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The Cost of Avoiding Crime: The Case of Bogotá

  • Alejandro Gaviria

    ()

  • Carlos Medina

    ()

  • Leonardo Morales

    ()

  • Jairo Nuñez

    ()

We use hedonic price models to estimate the value households are willing to pay to avoidviolent crime in the city of Bogotá. We find that households living in the highestsocioeconomic level (stratum 6) pay up to 7.2% of their house values in order to preventaverage homicide rates from increasing in one standard deviation. Households in stratum 5pay up to 2.4% of their house values to prevent homicide rates from increasing. The resultsindicate 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 thatauction security. These markets imply different levels of access to public goods among thepopulation, and actually, the exclusion of the poorest. We find as well evidence of negativecapitalization of the rate of attacks against life, and positive capitalization of the presenceof police authority.

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Paper provided by BANCO DE LA REPÚBLICA in its series BORRADORES DE ECONOMIA with number 004600.

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Length: 32
Date of creation: 13 Apr 2008
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Handle: RePEc:col:000094:004600
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  1. Carlos Medina & Jairo Núñez, 2006. "La Oferta De Servicios Del Sector Financiero Formal En Bogotá," DOCUMENTOS CEDE 003043, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "Inequality and Violent Crime," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 1-40, April.
  3. Roback, Jennifer, 1988. "Wages, Rents, and Amenities: Differences among Workers and Regions," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 23-41, January.
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  6. John J. Donohue & Steven D. Levitt, 2001. "The Impact Of Legalized Abortion On Crime," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 379-420, May.
  7. Carlos Medina & Leonardo Morales, 2006. "Stratification and Public Utility Services in Colombia: Subsidies to Households or Distortions on Housing Prices?," BORRADORES DE ECONOMIA 003528, BANCO DE LA REPÚBLICA.
  8. Ludwig, Jens & Cook, Philip J, 2001. " The Benefits of Reducing Gun Violence: Evidence from Contingent-Valuation Survey Data," Journal of Risk and Uncertainty, Springer, vol. 22(3), pages 207-26, May.
  9. John J. Donohue & Steven D. Levitt, 1999. "Legalized Abortion and Crime," JCPR Working Papers 104, Northwestern University/University of Chicago Joint Center for Poverty Research.
  10. Carlos Medina & Leonardo Morales & Jairo Nuñez, . "Quality of Life in Urban Neighborhoods in Colombia: The Cases of Bogotá and Medellín," Borradores de Economia 536, Banco de la Republica de Colombia.
  11. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, vol. 46(7), pages 1323-1357, July.
  12. Norman Loayza & Pablo Fajnzylber & Daniel Lederman, 2000. "Crime and Victimization: An Economic Perspective," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, August.
  13. 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..
  14. Heinemann, Alessandra & Verner, Dorte, 2006. "Crime and violence in development : a literature review of Latin America and the Caribbean," Policy Research Working Paper Series 4041, The World Bank.
  15. Giles Atkinson & Andrew Healey & Susana Mourato, 2005. "Valuing the costs of violent crime: a stated preference approach," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 559-585, October.
  16. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  17. Sherwin Rosen, 2002. "Markets and Diversity," American Economic Review, American Economic Association, vol. 92(1), pages 1-15, March.
  18. Alejandro Gaviria & Carmen Pagés-Serra, 1999. "Patterns of Crime Victimization in Latin America," Research Department Publications 4186, Inter-American Development Bank, Research Department.
  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 ECONOMIA - CIDSE, UNIVERSIDAD DEL VALLE - CIDSE, June.
  20. Gyourko, Joseph & Kahn, Matthew & Tracy, Joseph, 1999. "Quality of life and environmental comparisons," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 37, pages 1413-1454 Elsevier.
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