IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/doi10.1086-685075.html
   My bibliography  Save this article

On the Distributive Costs of Drug-Related Homicides

Author

Listed:
  • Nicolas Ajzenman
  • Sebastian Galiani
  • Enrique Seira

Abstract

This is the first paper to study the economic effects of drug-trafficking organization violence. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1%of Mexico's GDP.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2015. "On the Distributive Costs of Drug-Related Homicides," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    • Handle: RePEc:ucp:jlawec:doi:10.1086/685075
    DOI: 10.1086/685075
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/685075
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/685075
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/685075?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steven D. Levitt, 2004. "Understanding Why Crime Fell in the 1990s: Four Factors that Explain the Decline and Six that Do Not," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 163-190, Winter.
    2. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    3. Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2015. "On the Distributive Costs of Drug-Related Homicides," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    4. 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.
    5. Rafael Di Tella & Sebastian Edwards & Ernesto Schargrodsky, 2010. "The Economics of Crime: Lessons For and From Latin America," NBER Books, National Bureau of Economic Research, Inc, number dite09-1.
    6. Sebastian Galiani, Nicolas Ajzenman, Enrique Seira, . "On the Distributive Costs of Drug-Related Homicides," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    7. Rafael Di Tella & Sebastian Galiani & Ernesto Schargrodsky, 2010. "Crime Distribution and Victim Behavior during a Crime Wave," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 175-204, National Bureau of Economic Research, Inc.
    8. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    9. Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-833, April.
    10. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    11. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    12. Steve Gibbons, 2004. "The Costs of Urban Property Crime," Economic Journal, Royal Economic Society, vol. 114(499), pages 441-463, November.
    13. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    14. Di Tella, Rafael & Edwards, Sebastian & Schargrodsky, Ernesto (ed.), 2010. "The Economics of Crime," National Bureau of Economic Research Books, University of Chicago Press, number 9780226153742, September.
    15. Patrick Bajari & Matthew E. Kahn, 2005. "Estimating Housing Demand With an Application to Explaining Racial Segregation in Cities," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 20-33, January.
    16. Steven D. Levitt & Sudhir Alladi Venkatesh, 2000. "An Economic Analysis of a Drug-Selling Gang's Finances," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 755-789.
    17. Edward L. Glaeser & Bruce Sacerdote, 1999. "Why Is There More Crime in Cities?," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 225-258, December.
    18. Steven D. Levitt, 1999. "The changing relationship between income and crime victimization," Economic Policy Review, Federal Reserve Bank of New York, vol. 5(Sep), pages 87-98.
    19. repec:dau:papers:123456789/6486 is not listed on IDEAS
    20. Gabriela Calderón & Gustavo Robles & Alberto Díaz-Cayeros & Beatriz Magaloni, 2015. "The Beheading of Criminal Organizations and the Dynamics of Violence in Mexico," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(8), pages 1455-1485, December.
    21. Astorga, Luis & Shirk, David A., 2010. "Drug Trafficking Organizations and Counter-Drug Strategies in the U.S.-Mexican Context," University of California at San Diego, Center for U.S.-Mexican Studies qt8j647429, Center for U.S.-Mexican Studies, UC San Diego.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shawn Kantor & Carl T. Kitchens & Steven Pawlowski, 2021. "Civil Asset Forfeiture, Crime, And Police Incentives: Evidence From The Comprehensive Crime Control Act Of 1984," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 217-242, January.
    2. Galiani, Sebastian & Lopez Cruz, Ivan & Torrens, Gustavo, 2018. "Stirring up a hornets’ nest: Geographic distribution of crime," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 17-35.
    3. Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2015. "On the Distributive Costs of Drug-Related Homicides," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    4. Elster, Yael & Zussman, Asaf & Zussman, Noam, 2017. "Rockets: The housing market effects of a credible terrorist threat," Journal of Urban Economics, Elsevier, vol. 99(C), pages 136-147.
    5. Aldeco Leo Lorenzo Rodrigo & Jurado Jose A. & Ramírez-Álvarez Aurora A., 2022. "Internal Migration and Drug Violence in Mexico," Working Papers 2022-11, Banco de México.
    6. Audrey Au Yong Lyn, 2021. "Male employment and female intra-household decision-making: a Mexican gold mining case study," Review of Economics of the Household, Springer, vol. 19(3), pages 699-737, September.
    7. Clemens, Michael A., 2021. "Violence, development, and migration waves: Evidence from Central American child migrant apprehensions," Journal of Urban Economics, Elsevier, vol. 124(C).
    8. Hale Utar, 2018. "Firms and Labor in Times of Violence: Evidence from the Mexican Drug War," CESifo Working Paper Series 7345, CESifo.
    9. Nowak, Adam & Sayago-Gomez, Juan, 2018. "Homeowner preferences after September 11th, a microdata approach," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 330-351.
    10. Ryan Brown, 2018. "The Mexican Drug War and Early-Life Health: The Impact of Violent Crime on Birth Outcomes," Demography, Springer;Population Association of America (PAA), vol. 55(1), pages 319-340, February.
    11. Maria Micaela Sviatschi, 2018. "Making a Narco: Childhood Exposure to Illegal Labor Markets and Criminal Life Paths," Working Papers sviatschi_making-a-narco_, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    12. Iva Trako & Maria Micaela Sviatschi & Guadalupe Kavanaugh, 2018. "Access to Justice, Gender Violence and Children: Evidence from Women’s Justice Centers in Peru," Working Papers 2018-03, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    13. Ryan Brown & Verónica Montalva & Duncan Thomas & Andrea Velásquez, 2019. "Impact of Violent Crime on Risk Aversion: Evidence from the Mexican Drug War," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 892-904, December.
    14. Au Yong Lyn, Audrey, 2020. "Male employment and female intra-household decision-making: a Mexican gold mining case study," Munich Reprints in Economics 75733, University of Munich, Department of Economics.
    15. Elster, Yael & Zussman, Noam, 2024. "Minorities and property values: Evidence from residential buildings in Israel," Journal of Urban Economics, Elsevier, vol. 141(C).
    16. Brown, Ryan & Velásquez, Andrea, 2017. "The effect of violent crime on the human capital accumulation of young adults," Journal of Development Economics, Elsevier, vol. 127(C), pages 1-12.
    17. Germá-Bel & Maximilian Holst, 2016. "“A two-Sided coin: Disentangling the economic effects of the 'War on drugs' in Mexico”," IREA Working Papers 201611, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    18. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicholas Ajzenman, Sebastian Galiani, and Enrique Seira, 2014. "On the Distributed Costs of Drug-Related Homicides - Working Paper 364," Working Papers 364, Center for Global Development.
    2. Michael Clemens, Çaglar Özden, and Hillel Rapoport, 2014. "Migration and Development Research Is Moving Far beyond Remittances - Working Paper 365," Working Papers 365, Center for Global Development.
    3. Galiani, Sebastian & Lopez Cruz, Ivan & Torrens, Gustavo, 2018. "Stirring up a hornets’ nest: Geographic distribution of crime," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 17-35.
    4. Mejía, Daniel & Restrepo, Pascual, 2016. "Crime and conspicuous consumption," Journal of Public Economics, Elsevier, vol. 135(C), pages 1-14.
    5. Germá-Bel & Maximilian Holst, 2016. "“A two-Sided coin: Disentangling the economic effects of the 'War on drugs' in Mexico”," IREA Working Papers 201611, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    6. Andrés Domínguez, 2021. "Homicide rates and housing prices in Cali and Bogotá, D. C," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 40(83), pages 643-677, August.
    7. James Alm & Keith Finlay, 2013. "Who Benefits from Tax Evasion?," Economic Analysis and Policy, Elsevier, vol. 43(2), pages 139-154, September.
    8. Patrick Bayer & Robert McMillan & Alvin Murphy & Christopher Timmins, 2016. "A Dynamic Model of Demand for Houses and Neighborhoods," Econometrica, Econometric Society, vol. 84, pages 893-942, May.
    9. Luisa Blanco & Robin Grier & Kevin Grier & Daniel Hicks, 2021. "Household responses to escalating violence in Mexico," Applied Economics Letters, Taylor & Francis Journals, vol. 28(4), pages 315-318, February.
    10. Elster, Yael & Zussman, Asaf & Zussman, Noam, 2017. "Rockets: The housing market effects of a credible terrorist threat," Journal of Urban Economics, Elsevier, vol. 99(C), pages 136-147.
    11. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2010. "The New Economics of Equilibrium Sorting and its Transformational Role for Policy Evaluation," NBER Working Papers 16349, National Bureau of Economic Research, Inc.
    12. Bishop, Kelly C. & Timmins, Christopher, 2019. "Estimating the marginal willingness to pay function without instrumental variables," Journal of Urban Economics, Elsevier, vol. 109(C), pages 66-83.
    13. Brodeur, Abel & Yousaf, Hasin, 2019. "The Economics of Mass Shootings," IZA Discussion Papers 12728, Institute of Labor Economics (IZA).
    14. Baumann, Florian & Friehe, Tim, 2013. "Private protection against crime when property value is private information," International Review of Law and Economics, Elsevier, vol. 35(C), pages 73-79.
    15. Di Tella, Rafael & Freira, Lucía & Gálvez, Ramiro H. & Schargrodsky, Ernesto & Shalom, Diego & Sigman, Mariano, 2019. "Crime and violence: Desensitization in victims to watching criminal events," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 613-625.
    16. Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," SERC Discussion Papers 0207, Centre for Economic Performance, LSE.
    17. Golz, Michael & D'Amico, Daniel J., 2018. "Market concentration in the international drug trade," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 28-42.
    18. Nowak, Adam & Sayago-Gomez, Juan, 2018. "Homeowner preferences after September 11th, a microdata approach," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 330-351.
    19. Phillips, David C. & Sandler, Danielle, 2015. "Does public transit spread crime? Evidence from temporary rail station closures," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 13-26.
    20. Nadav Ben Itzhak, 2018. "The Effect of Terrorism on Housing Rental Prices: Evidence from Jerusalem," Bank of Israel Working Papers 2018.08, Bank of Israel.

    More about this item

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. On the Distributive Costs of Drug-Related Homicides (JL&E 2015) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:doi:10.1086/685075. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.