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The Non-Linear Effect of Wealth on Crime

  • Chihiro Muroi

    ()

    (Department of Economics, College of the Holy Cross)

  • Robert Baumann

    ()

    (Department of Economics, College of the Holy Cross)

Although theory suggests the relationship between crime and wealth is ambiguous, most empirical analyses estimate a monotonic relationship and find that wealth has negative effect on crime. Using two proxies for wealth (median income and poverty rate) and two types of crime (property and violent), we find a quadratic relationship is the best fit for our four crime-wealth groups. In general, the expected negative effect of wealth on crime only applies to wealthier counties. In poorer counties, wealth has an unexpected positive effect on crime. This result may be theoretically consistent, or an unintended byproduct of the Uniform Crime Reports data, which do not include unreported crime.

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File URL: http://college.holycross.edu/RePEc/hcx/Muroi-Baumann_Crime.pdf
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Paper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0907.

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Length: 21 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:hcx:wpaper:0907
Contact details of provider: Phone: (508)793-3362
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Web page: http://www.holycross.edu/departments/economics/website/

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  1. 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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  3. 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.
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  7. Jeff Grogger, 1997. "Market Wages and Youth Crime," NBER Working Papers 5983, National Bureau of Economic Research, Inc.
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  9. Bourguignon Francois, 2009. "Crime as a Social Cost of Poverty and Inequality: A Review Focusing on Developing countries," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
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  11. Morgan Kelly, 2000. "Inequality And Crime," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 530-539, November.
  12. Isaac Ehrlich, 1973. "The Deterrent Effect of Capital Punishment: A Question of Life and Death," NBER Working Papers 0018, National Bureau of Economic Research, Inc.
  13. Cornwell, Christopher & Trumbull, William N, 1994. "Estimating the Economic Model of Crime with Panel Data," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 360-66, May.
  14. 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.
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  16. Eric D. Gould & Bruce A. Weinberg & David B. Mustard, 2002. "Crime Rates And Local Labor Market Opportunities In The United States: 1979-1997," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 45-61, February.
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