The Changing Returns to Crime: Do Criminals Respond to Prices?

70 Pages Posted: 9 Jun 2015

See all articles by Mirko Draca

Mirko Draca

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Harvard University - Edmond J. Safra Center for Ethics; University of Warwick - Department of Economics

Theodore Koutmeridis

University of Glasgow; University of Warwick

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); London School of Economics & Political Science (LSE) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 2015

Abstract

In economic models of crime individuals respond to changes in the potential value of criminal opportunities. We analyse this issue by estimating crime-price elasticities from detailed data on criminal incidents in London between 2002 and 2012. The unique data feature we exploit is a detailed classification of what goods were stolen in reported theft, robbery and burglary incidents. We first consider a panel of consumer goods covering the majority of market goods stolen in the crime incidents and find evidence of significant positive price elasticities. We then study a particular group of crimes that have risen sharply recently as world prices for them have risen, namely commodity related goods (jewellery, fuel and metal crimes), finding sizable elasticities when we instrument local UK prices by exogenous shifts in global commodity prices. Finally, we show that changes in the prices of loot from crime have played a role in explaining recent crime trends.

Keywords: commodity prices, crime, goods prices, metal crime

JEL Classification: K42

Suggested Citation

Draca, Mirko and Koutmeridis, Theodore and Machin, Stephen J., The Changing Returns to Crime: Do Criminals Respond to Prices? (June 2015). CEPR Discussion Paper No. DP10647, Available at SSRN: https://ssrn.com/abstract=2615887

Mirko Draca (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
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Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
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University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Theodore Koutmeridis

University of Glasgow ( email )

Department of Economics
Adam Smith Business School
Glasgow, Scotland G12 8LE
United Kingdom

University of Warwick

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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