Does Crime Affect Economic Decisions? An Empirical Investigation of Savings in a High-Crime Environment
While most economic studies of crime have examined the determinants of criminal activity, this paper asks the reverse question: how does crime affect economic behavior? We study the relationship between crime and savings in the cities of São Paulo, a wealthy but crime-ridden state in Brazil. Our empirical results suggest that property crime is associated with an increase in savings. However, we do not observe a relationship between violent crime and savings, findings that are consistent with the theoretical explanation as to why crime induces thriftiness. These results are robust to an extensive sensitivity analysis that includes: 1) the inclusion of a large set of demographic covariates when examining cross-city variation; 2) accounting for city and period fixed effects when studying cross-city variation over time; 3) accounting for sample selection; and 4) splitting the sample by population size and income. We provide evidence that the association is not driven by reallocation towards bank deposits in general, which are safer assets in high-crime environments. Finally, we find a similar impact using household consumption and savings data.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 8 (2008)
Issue (Month): 1 (December)
|Contact details of provider:|| Web page: https://www.degruyter.com|
|Order Information:||Web: https://www.degruyter.com/view/j/bejeap|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard B. Freeman & William M. Rodgers III, 1999. "Area Economic Conditions and the Labor Market Outcomes of Young Men in the 1990s Expansion," NBER Working Papers 7073, National Bureau of Economic Research, Inc.
- Martin Browning & Annamaria Lusardi, 1995.
"Household Saving: Micro Theories and Micro Facts,"
Department of Economics Working Papers
1995-02, McMaster University.
- S. Brock Blomberg & Gregory D. Hess, 2006.
"How Much Does Violence Tax Trade?,"
The Review of Economics and Statistics,
MIT Press, vol. 88(4), pages 599-612, November.
- Rony Pshisva & Gustavo A. Suárez F., 2006. "Captive Markets: the Impact of Kidnappings on Corporate Investment in Colombia," COYUNTURA ECONÓMICA, FEDESARROLLO, June.
- Gary S. Becker, 1968.
"Crime and Punishment: An Economic Approach,"
Journal of Political Economy,
University of Chicago Press, vol. 76, pages 169-169.
- Ana Carla A. Costa & João M. P. De Mello, 2008.
"Judicial Risk and Credit Market Performance: Micro Evidence from Brazilian Payroll Loans,"
in: Financial Markets Volatility and Performance in Emerging Markets, pages 155-184
National Bureau of Economic Research, Inc.
- Ana Carla A. Costa & Joao M.P. De Mello, 2006. "Judicial Risk and Credit Market Performance: Micro Evidence from Brazilian Payroll Loans," NBER Working Papers 12252, National Bureau of Economic Research, Inc.
- Rony Pshisva & Gustavo A. Suarez, 2006. "'Captive markets': the impact of kidnappings on corporate investment in Colombia," Finance and Economics Discussion Series 2006-18, Board of Governors of the Federal Reserve System (U.S.).
- Abadie, Alberto & Dermisi, Sofia, 2008.
"Is Terrorism Eroding Agglomeration Economies in Central Business Districts? Lessons from the Office Real Estate Market in Downtown Chicago,"
Working Paper Series
rwp08-019, Harvard University, John F. Kennedy School of Government.
- Abadie, Alberto & Dermisi, Sofia, 2008. "Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago," Journal of Urban Economics, Elsevier, vol. 64(2), pages 451-463, September.
- Alberto Abadie & Sofia Dermisi, 2006. "Is Terrorism Eroding Agglomeration Economies in Central Business Districts? Lessons from the Office Real Estate Market in Downtown Chicago," NBER Working Papers 12678, National Bureau of Economic Research, Inc.
- 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.
- Ana Carla A. Costa & João M. P. de Mello, 2006. "Judicial Risk and Credit Market Performance: Micro Evidence from Brazil Payroll Loans," Working Papers Series 102, Central Bank of Brazil, Research Department.
- Julie Berry Cullen & Steven D. Levitt, 1999.
"Crime, Urban Flight, And The Consequences For Cities,"
The Review of Economics and Statistics,
MIT Press, vol. 81(2), pages 159-169, May.
- Julie Berry Cullen & Steven D. Levitt, 1996. "Crime, Urban Flight, and the Consequences for Cities," NBER Working Papers 5737, National Bureau of Economic Research, Inc.
- Lance Lochner, 2004.
"Education, Work, and Crime: A Human Capital Approach,"
NBER Working Papers
10478, National Bureau of Economic Research, Inc.
- Lance Lochner, 2004. "Education, Work, And Crime: A Human Capital Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 811-843, 08.
- Soares, Rodrigo R., 2006. "The welfare cost of violence across countries," Journal of Health Economics, Elsevier, vol. 25(5), pages 821-846, September.
- Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
- Demombynes, Gabriel & Ozler, Berk, 2005.
"Crime and local inequality in South Africa,"
Journal of Development Economics,
Elsevier, vol. 76(2), pages 265-292, April.
- Christiano A. Coelho & João Manoel Pinho de Mello & Leonardo Rezende, 2007. "Are Public Banks pro-Competitive? Evidence from Concentrated Local Markets in Brazil," Textos para discussão 551, Department of Economics PUC-Rio (Brazil), revised Sep 2007.
- Deininger,Klaus W., 2003. "Causes and consequences of civil strife - micro-level evidence from Uganda," Policy Research Working Paper Series 3045, The World Bank.
- Edward L. Glaeser & Bruce Sacerdote, 1996.
"Why is There More Crime in Cities?,"
Harvard Institute of Economic Research Working Papers
1746, Harvard - Institute of Economic Research.
- Lusardi, Annamaria, 1998. "On the Importance of the Precautionary Saving Motive," American Economic Review, American Economic Association, vol. 88(2), pages 449-453, May.
- Rafael Di Tella & Ernesto Schargrodsky, 2004. "Do Police Reduce Crime? Estimates Using the Allocation of Police Forces After a Terrorist Attack," American Economic Review, American Economic Association, vol. 94(1), pages 115-133, March.
When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:52. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.