IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/1040.html
   My bibliography  Save this paper

The Effect of Stolen Goods Markets on Crime: Evidence from a Quasi - Natural Experiment

Author

Listed:
  • D'Este, Rocco

    (Department of Economics, University of Warwick)

Abstract

This paper analyses the causal effect of the availability of stolen goods markets on theft crimes. Motivated by the richness of anecdotal evidence, we study this overlooked determinant of crime’s production function through the lens of pawnshops, a widespread business that offers secured loans to people, with items of personal property used as collateral. The endogeneity of pawnshops to crime is addressed in multiple ways. First, we strengthen the hypothesis that pawnshops deal with stolen goods by exploiting the properties of a panel of 2176 US counties from 1997 to 2010. Then, we detect causality exploiting the exogenous rise in the price of gold in a quasi - natural experiment fashion. Specifically, the identification strategy relies on the exogeneity of the interaction between the price of gold, constantly demanded by pawnbrokers in the form of jewels that are melted down to be transformed in a bar of precious metal, and the initial concentration of pawnshops to the county. Conservative estimates show that a one standard deviation increase in gold price generates a 0.05 standard deviation increase in the effect of pawnshops on burglaries and robberies. The mechanism behind the causal effect is corroborated by numerous falsification tests on other crimes that disprove the possibility that pawnshops might cause crime through channels other than the demand for stolen goods.

Suggested Citation

  • D'Este, Rocco, 2014. "The Effect of Stolen Goods Markets on Crime: Evidence from a Quasi - Natural Experiment," The Warwick Economics Research Paper Series (TWERPS) 1040, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:1040
    as

    Download full text from publisher

    File URL: https://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2014/twerp_1040b_deste.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gordon Dahl & Stefano DellaVigna, 2009. "Does Movie Violence Increase Violent Crime?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 677-734.
    2. Mirko Draca & Stephen Machin & Robert Witt, 2011. "Panic on the Streets of London: Police, Crime, and the July 2005 Terror Attacks," American Economic Review, American Economic Association, vol. 101(5), pages 2157-2181, August.
    3. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 259-283, April.
    4. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    5. 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.
    6. Milo Bianchi & Paolo Buonanno & Paolo Pinotti, 2012. "Do Immigrants Cause Crime?," Post-Print hal-01629746, HAL.
    7. Steven D. Levitt, 1998. "Juvenile Crime and Punishment," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1156-1185, December.
    8. Manudeep Bhuller & Tarjei Havnes & Edwin Leuven & Magne Mogstad, 2013. "Broadband Internet: An Information Superhighway to Sex Crime?," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1237-1266.
    9. Steven D. Levitt, 1996. "The Effect of Prison Population Size on Crime Rates: Evidence from Prison Overcrowding Litigation," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 319-351.
    10. repec:dau:papers:123456789/5382 is not listed on IDEAS
    11. Bruce Western & Jeffrey R. Kling & David F. Weiman, 2001. "The Labor Market Consequences of Incarceration," Working Papers 829, Princeton University, Department of Economics, Industrial Relations Section..
    12. Jeffrey Grogger, 1995. "The Effect of Arrests on the Employment and Earnings of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 51-71.
    13. Francesco Drago & Roberto Galbiati & Pietro Vertova, 2009. "The Deterrent Effects of Prison: Evidence from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 117(2), pages 257-280, April.
    14. Klick, Jonathan & Tabarrok, Alexander, 2005. "Using Terror Alert Levels to Estimate the Effect of Police on Crime," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 267-279, April.
    15. Eric Helland & Alexander Tabarrok, 2007. "Does Three Strikes Deter?: A Nonparametric Estimation," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    16. Jeffrey R. Kling & Jens Ludwig & Lawrence F. Katz, 2005. "Neighborhood Effects on Crime for Female and Male Youth: Evidence from a Randomized Housing Voucher Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 87-130.
    17. Milo Bianchi & Paolo Buonanno & Paolo Pinotti, 2012. "Do Immigrants Cause Crime?," Journal of the European Economic Association, European Economic Association, vol. 10(6), pages 1318-1347, December.
    18. John J. Donohue III & Steven D. Levitt, 2001. "The Impact of Legalized Abortion on Crime," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 379-420.
    19. Dan Silverman, 2004. "Street Crime And Street Culture," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 761-786, August.
    20. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    21. Jan Eeckhout & Nicola Persico & Petra E. Todd, 2010. "A Theory of Optimal Random Crackdowns," American Economic Review, American Economic Association, vol. 100(3), pages 1104-1135, June.
    22. Jeffrey R. Kling & David Weiman & Bruce Western, 2001. "The Labor Market Consequences of Incarceration," Working Papers 829, Princeton University, Department of Economics, Industrial Relations Section..
    23. Levitt, Steven D, 1997. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime," American Economic Review, American Economic Association, vol. 87(3), pages 270-290, June.
    24. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-791, October.
    25. 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.
    26. Joshua Shackman & Glen Tenney, 2006. "The Effects of Government Regulations on the Supply of Pawn Loans: Evidence from 51 Jurisdictions in the U.S," Journal of Financial Services Research, Springer;Western Finance Association, vol. 30(1), pages 69-91, August.
    27. Joshua Shackman & Glen Tenney, 2006. "The Effects of Government Regulations on the Supply of Pawn Loans: Evidence from 51 Jurisdictions in the U.S," Journal of Financial Services Research, Springer;Western Finance Association, vol. 30(2), pages 229-229, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wrk:warwec:1040. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash). General contact details of provider: http://edirc.repec.org/data/dewaruk.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.