Abstract

http://ssrn.com/abstract=233792
 
 

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Casinos, Crime and Community Costs


Earl L. Grinols III


Baylor University - Department of Economics

David B. Mustard


University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics; Institute for the Study of Labor (IZA); University of Georgia Law School

Cynthia Hunt Dilley


University of Illinois at Urbana-Champaign - Department of Economics

June 2000


Abstract:     
Casino gaming - providing negative expected return with positive variance - has puzzled economists with respect to a number of issues, including the extent to which casinos are tied to externalities. In the case of tobacco, the link between use and health-related externalities has led to state lawsuits to recover social costs. This paper studies the connection between casinos and crime using county-level data for every US county between 1977 and 1996, spanning the introduction of casinos to states other than Nevada. We find that casinos increased crime after a lag. The data indicate that 8% of crime observed in casino counties in 1996 was attributable to casinos. The average annual cost of increased crime due to casinos was $65 per adult per year. Furthermore, by studying the crime rates in counties that border casinos host counties we show that casinos create crime, not merely move it from one area to another. If anything, the neighbor data indicate that casino crime spills over into the border counties rather than is moved from them. Last, we explain why other studies have sometimes failed to identify a link between casinos and increased crime rates.

Number of Pages in PDF File: 33

Keywords: Casinos, Crime, Externalities, Social Cost, Pigouvian Taxes

JEL Classification: K0, K2, H2

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Date posted: October 6, 2000  

Suggested Citation

Grinols, Earl L. and Mustard, David B. and Dilley, Cynthia Hunt, Casinos, Crime and Community Costs (June 2000). Available at SSRN: http://ssrn.com/abstract=233792 or http://dx.doi.org/10.2139/ssrn.233792

Contact Information

Earl L. Grinols III
Baylor University - Department of Economics ( email )
P.O. Box 98003
Waco, TX 76798-8003
United States
(254) 710-7522 (Phone)
(254) 710-6142 (Fax)
David B. Mustard (Contact Author)
University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )
Athens, GA 30602-6254
United States
706-542-3624 (Phone)
706-542-3376 (Fax)
HOME PAGE: http://www.terry.uga.edu/~dmustard/
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
University of Georgia Law School
Athens, GA 30602
United States
Cynthia J. Hunt Dilley
University of Illinois at Urbana-Champaign - Department of Economics ( email )
410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States
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