The Social Costs of Gun Ownership

Abstract:     
This paper develops an estimate of the marginal social costs of gun ownership based on new estimates of the effect of household gun prevalence on homicide rates. Using a panel dataset of 20 annual observations on the 200 largest counties, we estimate an elasticity of homicide with respect to gun prevalence equal to +.10, conditioning on county fixed effects, year fixed effects, burglary and robbery rates, and percent black. Using the same estimation procedure for gun and non-gun homicides separately, we find that all of the effect of gun prevalence is on gun homicide rates. These results are robust to a variety of alternative specifications, including models that condition on year fixed effects defined separately for each region, or the lagged value of the dependent variable.

We also apply the same set of procedures to state-level data for the same period, with qualitatively similar results. The elasticity estimates from state-level data are larger and less robust than for county-level data.

All estimates utilize as a proxy for gun prevalence the percentage of suicides committed with a gun. Earlier research has demonstrated that it is superior to other proxies in common use for cross-section analysis. New results presented here provide confirmation of its validity in time-series analysis of repeated cross-sections.

Given that more guns cause more homicides and have little effect on other types of crime, it appears that the marginal external social cost of private gun ownership is positive. The magnitude of this cost increases with the level of crime and violence in the community. While it is not possible to make separate estimates of the effects of different types of guns, it is relevant that handguns, which constitute about one-third of the guns in private hands, account for 80 percent of all homicides. At mean values, an increase of 10,000 handgun-owning households in a county is associated with 1 additional homicide per year. If these lives are valued at just $1 million, the average annual marginal social cost of household handgun ownership is $100. If we instead monetize the harm from gun violence using contingent-valuation estimates, our estimates imply that the average annual social cost per household is on the order of $600.

JEL Classifications: H21, I18, K42

Working Paper Series