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Assessing the crack hypothesis using data from a crime wave: the case of São Paulo


  • João M P De Mello

    () (Department of Economics PUC-Rio)


Mimicking the “Great American Crime Decline” (Zimiring, 2007), violent crime in the state of São Paulo dropped sharply in the 2000s after rising steadily throughout the 1980s and 1990s. This paper evaluates the role of crack cocaine in explaining the aggregate dynamics in violence. Four facts are established. First, the aggregate data show a tight co-movement between the prevalence of crack cocaine and homicides. Second, using city-level apprehension and possession data, I find a strong elasticity of violent crime with respect to crack cocaine after controlling for year, city effects, and many time-varying covariates. I use the estimated elasticity to compute the contribution of crack cocaine to aggregate violence. Crack explains 30% of time series variation in the data. Third, only drug traffic – not drug possession – has an impact on homicides. Finally, I find no impact on property crimes, I find a weaker impact on attempted murder, and, interestingly, I find a weak negative impact on aggravated assault. The theory suggests that both facts – only trafficking matters and crack affects only homicides, not property crime – can be rationalized only if drug-induced crime is driven by systemic violence induced by illegality itself. These results are important for policy because they suggest that violence will not follow legalization of both the possession and the trade of cocaine or crack-cocaine.

Suggested Citation

  • João M P De Mello, 2010. "Assessing the crack hypothesis using data from a crime wave: the case of São Paulo," Textos para discussão 586, Department of Economics PUC-Rio (Brazil).
  • Handle: RePEc:rio:texdis:586

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    References listed on IDEAS

    1. João M. P. de Mello & Alexandre Schneider, 2010. "Assessing São Paulo's Large Drop in Homicides: The Role of Demography and Policy Interventions," NBER Chapters,in: The Economics of Crime: Lessons for and from Latin America, pages 207-235 National Bureau of Economic Research, Inc.
    2. Saffer, Henry & Chaloupka, Frank, 1999. "The Demand for Illicit Drugs," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 401-411, July.
    3. Christopher Carpenter, 2007. "Heavy Alcohol Use and Crime: Evidence from Underage Drunk-Driving Laws," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 539-557.
    4. repec:aph:ajpbhl:1998:88:1:97-100_3 is not listed on IDEAS
    5. Ciro Biderman & JoãoMP DeMello & Alexandre Schneider, 2010. "Dry Laws and Homicides: Evidence from the São Paulo Metropolitan Area," Economic Journal, Royal Economic Society, vol. 120(543), pages 157-182, March.
    6. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    7. Jeffrey A. Miron & Jeffrey Zwiebel, 1995. "The Economic Case against Drug Prohibition," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 175-192, Fall.
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    Crack Epidemic; Violence; Panel Data;

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