Valuing Crime Control Benefits Using Stated Preference Approaches

Abstract

While the "state-of-the-art" in valuing crime control benefits has progressed considerably over the past 30 years, there is still no agreement in the literature about either the scope of benefits that should be considered or about the appropriate methodology to estimate these benefits. This chapter first considers the scope of benefits and argues that a holistic approach should consider the impact of crime on the "quality of life" in a neighborhood or city. Methodologies for estimating the quality of life can take either a "bottom up" or "top down" approach. While these are conceptually equivalent, the empirical burdens differ and neither approach is necessarily better. Regardless of which approach is taken, there are three basic methodologies that have been used to estimate nonmarket public goods such as the value of crime reductions - revealed preferences, stated preferences, and life satisfaction. We focus on ex ante stated preference approaches that are designed to estimate the impact of crime on quality of life and consider some of the key methodological challenges faced by researchers. Existing studies are reviewed and future research priorities are identified.

Keywords: costs of crime, quality of life, stated preference, revealed preference, life satisfaction

JEL Classification: K42, I31, D61, C42