-Selling Gang's Finances," NBER Working Papers 6592, National Bureau of Economic Research, Inc.
  2. Steven D. Levitt, 1995. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Policeon Crime," NBER Working Papers 4991, National Bureau of Economic Research, Inc.
  3. Levitt, Steven D, 1996. "The Effect of Prison Population Size on Crime Rates: Evidence from Prison Overcrowding Litigation," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 319-51, May.
  4. Grogger, Jeffrey, 1991. "Certainty vs. Severity of Punishment," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 297-309, April.
  5. Entorf, Horst & Spengler, Hannes, 1998. "Socio-economic and demographic factors of crime in Germany: evidence from panel data of the German states," ZEW Discussion Papers 98-16, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Bhargava, A & Franzini, L & Narendranathan, W, 1982. "Serial Correlation and the Fixed Effects Model," Review of Economic Studies, Wiley Blackwell, vol. 49(4), pages 533-49, October.
  7. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 259-83, April.
  8. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  9. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
  10. Entorf, Horst, 1997. "Random walks with drifts: Nonsense regression and spurious fixed-effect estimation," Journal of Econometrics, Elsevier, vol. 80(2), pages 287-296, October.
  11. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  12. Isaac Ehrlich, 1996. "Crime, Punishment, and the Market for Offenses," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 43-67, Winter.
  13. Anderson, David A, 1999. "The Aggregate Burden of Crime," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 611-42, October.
  14. H. Naci Mocan & Hope Corman, 2000. "A Time-Series Analysis of Crime, Deterrence, and Drug Abuse in New York City," American Economic Review, American Economic Association, vol. 90(3), pages 584-604, June.
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Cited by:
  1. Jorgen Lauridsen, 2009. "Is Baltic Crime Economically Rational?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 9(1), pages 31-38, July.
  2. Paolo Buonanno & Daniel Montolio Estivill, 2005. "Identifying the Socioeconomic Determinants of Crime in Spanish Provinces," Working Papers in Economics 138, Universitat de Barcelona. Espai de Recerca en Economia.
  3. Loureiro, Paulo R.A. & Mendonça, Mário Jorge Cardoso de & Moreira, Tito Belchior Silva & Sachsida, Adolfo, 2009. "Crime, economic conditions, social interactions and family heritage," International Review of Law and Economics, Elsevier, vol. 29(3), pages 202-209, September.

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