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The Cost of Avoiding Crime: The Case of Bogotá

In: The Economics of Crime: Lessons for and from Latin America

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  • Alejandro Gaviria
  • Carlos Medina
  • Leonardo Morales
  • Jairo Núñez

Abstract

We use hedonic price models to estimate the value households are willing to pay to avoid violent crime in the city of Bogotá. We find that households living in the highest socioeconomic level (stratum 6) pay up to 7.2% of their house values in order to prevent average homicide rates from increasing in one standard deviation. Households in stratum 5 pay up to 2.4% of their house values to prevent homicide rates from increasing. The results indicate 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 that auction security. These markets imply different levels of access to public goods among the population, and actually, the exclusion of the poorest. We find as well evidence of negative capitalization of the rate of attacks against life, and positive capitalization of the presence of police authority.
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Suggested Citation

  • Alejandro Gaviria & Carlos Medina & Leonardo Morales & Jairo Núñez, 2010. "The Cost of Avoiding Crime: The Case of Bogotá," NBER Chapters, in: The Economics of Crime: Lessons for and from Latin America, pages 101-132, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:11835
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    References listed on IDEAS

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    1. Carlos Medina & Leonardo Morales & Jairo Nuñez, 2008. "Quality of Life in Urban Neighborhoods in Colombia:The Cases of Bogotá and Medellín," BORRADORES DE ECONOMIA 005126, BANCO DE LA REPÚBLICA.
    2. Leonardo Morales & Carlos Medina, 2007. "Stratification and Public Utility Services in Colombia: Subsidies to Households or Distortion of Housing Prices?," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 41-99, January.
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    5. Carlos Medina & Jairo Núñez, 2006. "La Oferta De Servicios Del Sector Financiero Formal En Bogotã," Documentos CEDE 003043, Universidad de los Andes - CEDE.
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    14. Giorgio Topa, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 261-295.
    15. Alejandro Gaviria & Carmen Pagés-Serra, 1999. "Patterns of Crime Victimization in Latin America," Research Department Publications 4186, Inter-American Development Bank, Research Department.
    16. 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..
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    19. 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 Economía - CIDSE, Universidad del Valle - CIDSE, June.
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    Cited by:

    1. Alejandro Gaviria & Carlos Medina & Jorge Tamayo, 2010. "Assessing the Link between Adolescent Fertility and Urban Crime," BORRADORES DE ECONOMIA 006860, BANCO DE LA REPÚBLICA.
    2. 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.
    3. Carlos Medina & Leonardo Morales & Jairo Nuñez, 2008. "Quality of Life in Urban Neighborhoods in Colombia:The Cases of Bogotá and Medellín," BORRADORES DE ECONOMIA 005126, BANCO DE LA REPÚBLICA.
    4. Carlos Augusto Olarte Bacares, 2014. "Criminality spread: a "Boomerang effect" of public transport improvements?," Documents de travail du Centre d'Economie de la Sorbonne 14013, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. David M. Vetter & Kaizô I. Beltrão & Rosa M. R. Massena, 2013. "The Impact of the Sense of Security from Crime on Residential Property Values in Brazilian Metropolitan Areas," Research Department Publications IDB-WP-415, Inter-American Development Bank, Research Department.
    6. Leonardo Fabio Morales, 2015. "Peer Effects on a Fertility Decision: an Application for Medellín, Colombia," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 119-159, February.
    7. Enrique Javier Burbano Valencia & María Isabel Zafra Sanz, 2017. "Homicidio y precios de la tierra: un análisis espacial en Santiago de Cali," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 40(113), pages 147-159, Mayo.
    8. Escobedo, Francisco J. & Clerici, Nicola & Staudhammer, Christina L. & Feged-Rivadeneira, Alejandro & Bohorquez, Juan Camilo & Tovar, German, 2018. "Trees and Crime in Bogota, Colombia: Is the link an ecosystem disservice or service?," Land Use Policy, Elsevier, vol. 78(C), pages 583-592.
    9. Manfred Grautoff, Fernando Chavarro, Jazmín Balaguer, 2010. "Torneo criminal, aversión al riesgo y seguridad ciudadana: comportamiento criminal en Bogotá D.C," Revista CIFE, Universidad Santo Tomás, June.
    10. Carlos Medina & Jorge Andrés Tamayo, 2011. "An Assessment of How Urban Crime and Victimization Affects Life Satisfaction," BORRADORES DE ECONOMIA 007876, BANCO DE LA REPÚBLICA.

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    More about this item

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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